7 ms·

Infinite money hack strikes again. The lie here is that this takes care of "households" and "small businesses"—no, this is a bailout ("backstop") that saves the

by dvt 4y ago

Infinite money hack strikes again. The lie here is that this takes care of "households" and "small businesses"—no, this is a bailout ("backstop") that saves the richest of the rich (namely, VCs whose startups parked cash in SVB). Why do you think Gary Tan, Marc Andreesen, etc. went on a press tour yesterday? This is why gambling on Robinhood and on crypto is so pervasive. Regular folks realize that they have zero chances here, it's absolutely a rigged game. Just like in 2008, this isn't capitalism, it's just socialism for the ultra rich.

gsibble 4y ago
Exactly. This is really bailing out the rich and their investments. Such bullshit.
deleted 4y ago
[deleted]
johnfn 4y ago
Really? I have friends - normal tech employees - who were telling me they were clearly at risk for not getting a paycheck. I think the story is quite a bit more complex than you say.
- anon291 4y ago
  The united states has almost universal unemployment insurance. If your paycheck doesn't come you'll get a check soon.
  - elbigbad 4y ago
    I checked unemployment briefly during all the layoffs and the checks were just a fraction of my regular paycheck. Further, the process is arduous and takes a while before the first check is received. Even further, it’s not clear to me that one gets unemployment eligibility while still being employed just because there’s difficulty paying one’s normal check. Your comment is very handwavey and lacks enough empathy to border on just cruel.
    - anon291 4y ago
      I mean I was laid off (and this ain't my first rodeo) so know exactly how unemployment works. In California, you get a check that represents a totally normal American wage and your kids will qualify for Medicare and probably you and your spouse will qualify for a reasonable market plan. In my new state of Oregon, you again get a totally reasonable wage, my kids have better medical insurance I did when I was employed, and my wife and I qualify for extremely subsidized health insurance. Basically my mortgage is paid for and my kids and I are insured. It's time limited but six months is enough time to find another job and the healthcare is not time limited. Realistically the us has a solid safety net. At least in all the states I've lived in, which are the ones most tech employees are in
      - elbigbad 4y ago
        Well your strong knowledge of the unemployment system in relation to your cruel comment rules out one side of Hanlon’s Razor anyways.
        anon291 4y ago
        What is cruel about wanting people to get paid a median wage via government benefits. How is this the new definition of cruel?
  - deleted 4y ago
    [deleted]
  - stbenjam 4y ago
    Lol hardly. Even if they qualify for unemployment it’s a tiny fraction of a tech workers salary. It caps out in California at $450 a week.
  - telotortium 4y ago
    Max unemployment insurance in California is $450/week. You can't even pay your rent on a bad apartment with that money unless you're sharing it with someone else.
    - anon291 4y ago
      Sounds like you should vote for better politicians then. Oregon has a lower tax burden overall but provides almost $800 / week in insurance. Seriously, your state has a democrat supermajority and a huge budgetary surplus. Where are your politician's priorities. Seemingly with large corporations instead of normal people.
- taeric 4y ago
  For the most part, that was almost certainly pure panic. Getting stoked by more and more people that should have known better than to push such a narrative.
- inferiorhuman 4y ago
  https://www.bbc.com/news/business-64934348 https://www.bbc.com/news/business-64934348
necubi 4y ago
The equityholders in SVB will get wiped out. The folks getting made whole are those with (supposedly safe) bank accounts. They were not taking wild risks. They were putting their money in a bank. Just because some asshole VCs have money in that bank as well you think all of the other small businesses and their employees should be thrown to the wolves?
briandear 4y ago
It’s interesting to look at the politicians SVB employees donated to. Apparently that investment paid off. If this were a Texas bank with the majority of depositors being oil and gas companies, I am sure that the fed wouldn’t be as interested in paying beyond the insured $250k. Who ever heard of an insurance company paying off more than the policy limits? I’m happy for the depositors to be made whole — as long as SVB executives go to jail in exchange. But a failure without consequence isn’t fair to the rest of the country that get to pay higher bank fees as a result.
- kylecordes 4y ago
  I've seen this same argument made by lots of people on Twitter. But as far as I can tell, in at least the last several decades of bank failures in the US, every depositor has been made whole or close to whole, regardless of geography or industry or political favor. Usually the mechanism has been to arrange the failing bank be bought out, rather than to extend the FDIC limit.
cm2187 4y ago
Or rather the dems bailing out their VC donors.
bogomipz 4y ago
The way I interpreted "households" in the statement was that it was referring to the regular folks who are employed by many VC-backed start ups that banked with SVB. Employees at tech companies in the US get paid twice a month(generally the 1st and the 15th.) This backstopping while certainly bailing out VCs yes, also ensures that regular people working for those VC-backed startups will get their paycheck this week.
digitaltrees 4y ago
The fed action is the right call unless you want to go back to the 1800s when bank failures were routine and caused cyclical shocks.
- salawat 4y ago
  You mean... Just like they do now? The late 80's, early 90's, early Oughts, late Oughts, Pandemic, now... Hell, If there's been one constant in my life it seems to be financial crises every 5-10 years. All the Fed seems to do is magic in new money to inflate asset bubbles some more.
  - digitaltrees 4y ago
    That’s not consistent with the historical record. https://www.calculatedriskblog.com/2016/01/bank-failures-by-year.html?m=1 https://www.calculatedriskblog.com/2016/01/bank-failures-by-...
    - salawat 4y ago
      Bank failures are not the only form of financial crisis. https://en.m.wikipedia.org/wiki/Financial_crisis https://en.m.wikipedia.org/wiki/Financial_crisis Humans and finance man. It's like giving a bunch of addicts a suitcase full of coke them locking the door and slowly walking away.
      - digitaltrees 4y ago
        And yet finance is what has built the modern world and of human progress.
        salawat 4y ago
        ...Arguably, agriculture, the printing press, electricity, germ theory, widespread access to education, and eventually lots of meth has helped significantly more in that regard. Finance is one of those things like sex and murder. It'll always be there, no matter what state you're in, or what trajectory you're going, and it's always extolling how it alone is responsible for how great your life is. It's humanity's background noise. And while the Finance people are yammering in the corner, bored farmers are building rockets, discovering vaccines, inventing television, harnessing the internal combustion engine... Nah. Finance is bs and pageantry, and the inevitable excuse we settle on for why the hell we got up and did something that needed to get done. End of story. Dollars don't mend broken bones. People do. Then some finance guy shows up and says "you should put a price tag on that" and it all goes downhill from there.
tcbawo 4y ago
I can’t imagine the richest of the rich were parking any significant chunk of their money as a depositor in SVB. These people have access to far greater diversity of investments than whatever SVB was offering. I can understand the anger and frustration that many people feel — we don’t live in a true meritocracy. But I don’t understand the opinion that choosing a particular bank to open a checking account is equivalent to gambling. It seems perfectly rational for depositors to access their funds and wipe out SVB’s equity and debt holders. Not doing so would reward those that withdrew early, caused a panic, started a bank run, and potentially tanking the equity offering in the works. It would be very interesting to see the SEC go after some of them for market manipulation and insider trading.
fairity 4y ago
Sure, you can view this as a bailout of rich people. However, the bail out is also effectively being funded by rich people, so I don't really get what your complaint is. Put another way, the depositors are being made whole by the FDIC's deposit insurance fund, which is in turn funded by the banking sector's insurance premiums. So, the money here is basically being taken out of the banking sector's shareholder pockets (read: rich people).
digitaltrees 4y ago
They went on a press tour because a generation of start ups was about to be eradicated wiping out trillions of value over the next 10 years, possibly destroying the most valuable ecosystem ever and putting American society on a path to competitive disadvantage long term. If you think this is hyperbole considering US growth without startups just as AI is about to transform 75% of economic activity globally.

by dvt 4y ago

gsibble 4y ago

Exactly. This is really bailing out the rich and their investments. Such bullshit.

deleted 4y ago

[deleted]

johnfn 4y ago

Really? I have friends - normal tech employees - who were telling me they were clearly at risk for not getting a paycheck. I think the story is quite a bit more complex than you say.

anon291 4y ago
The united states has almost universal unemployment insurance. If your paycheck doesn't come you'll get a check soon.
- elbigbad 4y ago
  I checked unemployment briefly during all the layoffs and the checks were just a fraction of my regular paycheck. Further, the process is arduous and takes a while before the first check is received. Even further, it’s not clear to me that one gets unemployment eligibility while still being employed just because there’s difficulty paying one’s normal check. Your comment is very handwavey and lacks enough empathy to border on just cruel.
  - anon291 4y ago
    I mean I was laid off (and this ain't my first rodeo) so know exactly how unemployment works. In California, you get a check that represents a totally normal American wage and your kids will qualify for Medicare and probably you and your spouse will qualify for a reasonable market plan. In my new state of Oregon, you again get a totally reasonable wage, my kids have better medical insurance I did when I was employed, and my wife and I qualify for extremely subsidized health insurance. Basically my mortgage is paid for and my kids and I are insured. It's time limited but six months is enough time to find another job and the healthcare is not time limited. Realistically the us has a solid safety net. At least in all the states I've lived in, which are the ones most tech employees are in
    - elbigbad 4y ago
      Well your strong knowledge of the unemployment system in relation to your cruel comment rules out one side of Hanlon’s Razor anyways.
      - anon291 4y ago
        What is cruel about wanting people to get paid a median wage via government benefits. How is this the new definition of cruel?
- deleted 4y ago
  [deleted]
- stbenjam 4y ago
  Lol hardly. Even if they qualify for unemployment it’s a tiny fraction of a tech workers salary. It caps out in California at $450 a week.
- telotortium 4y ago
  Max unemployment insurance in California is $450/week. You can't even pay your rent on a bad apartment with that money unless you're sharing it with someone else.
  - anon291 4y ago
    Sounds like you should vote for better politicians then. Oregon has a lower tax burden overall but provides almost $800 / week in insurance. Seriously, your state has a democrat supermajority and a huge budgetary surplus. Where are your politician's priorities. Seemingly with large corporations instead of normal people.
taeric 4y ago
For the most part, that was almost certainly pure panic. Getting stoked by more and more people that should have known better than to push such a narrative.
inferiorhuman 4y ago
https://www.bbc.com/news/business-64934348 https://www.bbc.com/news/business-64934348

necubi 4y ago

The equityholders in SVB will get wiped out. The folks getting made whole are those with (supposedly safe) bank accounts. They were not taking wild risks. They were putting their money in a bank. Just because some asshole VCs have money in that bank as well you think all of the other small businesses and their employees should be thrown to the wolves?

briandear 4y ago

It’s interesting to look at the politicians SVB employees donated to. Apparently that investment paid off. If this were a Texas bank with the majority of depositors being oil and gas companies, I am sure that the fed wouldn’t be as interested in paying beyond the insured $250k. Who ever heard of an insurance company paying off more than the policy limits? I’m happy for the depositors to be made whole — as long as SVB executives go to jail in exchange. But a failure without consequence isn’t fair to the rest of the country that get to pay higher bank fees as a result.

kylecordes 4y ago
I've seen this same argument made by lots of people on Twitter. But as far as I can tell, in at least the last several decades of bank failures in the US, every depositor has been made whole or close to whole, regardless of geography or industry or political favor. Usually the mechanism has been to arrange the failing bank be bought out, rather than to extend the FDIC limit.

cm2187 4y ago

Or rather the dems bailing out their VC donors.

bogomipz 4y ago

The way I interpreted "households" in the statement was that it was referring to the regular folks who are employed by many VC-backed start ups that banked with SVB. Employees at tech companies in the US get paid twice a month(generally the 1st and the 15th.) This backstopping while certainly bailing out VCs yes, also ensures that regular people working for those VC-backed startups will get their paycheck this week.

digitaltrees 4y ago

The fed action is the right call unless you want to go back to the 1800s when bank failures were routine and caused cyclical shocks.

salawat 4y ago
You mean... Just like they do now? The late 80's, early 90's, early Oughts, late Oughts, Pandemic, now... Hell, If there's been one constant in my life it seems to be financial crises every 5-10 years. All the Fed seems to do is magic in new money to inflate asset bubbles some more.
- digitaltrees 4y ago
  That’s not consistent with the historical record. https://www.calculatedriskblog.com/2016/01/bank-failures-by-year.html?m=1 https://www.calculatedriskblog.com/2016/01/bank-failures-by-...
  - salawat 4y ago
    Bank failures are not the only form of financial crisis. https://en.m.wikipedia.org/wiki/Financial_crisis https://en.m.wikipedia.org/wiki/Financial_crisis Humans and finance man. It's like giving a bunch of addicts a suitcase full of coke them locking the door and slowly walking away.
    - digitaltrees 4y ago
      And yet finance is what has built the modern world and of human progress.
      - salawat 4y ago
        ...Arguably, agriculture, the printing press, electricity, germ theory, widespread access to education, and eventually lots of meth has helped significantly more in that regard. Finance is one of those things like sex and murder. It'll always be there, no matter what state you're in, or what trajectory you're going, and it's always extolling how it alone is responsible for how great your life is. It's humanity's background noise. And while the Finance people are yammering in the corner, bored farmers are building rockets, discovering vaccines, inventing television, harnessing the internal combustion engine... Nah. Finance is bs and pageantry, and the inevitable excuse we settle on for why the hell we got up and did something that needed to get done. End of story. Dollars don't mend broken bones. People do. Then some finance guy shows up and says "you should put a price tag on that" and it all goes downhill from there.

tcbawo 4y ago

I can’t imagine the richest of the rich were parking any significant chunk of their money as a depositor in SVB. These people have access to far greater diversity of investments than whatever SVB was offering. I can understand the anger and frustration that many people feel — we don’t live in a true meritocracy. But I don’t understand the opinion that choosing a particular bank to open a checking account is equivalent to gambling. It seems perfectly rational for depositors to access their funds and wipe out SVB’s equity and debt holders. Not doing so would reward those that withdrew early, caused a panic, started a bank run, and potentially tanking the equity offering in the works. It would be very interesting to see the SEC go after some of them for market manipulation and insider trading.

fairity 4y ago

Sure, you can view this as a bailout of rich people. However, the bail out is also effectively being funded by rich people, so I don't really get what your complaint is. Put another way, the depositors are being made whole by the FDIC's deposit insurance fund, which is in turn funded by the banking sector's insurance premiums. So, the money here is basically being taken out of the banking sector's shareholder pockets (read: rich people).

digitaltrees 4y ago

They went on a press tour because a generation of start ups was about to be eradicated wiping out trillions of value over the next 10 years, possibly destroying the most valuable ecosystem ever and putting American society on a path to competitive disadvantage long term. If you think this is hyperbole considering US growth without startups just as AI is about to transform 75% of economic activity globally.