113
‘Reddit can survive without search’: company reportedly threatens to block Google
(www.theverge.com)
this post was submitted on 25 Oct 2023
113 points (89.0% liked)
Technology
34423 readers
208 users here now
This is the official technology community of Lemmy.ml for all news related to creation and use of technology, and to facilitate civil, meaningful discussion around it.
Ask in DM before posting product reviews or ads. All such posts otherwise are subject to removal.
Rules:
1: All Lemmy rules apply
2: Do not post low effort posts
3: NEVER post naziped*gore stuff
4: Always post article URLs or their archived version URLs as sources, NOT screenshots. Help the blind users.
5: personal rants of Big Tech CEOs like Elon Musk are unwelcome (does not include posts about their companies affecting wide range of people)
6: no advertisement posts unless verified as legitimate and non-exploitative/non-consumerist
7: crypto related posts, unless essential, are disallowed
founded 5 years ago
MODERATORS
you are viewing a single comment's thread
view the rest of the comments
view the rest of the comments
Its pretty simple: Their businesses were built when it was cheap to borrow money. The pandemic caused large inflation. In response feds all around the world have greatly increased prime interest rates. Now their 'run large deficits to expand' business model is more expensive and they need to compete against increasingly valuable bonds as a competing source of investment. All of this means they need to aggressively chase improved profitability.
SVB failing caused a lot of this.
That seems like the reverse. The high rate environment made startups stingy which (along with that one newsletter saying SVB ran out of money) caused the run that killed SVB.
To be fair, SVB kind of did run out of money. They invested heavily into Treasuries, so as rates increased, their investments were devalued, which meant they wouldn't be able to cover their debts if they sold everything or if withdrawals significantly outpaced contributions.
The banks that remained solvent diversified their investments.
The real cause of this is inflation. The Fed raised rates to combat inflation, and raising rates increases their own rate for borrowing, meaning Treasury yields increase, which means new Treasuries are more attractive than older Treasuries, which means older Treasuries sell for less than face value if not held to maturity. The causes of the rampant inflation are varied and include:
All of that combined led the Treasury rates to increase faster than most expected, which meant a lot of longer term Treasury investors were left holding depreciating investments.
In short, SVB ran too much risk and were punished for it.
...how?