4 ms·

The only comic thing in this entire tragedy is watching the fanatics who have been relentlessly preaching to others such dictums as “move quick and break things

by ak_111 4y ago

The only comic thing in this entire tragedy is watching the fanatics who have been relentlessly preaching to others such dictums as “move quick and break things” and “only the paranoid survive”, extolling the virtues of “creative destruction” and repeating ad infinitum the Reagan quote "The top 9 most terrifying words in the English Language are: I'm from the government, and I'm here to help" cry out for government intervention, with seemingly zero self awareness in how it basically contradicts their entire world view.

deleted 4y ago
[deleted]
christophilus 4y ago
I tend to be libertarian, but there are reasonable roles for government, and regulating banks and life insurers by forcing them to contribute to something like the FDIC and the state insurance commission (or whatever that life insurance thing is called) is legitimate even to most conservatives. Stepping in to smooth out systemic problems is another valid function— like Reagan did with the air traffic controllers, like the FDIC does with bank failures, etc. Anyway, I don’t think folks are asking for a handout. They’re just asking the FDIC to do their jobs more quickly than usual because so many businesses are tied up here. This is the reason there is an FDIC in the first place. I don’t think it’s unreasonable to ask them to smooth the process out to help meet payroll. None of this requires handouts— just proper management and metering out of the assets under consideration.
- pfannkuchen 4y ago
  One important aspect is that we may be embedded in a vicious circle of discontinuity events and smoothing. A broad expectation that smoothing will be applied after a discontinuity event will tend to make people more willing to accept the future risk of discontinuity events in their decision making. Less risk-avoiding behavior regarding discontinuity events makes discontinuity events more likely. Then, when the next discontinuity event happens, if smoothing is again applied, it reinforces this expectation, which reinforces the probability of future discontinuities, etc. For this reason, swearing off active smoothing could actually result in a smoother system, eventually (after the pain of transition, of course).
- nemothekid 4y ago
  >Stepping in to smooth out systemic problems is another valid function Whether you consider this problem "systemic" is political. Note that the FDIC insurance is not the point of contention here - it's whether depositors should be made hold especially if SVB's HTM securities are insolvent. I could easily make an argument why student loan debt is a systemic issue in the united states - the government's guarantee of the loans as well as making them impossible to clear via bankruptcy has created both infinite demand (leading to higher tuition prices) and reckless loaning (due to the government essentially guaranteeing the loans). Why is this "systemic" issue unreasonable, while SVB is?
  - christophilus 4y ago
    I don’t think depositors should be made whole if it can’t be done by a combination of managing the bank’s assets, and sale of depositors to other banks. So, if you’re saying neither the Fed nor the treasury nor the tax payers should bail out depositors, then I agree with you.
foobiekr 4y ago
That, the documented comments by short sellers for months about it being a trainwreck, the last minute bonuses and the dumping of stock on retail investors by insiders. It's like all of the tech misbehavior packaged neatly up into one story.
- ak_111 4y ago
  The worst is the bosses of SVB playing a role in lobbying for more relaxed banking regulations.
nemo44x 4y ago
The government and its institutions (The Fed) had a big part in this though. They flooded the market with cash, sold a bunch of bonds with low interest rates (lowest ever) to tons of banks that had to figure out how to manage that cash and did so by buying “the safest investment”, and then that same institution jacked up interest rates to the highest in 20 years over the course of 10 months. So no, if the government and the fed would actually let the market set interest rates then this doesn’t happen. If the UST had to sell bonds at the real market rate for them then this doesn’t happen.
- ak_111 4y ago
  I am not a fan of the Fed, but it was created precisely to stabilise the banking system due to a huge number of bank runs (that happened before it was created). I think the only consistent libertarian position on this would be to concede that bank runs are totally normal (and welcome even) aspect of a capitalist system and they should never be bailed out or depositors compensated as it would be rewarding irresponsible behaviour (both by shareholders AND depositors).
- almog 4y ago
  They had plenty of time to hedge against that risk — the Fed since almost a year now has been "higher for longer". Believing and pumping the Fed pivot narrative and by doing so betting wagainst the Fed is what failed them.
  - nemo44x 4y ago
    I’m not saying the SVB management is not to blame. Their business should go to 0. I’m just saying that the gov policy and erratic Fed policy caused this. The Fed is creating a lot of problems right now. They’re going to kill the patient trying to kill the cancer.
    - almog 4y ago
      How do you distinguish cause and blame then?
ALittleLight 4y ago
I think it's common to take people you disagree with and put them in a mental bucket labeled "other". Then, you can see people opposed to all government intervention, bucket them as other, and see people who think depositors deserve to be made whole, and conclude that there is some hypocrisy going on with the latter position, because different people you disagreed with thought different things.

by ak_111 4y ago

deleted 4y ago

[deleted]

christophilus 4y ago

I tend to be libertarian, but there are reasonable roles for government, and regulating banks and life insurers by forcing them to contribute to something like the FDIC and the state insurance commission (or whatever that life insurance thing is called) is legitimate even to most conservatives. Stepping in to smooth out systemic problems is another valid function— like Reagan did with the air traffic controllers, like the FDIC does with bank failures, etc. Anyway, I don’t think folks are asking for a handout. They’re just asking the FDIC to do their jobs more quickly than usual because so many businesses are tied up here. This is the reason there is an FDIC in the first place. I don’t think it’s unreasonable to ask them to smooth the process out to help meet payroll. None of this requires handouts— just proper management and metering out of the assets under consideration.

pfannkuchen 4y ago
One important aspect is that we may be embedded in a vicious circle of discontinuity events and smoothing. A broad expectation that smoothing will be applied after a discontinuity event will tend to make people more willing to accept the future risk of discontinuity events in their decision making. Less risk-avoiding behavior regarding discontinuity events makes discontinuity events more likely. Then, when the next discontinuity event happens, if smoothing is again applied, it reinforces this expectation, which reinforces the probability of future discontinuities, etc. For this reason, swearing off active smoothing could actually result in a smoother system, eventually (after the pain of transition, of course).
nemothekid 4y ago
>Stepping in to smooth out systemic problems is another valid function Whether you consider this problem "systemic" is political. Note that the FDIC insurance is not the point of contention here - it's whether depositors should be made hold especially if SVB's HTM securities are insolvent. I could easily make an argument why student loan debt is a systemic issue in the united states - the government's guarantee of the loans as well as making them impossible to clear via bankruptcy has created both infinite demand (leading to higher tuition prices) and reckless loaning (due to the government essentially guaranteeing the loans). Why is this "systemic" issue unreasonable, while SVB is?
- christophilus 4y ago
  I don’t think depositors should be made whole if it can’t be done by a combination of managing the bank’s assets, and sale of depositors to other banks. So, if you’re saying neither the Fed nor the treasury nor the tax payers should bail out depositors, then I agree with you.

foobiekr 4y ago

That, the documented comments by short sellers for months about it being a trainwreck, the last minute bonuses and the dumping of stock on retail investors by insiders. It's like all of the tech misbehavior packaged neatly up into one story.

ak_111 4y ago
The worst is the bosses of SVB playing a role in lobbying for more relaxed banking regulations.

nemo44x 4y ago

The government and its institutions (The Fed) had a big part in this though. They flooded the market with cash, sold a bunch of bonds with low interest rates (lowest ever) to tons of banks that had to figure out how to manage that cash and did so by buying “the safest investment”, and then that same institution jacked up interest rates to the highest in 20 years over the course of 10 months. So no, if the government and the fed would actually let the market set interest rates then this doesn’t happen. If the UST had to sell bonds at the real market rate for them then this doesn’t happen.

ak_111 4y ago
I am not a fan of the Fed, but it was created precisely to stabilise the banking system due to a huge number of bank runs (that happened before it was created). I think the only consistent libertarian position on this would be to concede that bank runs are totally normal (and welcome even) aspect of a capitalist system and they should never be bailed out or depositors compensated as it would be rewarding irresponsible behaviour (both by shareholders AND depositors).
almog 4y ago
They had plenty of time to hedge against that risk — the Fed since almost a year now has been "higher for longer". Believing and pumping the Fed pivot narrative and by doing so betting wagainst the Fed is what failed them.
- nemo44x 4y ago
  I’m not saying the SVB management is not to blame. Their business should go to 0. I’m just saying that the gov policy and erratic Fed policy caused this. The Fed is creating a lot of problems right now. They’re going to kill the patient trying to kill the cancer.
  - almog 4y ago
    How do you distinguish cause and blame then?

ALittleLight 4y ago

I think it's common to take people you disagree with and put them in a mental bucket labeled "other". Then, you can see people opposed to all government intervention, bucket them as other, and see people who think depositors deserve to be made whole, and conclude that there is some hypocrisy going on with the latter position, because different people you disagreed with thought different things.