I don't always read Noah Smith................

 ........but I'm glad he is out there writing stuff like this:

Finally, let’s talk about the big risk: financial contagion. Many people will undoubtedly have traumatic memories of 2008, when Lehman’s collapse triggered a systemic meltdown. That is a real possibility, and it’s why the FDIC and other government agencies are probably going to work very hard to make sure SVB’s depositors don’t have to take haircuts.

But there are reasons this is not like the Lehman shock. First of all, in 2008 the big banks were all very exposed to each other — they had all lent each other money against the opaque, illiquid mortgage-backed assets that they had all created and sold to each other. This is just not the case with SVB at all — the financial system as a whole is just not particularly exposed to either SVB’s debt or the assets on SVB’s books. Bank stocks fell on the news about SVB, but this is probably just sentiment.

In general, I’m optimistic about the system’s ability to contain the fallout from SVB. So far the U.S. economy has powered along with record employment and strong growth, even as the tech sector has gone into a slump. There’s not a lot of reason to think that basic pattern will change after this bank run, and the government has every reason to make sure it doesn’t change.

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