E120: Banking crisis and the great VC reset
2023-03-17 spoken.md · speaker-labeled ▶ watch ← E119 all episodes E121 →
Every number here is replayed from score_events — the same ledger the pool ranks on. Decay is what the 114 ideas nobody mentioned gave up this week; it applies only when an episode is processed.
Tier crossings
conviction thresholds crossed by this episode — 65 / 45 / 15 · ideas born here show where they landed. why 65 isn't always green
Who moved the board
each voice's force on conviction this episode — supports and opposes, weighted exactly as the replay applied them · share = % of this episode's movement
What got argued (13 ideas)
ordered by how hard each idea moved · quotes are verbatim from the transcript, timestamps deep-link into the episode
Chamath's read of the facility the Fed stood up over the weekend of 2023-03-12: it lends against banks' underwater bonds at PAR for one year at roughly 4.9% (OIS + 10bp), so every non-top-four bank's rational move is to pledge its impaired book, take the dollar, and re-buy treasuries yielding far more — an arbitrage the Fed itself created. That is roughly $2T of unrealized losses outside the top four, plus another $1-2T gap at JP Morgan/BofA/Citi/Wells the Fed will also have to backstop. Nothing is fixed: the loans mature in twelve months, and the only way the banks can repay is for the Fed to take an emergency posture and cut rates hard enough to re-inflate those bonds. So mark 2024-03-15 as the next crisis date and expect the cuts before it.
As far as I can tell, all we've done is we've kicked the can down the road for a year. But I do think it's important for people to realize this doesn't solve the problem. It just means that mark your calendar for a year from now. We have a problem on March 15th, 2024, because all those folks that took money, what do we do?
In fact, the contrary point to Sacks' comment is that it is a great time to be buying these shares and it is a great time to be investing and it is a great time because as we've talked about countless times, there are extraordinary technologies from AI to biotech becoming software to fusion to novel applications with AI and SaaS and on and on and on.
Number two, Stripe basically takes a 50% haircut, which is the single best-run, most highly valued company in Silicon Valley. Again, that's going to eviscerate a lot of TVPI in a lot of people's portfolios, a lot of theoretical money that LPs were going to get.
Episode digest
written during extraction and stored in data/extractions/ep120.json — the auditable source of truth, including everything market-adjacent that did not earn a capture
Week two of the banking crisis: mostly reinforcement of E119's calls, with Sacks re-upping regional deposit flight (the 2018 de-reg built a two-tier system, money is moving from the regionals to the SIBs, 'more shoes to drop') and claiming the weekend backstop was their recommendation. The one new idea is Chamath's: the Fed's par-value lending facility is a one-year can-kick over ~$2T of losses outside the top four plus $1-2T inside it, whose only exit is massive rate cuts — 'mark your calendar' for 2024-03-15. UNSCOREABLE CALL, DELIBERATELY NOT COINED — Chamath on Credit Suisse at 9:55: 'At Credit Suisse, they have an enormous amount of liquidity... But the balance sheet itself was not only liquid but also very solvent', blaming the run on a cherry-picked 45 seconds of the Saudi National Bank chairman and concluding 'that panic has largely gone'; two days later CS was force-merged into UBS, the residual equity cut ~60% and $17B of AT1s written to zero. It gets no idea because it cannot be scored honestly: CS and CSGN.SW have no series (ingest maps CS to nothing), and every live proxy over the 12-month window records this wrong call as a HIT — EUFN and UBS both rallied hard, UBS partly BECAUSE he was wrong, and even the AT1/CoCo ETFs that fell 5-9% on the wipeout (AT1.L, CCBO.L, COCB.L) ended the year up 2-19%. His stance is on the record here at full strength rather than laundered into a narrower containment thesis he never actually stated. The VC-reset half is the richer material: Founders Fund halving its fund, Stripe's 50% haircut, Tiger's 33% write-down and Sequoia's UC returns give the late-stage marks-reset idea a table-pounding confirmation nine days before its window shuts, and Chamath flips on his own mega-GP consolidation call. Sacks, Friedberg and Jason all pound the buy-the-downturn-vintage thesis while Chamath takes the other side hard — 'even if you think these vintages are great, I don't think they're open for business', with UC Berkeley 'effectively out of business' as an LP. Diarization CLEAN: all four content-verified on fingerprints (including two Friedberg turns, after his E119 zero-turn merge); two cosmetic vocative bleeds at 4:41 and at the head of Chamath's 22:07 turn, neither affecting a capture.