One Sentence News / March 13, 2023
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Working to address SVB collapse, but not looking at bailout, says Yellen
Summary: That business-like headline conceals the incredible amount of panic that has surrounded this story over the past few days, but in essence, a regional bank that specializes in startup customers, Silicon Valley Bank, collapsed late last week, leaving a whole lot of tech companies in the lurch, wondering if they’ll get back the money they kept there, and if so, when.
Context: This caused so much panic in part because of contagion fears—this collapse was the consequence of a bank-run, so there’s a real possibility that the same might happen at other banks, too—but also because of the centrality of this bank within the tech-world, as startups were incentivized to keep huge, lump-sum investments there, and as a result more than 85% of the money it held is not covered by the FDIC’s $250,000 government guarantee on bank holdings; some of the bank’s business customers may not be able to pay their employees or keep the lights on lacking access to the funds this bank held, so the collapse of some startups is also a possibility here; government regulators are saying they should be able to make everyone whole, or mostly whole, without breaking rules they set following the 2008 global financial crisis—rules meant to disincentivize bad behavior in the banking world—though there’s still a lot of tension in the air about all this as we don’t yet know precisely what will happen next, and there could be quite a few unknowns for longer than most involved parties would prefer.
—Reuters
Saudi-Iran pact could transform the Middle East
Summary: Also late last week, the Saudi Arabian and Iranian governments announced that they would be reestablishing diplomatic ties following the formalization of an agreement facilitated by China.
Context: There’s a lot going on here, and this could be incredibly big news if the agreement goes forward as planned and holds for any amount of time; the Saudi and Iranian governments have hated each other for ages and a lot of what happens in the Middle East happens because of the meta-scale power-play between these two dominant governments; this seems to be an effort to cool those tensions and allow both governments to refocus their resources and attention elsewhere—like bulwarking their militaries and economies for the major, multifaceted pivot the world is going through right now; this is also a significant coup for China, which has been trying, unsuccessfully, to negotiate peace in Ukraine, but which quite possibly managed to score a surprise victory in this other, also vital, conflict zone.
—The New York Times
The Netherlands to block export of advanced chips printers to China
Summary: The Dutch government has confirmed that it will impose fresh Chinese export restrictions on some of its semiconductor-related equipment, potentially limiting the Chinese chip industry’s ability to produce more advanced technologies.
Context: The Netherlands makes the best chip-manufacturing equipment in the world, and because of their knowledge and patents, it’s difficult to get gear even approximating the same quality without going through them; the US has been leaning on its allies to further limit their chip-related exports to China in order to slow the Chinese government in their development of all sorts of edgy technologies that require high-end chips to pursue, and this is one of the last dominos to fall in that regard; there are still methods through which Chinese entities can get their hands on these machines, but it will likely take a lot more time and money to get them, now, and they almost certainly won’t be able to acquire them in the quantity they would prefer.
—Politico
About $42 billion was withdrawn from Silicon Valley Bank on Thursday of last week (equating to about $4.2 billion-per-hour or more than $1 million-per-second), marking the largest bank run in history; that’s substantially larger than the previous largest-ever bank run, which saw $16.7 billion pulled from Washington Mutual over the course of ten days in 2008.
—Axios
419
Number of votes cast by the US House of Representatives (out of 419 Representatives present—so this was unanimous) to declassify intelligence related to the origins of COVID-19.
This vote comes in the wake of heightened official and unofficial support for the so-called “lab-leak” theory for the pandemic, which posits the disease may have “escaped” from the Wuhan Institute of Virology rather than emerging naturally from an animal vector via a wet market in Wuhan, China (which is the theory most of the publicly available data currently backs).
—The Wall Street Journal
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