‘Big Short’ Investor: SVB Crisis Speeding Economic Slowdown

In The Big Short, author Michael Lewis profiled some traders who foresaw and, in some cases, profited from the 2008 financial crisis. One of them was Danny Moses, whom actor Rafe Spall ultimately played in the Academy Award-winning 2016 movie based on the book. Moses is still speculating about the economy. In a CNBC interview broadcast Tuesday, he said that the collapse of Silicon Valley bank only worsens the US economy’s slowdown.

Moses said to anyone who believes the US economy is “going to slow down,” SVB “accelerated that slowdown because banks have to really pull back in their activities.” Before SVB’s meltdown, the economy was already in questionable shape. Inflation has been on the rise and the Fed has sharply increased interest rates in the last year. Moses believes that if the bank collapse wasn’t the straw that broke the camel’s back, it was close.

Consumers, Moses told CNBC, “can’t assume that the regulators have any idea what they’re actually dealing with now considering that they were completely caught off guard … by what just happened at Silicon Valley Bank.” And, as far as Moses is concerned, the fact the US government quickly bailed out SVB on Monday “should make people nervous.”

Moses was directly critical of SVB when speaking to the New York Times for an article chronicling the bank’s recent woes. “This isn’t greed, necessarily, at the bank level,” he told the Times, “It’s just bad risk management. It was complete and utter bad risk management on the part of SVB.”

In his CNBC interview, Moses said that if the Federal Reserve believes the currently unsteady state of the economy “is just going to go away,” they are “kidding themselves.”