4 ms·
That's a very odd way of stating "here's a sector that will be badly hurt if the contents of their checking accounts disappear with an unknown timeline and perc
by x0x0 4y ago
That's a very odd way of stating "here's a sector that will be badly hurt if the contents of their checking accounts disappear with an unknown timeline and percentage recovered."
By that rubric, you could perfectly well claim that your accountant, laundromat, and lawn care companies are systematically important, because they'd fire their employees if their checking accounts disappeared.
- wpietri 4y agoSure, so I'm saying those things are not systemically vital such that they should be exempt from the consequences of their market choices. You're the one claiming there will be contagion here. I don't think that's the case. If a bunch of unprofitable companies with bad treasury management go under, I think the rest of the economy will be fine. Companies go out of business every day. If you are claiming that tech is somehow special such that contagion will harm the wider economy, as was the case with mortgage-backed securities in 2008, then any taxpayer-funded bailout should be a one-time deal that goes along with enough regulation so that contagion is no longer a risk in the future.
- x0x0 4y ago> You're the one claiming there will be contagion here. In the sense that I never said that, sure. The only thing I claimed, even implicitly, is firing a bunch of people because their employer's cash disappeared would be bad.
- wpietri 4y agoNo, you explicitly used the word contagion: "If people get whatever short term vengeance they're looking for, the contagion will cause a whole lot of collateral damage to people who aren't in tech." That has a technical meaning in finance: https://en.wikipedia.org/wiki/Financial_contagion https://en.wikipedia.org/wiki/Financial_contagion
- x0x0 4y agoidopmstuff != x0x0 https://news.ycombinator.com/item?id=35122581 https://news.ycombinator.com/item?id=35122581 I repeat: "In the sense that I never said that, sure."
- wpietri 4y agoMy apologies; I did confuse the two. In which case, since you're not claiming contagion risk, I return to my previous point that there is no reason for taxpayers to bail out rich people who took a gamble and lost.
- closeparen 4y agoThe issue is whether checking accounts at chartered banks are “market choices” for which there should be “consequences.” The banking system is so regulated because when we lived in that world, it was a bad time, and collective action to make banks reliable was in everyone’s interest. If we are back to “stupid depositors deserve what they get” then what exactly is bank regulation for?
- wpietri 4y agoBank regulation's job is not to create a magic world of unicorns and rainbows. It's to a) keep regular folks from losing their shirts due to the shenanigans of the rich, and b) to prevent systemic risk that could harm the wider economy. Banks make money through risk. Sometimes those risks work out and people make money. Sometimes those risks don't work out and banks fail. This is capitalism 101, and to the extent banks are capitalist enterprises, there's no way around it. Government's job here is just to limit the damage. If you want banks to be perfectly safe, then you are arguing for government-chartered, not-for-profit, non-capitalist banks. These are things that exist, but we don't have them here in the US. We could, if you really want people with millions in cash to have someplace perfectly safe to park their money, you can certainly argue for their creation.