9 ms·
"there are no libertarians in a bank run"
by megabless123 4y ago
"there are no libertarians in a bank run"
- belter 4y agoOr...How to turn everybody into a Socialist in minutes... "Investors implore the government to step in after Silicon Valley Bank failure" - https://www.cnbc.com/2023/03/11/silicon-valley-bank-failure-has-investors-calling-for-government-aid.html https://www.cnbc.com/2023/03/11/silicon-valley-bank-failure-...
- ModernMech 4y agoInvestors privatizing profits and socializing losses is a feature of capitalism, not socialism.
- capableweb 4y agoHow is socializing losses a part of capitalism? Supposedly free markets is a part of capitalism, but if you don't let things fail, how can you call it a free market?
- PinguTS 4y agoBecause its those who call for the goverment for a bailout, because otherwise it will hurt the general public -> many failing business -> increasing unemployment
- MoOmer 4y agoI believe the parent comment was talking more on the actualities during implementation vs. theoretical. Turns out, greed is a powerful driver; and, humans are fully capable of self-serving mental gymnastics.
- Jensson 4y agoMost implementations of capitalism isn't USA though, there are plenty of successful examples in the world today that doesn't have these problems.
- phkahler 4y ago>> How is socializing losses a part of capitalism? Not textbook capitalism, the fake kind we have. The one where businesses clammor for "free markets" and no regulation, but only when it suits them.
- 7steps2much 4y agoA capitalist will always support whatever is best for them. That means amongst other things: - privatizing gains, socializing losses - free markets/competition while they are poor, monopolies once they are on top As a good capitalist you would aim to dismantle the very things that enabled your rise to power.
- ModernMech 4y agoThere’s capitalism in the textbook and capitalism as practiced by capitalists. Free markets are a great idea and all, but I’ve never met a capitalist who actually supported free markets. The natural state of capitalism trends toward monopolies, regulatory capture, cronyism, price fixing, wage theft, information asymmetry, and bailouts.
- Vt71fcAqt7 4y ago>Supposedly free markets is a part of capitalism No. Those are two different things.
- capableweb 4y agoSure, I haven't said otherwise. But if you imagine a capitalistic system, isn't free markets a part of it? And what other economic systems than capitalism do you imagine having free markets? Hence the "is a part of" part of my comment.
- Vt71fcAqt7 4y ago>But if you imagine a capitalistic system, isn't free markets a part of it? See: 1940-1970 Japan, South Korea, 1980-2023 China.
- MadSudaca 4y agoThis comment here is evidence that the USA is no longer a capitalist country. Socialism is so ingrained that people can't tell anymore where capitalism ends and socialism beings. Socialism by definition is having a centralized authority stepping in to regulate and control what goes on, for the "good of the people". In a free market capitalistic society, if you lose your money on a private enterprise, then you have to deal with it yourself, no one is coming for your rescue.
- mtlmtlmtlmtl 4y agoActually the definition of socialism is social ownership of the means of production. It does not require centralisation or even a state.
- MadSudaca 4y agoIt's the same. How you organize "the people" is irrelevant.
- sekh60 4y agoIs this really so hard for Americans to understand?
- ModernMech 4y agoYes, because in America, both Joe Biden and Bernie Sanders are labeled “socialists” even though they are on opposite ends of the political left. Joe Biden doesn’t even support Medicare for All, the most socialist healthcare idea we have; instead, he pushes the ACA, which was originally a Federalist Society (read conservative capitalists) healthcare plan implemented by a Republican governor in Massachusetts. But somehow Joe Biden is a “socialist”.
- mtlmtlmtlmtl 4y ago"Socialism" has become a dirty word in the US largely due to historical reasons involving the cold war. As a result its definition in the minds of Americans is very often something completely different than the actual definition. Basically it's just the evolution of language. They're two different words now, depending which side of the Atlantic you're on.
- Matl 4y agoAbsolutely, as an European I am constantly amazed how deeply the 'socialism bad' mantra is embedded in the American psyche, how can you blame even the most text book failure of capitalism on socialism? Perhaps the problem is the people can only imagine either capitalism or the Soviet Union and nothing in between. Guess what, you can have a mix where it makes sense. There's no need to obsessively pull out every socialism trope as if one were ChatGPT at every hint of an extremely mild criticism of capitalism. Feedback is an important mechanism for the gradual improvement of any system.
- brianwawok 4y agoIt’s politically profitable to call things socialist or communist, as Americans have a distaste for both. 2% tax raise for the top 1% of wage earners? Socialist. Gets used to flip votes in the elections. Even very poor Americans who would literally have a much higher standard of living under socialism are taught to despise it.
- 331c8c71 4y ago> Even very poor Americans who would literally have a much higher standard of living under socialism are taught to despise it. Pretty much the same for people living in oppressed countries. They would benefit from at least some liberties but are taught to despise them (and the west for having them).
- Sawamara 4y ago"And the west for having them" - nope. Thats a propaganda line by the US goverment, and lately by the EU right wingers. There are much better reasons to despise the West than the percieved "freedom" they have. Like their actual acts of genocides and exploitation.
- 331c8c71 4y agoAgreed, probably not for the liberties per se but rather for hypocrisy.
- deleted 4y ago[deleted]
- jzb 4y agoI think it’s really important to distinguish between bailing out the people who invested in the bank, and the people who have deposits at the bank. Those are not the same thing at all we should have a system where people can put their money safely into regulated banks, and expect to get all of that money back. We should also have a system, the same system, where investment is a risk. But parking your money in a bank account should not be a risky endeavor.
- JumpCrisscross 4y ago> parking your money in a bank account should not be a risky endeavor Why? It is. Transparently. There are measures of how risky different banks are. For ordinary people, the risks should be insulated. And they are. Deposits are insured. Unemployment is insured. If you have more than $250k in a non-investment grade bank, you should have a strategy for mitigating that risk. If you have tens of millions of dollars of cash, you should have a treasury function.
- ianai 4y agobecause the fed is targeting a 2% inflation rate. Laissez faire policy led to the Great Depression. The lesson there was the downs absolutely do not need to resolve on their own without government involvement and LF was abandoned. The reforms from it significantly contributed to the growth and stability from thereon.
- luckylion 4y agoIn another thread, someone mentioned that First Republic did offer special conditions for leaving large cash deposits with them. I assume it's similar in this case, isn't it? Essentially, you buy e.g. lower rates on a personal loan by keeping your company's cash with them, far beyond the insured amount. It's not just "I could've chosen any bank, I just wanted my money securely stashed somewhere", it's "I put my money here, knowing it's not insured beyond this amount, but I get favorable rates in return". The lines between deposit and investment get really blurry there.
- bradleyjg 4y ago
- ursuscamp 4y agoHandouts and rescues for well-connected parties is a feature of government, not any particular economic system.
- mtlmtlmtlmtl 4y agoThis is a false dichotomy. It's very much both. To say that capitalism doesn't incentivise this sort of practice is pretty naïve.
- bravo22 4y agoWhat do you mean by incentivise? People being allowed to have opinions? What part of free enterprise incentivises the Congress to enable this?
- mtlmtlmtlmtl 4y agoIt's called money. In the US, elections are largery determined by who could spent the most money. Therefore elected officials are incentivised to keep rich people close. Whenever rich people's power is threatened by a political initiative, lobbying and grey zone bribes are used to maintain the status quo. Capitalism leads to the concentration of wealth that allows these incentives to appear. Edit: How I enjoy the salty tears of people who drive by downvote without a rebuttal out of cognitive dissonance. Delicious.
- bravo22 4y agoYou are railing against democracy, voting and election campaigns. You're rightly pointing out flaws in them. The solutions that have been proposed for those flaws are called small government. The same corruption happens in every other system including socialism but even if that system abolishes money the corruption would be done through power, coercion, and influence.
- mtlmtlmtlmtl 4y ago
- narrator 4y agoIn China they use debt-free newly printed money to recapitalize banks. The reason this doesn't create moral hazard is lending is very tightly controlled and subject to regular decrees about who they can lend to and for what.
- alchemist1e9 4y agoYes no moral hazard. Sure. That’s why China has the most distorted property market in the world creating ghost cities. Are we actually at the point where Chinese absurd practices are talked about as something to emulate? What did you mean by this comment?
- narrator 4y agoThe creation of money should be a government function though. The weird hybrid system we have where we privatize the gains and socialize the loses is what causes these kinds of disruptions. With how much control China exercises over the banks, it is essentially almost a government function. I would be for getting rid of bank money creation. It just makes too many problems and creates the boom bust cycle.
- alchemist1e9 4y agoOr how about we remove governments from money business and move to private currency. It’s looking more and more likely we are headed in that direction.
- belter 4y agoOnly the official loans. The problem is China is calculated to have at least 40% of the lending, via the shadow banking system with massive risk of contagion. And yes, it's true the Chinese administration has been trying to curb this risk. "The Rise of Shadow Banking in China: The Political Economy of Modern Chinese State Capitalism" - https://iems.ust.hk/publications/thought-leadership-briefs/tsai-rise-of-shadow-banking-in-chin https://iems.ust.hk/publications/thought-leadership-briefs/t... "Shadow banking in China" - https://en.wikipedia.org/wiki/Shadow_banking_in_China https://en.wikipedia.org/wiki/Shadow_banking_in_China
- SomeHacker44 4y agoCategorically this should not be capitalism and is not actually in my understanding. It is the opposite of the definition, or at least the original definition. It is regulatory capture by wealthy parties that force the government to protect their wealth and then use capitalism to ensure that the government does not materially improve the lot of the non wealthy.
- mamonster 4y agoThe VC begging is absolutely delicious. Listened to the latest All-In episode and have been reading some Twitter threads, heard everything from this is going to wipe out 10 years of capitalist progress to people indicating they never heard about Held to Maturity accounting(i.e a CFA level 1 topic) to predicting a bank run on Monday if no bail out to suggesting that government would double their money if they bailed these companies out a la TARP.
- synu 4y agoThe all in podcast has become an unintentional parody of itself.
- muyuu 4y ago[flagged]
- credit_guy 4y agoWhy not? Here, I'm one: let them burn. I'm sure there are plenty of others who think just like me.
- ddorian43 4y agoAnd if it contagions into your own bank and company and you get laid off too?
- credit_guy 4y agoFunny. It just so happens that the contagion did just that I was was laid off 2 months ago.
- ftxbagholder123 4y agoI assume your views in this case are consistent with the views you expressed in our prior discussion related to FTX. That is, it would have been your responsibility to do due diligence on the bank and properly ensure that your assets are safeguarded, and if you had failed to take such precautions, then the fault would have been yours and yours only. As a result, you would not whine on HackerNews, nor expect sympathy or compensation. Fair?
- ddorian43 4y ago> Fair? For euqity/bond holders of the bank, probably. For depositors like in this case, a little bit complex. What about possible contagion? Where will the contagion be stopped? Or just let it destroy the world if possible. > nor expect sympathy or compensation Maybe compensation like Bernie-Madoff style, remove all the profits of other persons. But this works fine by me because it will probably destroy crypto.
- ftxbagholder123 4y agoIt seems to me it's a decision that trades off the risk of moral hazard for risk of contagion. To me, the rules were crystal clear -- if you have more than $250k in your account, that excess cash should be seen as "at risk". Workarounds include depositing money in a brokerage account (and buying risk-free t-bills) or spreading it out across multiple bank accounts. Smart and risk-aware people did that, dumb people didn't (or alternatively, through specific rules that Silicon Valley Bank set, were prevented from taking their money elsewhere). But as always, system tends to take decisions that increase moral hazards as time goes on. Swift and easy solution in the moment, but bad in the long run. (Probably not productive to bring crypto into this discussion in my view.)
- TheLoafOfBread 4y agoI really enjoyed Sack's and Ackman's Twitter meltdowns demanding bailout from government while refusing to call it bailout, because government bad, m'kay. Orwell would be proud about such doublethink.
- lotsofpulp 4y agoI would not assume it is doublethink. People think differently than what they say all the time.
- cdiddy2 4y agolibertarians wouldn't have a federal reserve raising interest rates at such a high pace though.