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Silicon Valley Learns to Love Socialism for the Rich
- shrewduser 4y agoIn a just world these people would be stripped of everything they own.
- Robotbeat 4y agoThe bank owners? Yes, they have.
- titzer 4y agoNot a single one of them will be poor. Ever.
- favorited 4y agoThe bank's owners were its shareholders, and it was publicly traded. Literally anyone could own a share of it. https://www.google.com/finance/quote/SIVB:NASDAQ https://www.google.com/finance/quote/SIVB:NASDAQ
- JetSpiegel 4y agoHow can you get the money to buy the shares, if you are a regular worker? Maybe get a loan from a bank?
- Robotbeat 4y agoLots of normal people own stocks. You can save money and invest it for retirement, etc. It’s risky because… Well… Public companies you invest money in can go bankrupt.
- AnnikaL 4y agoYou might save money, or your employer or government might invest money for your pension in the bank's stock.
- joegibbs 4y agoIt was trading at about $200 a share, you don't need a loan to be a shareholder. Besides, you can get fractional shares so even if $200 is too much you could still be a shareholder.
- feross 4y agoWhat did the depositors do wrong? You're saying in a just world, the individuals and businesses who just decided to open a checking account—at a top-20 US bank—deserve to lose everything? What did they do wrong?
- Workaccount2 4y agoDidn't insure their holdings. And maybe you're thinking "Who would've thought.." Probably people who work in finance, like VCs, that can do risk analyses.
- deltree7 4y agoDo you check the the inspection sticker of every elevator, train, restaurant, building that you enter?
- JetSpiegel 4y agoI would if I worked in an elevator company.
- DubiousPusher 4y agoI think it's fine if the new precedent we're setting is that the FDIC backs any amount of money on deposit for everyone going forward. If that is not the new precedent, then this is a bailout of rich individuals and some specific corporations. That doesn't seem a problem to you? If the savings and loan of Bismarck North Dakota fails, is the government bailing out the car lot owner and the wheat farmer and the home builder?
- danans 4y ago> If the savings and loan of Bismarck North Dakota fails, is the government bailing out the car lot owner and the wheat farmer and the home builder? Yes, the depositors would get bailed out, but the bank itself would be sold for parts. That might constrain the way that retail deposits are allowed to be managed. A start would be undoing the Trump administration's rollback of Dodd-Frank stress testing requirements for smaller banks [1]. It will probably also mean the FDIC will require more insurance on deposits. This will all hurt profitability of banks, and reduce risk for depositors. 1. https://www.cnbc.com/2018/05/24/trump-signs-bank-bill-rolling-back-some-dodd-frank-regulations.html https://www.cnbc.com/2018/05/24/trump-signs-bank-bill-rollin...
- viscanti 4y agoThe owners should be forced to sell the whole business for $1.
- quartz 4y agoI mean, that's literally what happened with the UK arm of SVB: https://www.cnbc.com/2023/03/13/hsbc-buys-silicon-valley-bank-uk-protecting-deposits-.html https://www.cnbc.com/2023/03/13/hsbc-buys-silicon-valley-ban...
- __MatrixMan__ 4y agoWould a just world have bankers in the first place?
- zamnos 4y agoBankers? Absolutely. We can nit pick which bankers are the "good" ones vs the "bad" ones, but as a whole, there are useful functions they perform for society. Usury though? Possibly not.
- __MatrixMan__ 4y agoI'm not saying they're useless, or evil. They're just playing their part. I'm saying that in a just world we'd have found a different way to solve the problems that they solve. For instance, I can get a loan from a bank for a mining operation that will contaminate the ground water somewhere. Thanks to bankers, I can expect that the locals will accept the money I'm paying my employees--since they can't distinguish it from any other money--even though they'd be much better off refusing it and continuing to drink clean water. The way we practice money involves a loss of agency to whoever has less of it. A just world would require the consent of the locals, our world only requires that I prove to a banker that the operation will be profitable.
- quijoteuniv 4y agoAmen
- feross 4y ago> One SVB depositor, the streaming service Roku, has $487 billion housed in the bank—only a small fraction of which seems to be insured. Not impressed by the basic factual errors in this article. $487 billion ≠ $487 million. https://variety.com/2023/digital/news/roku-svb-failed-silicon-valley-bank-cash-1235549817/ https://variety.com/2023/digital/news/roku-svb-failed-silico... EDIT: I just noticed another disappointing factual error, bordering on disinformation. They say: > On October 14, 2022, Sacks tweeted, “The idea that the American government, the American taxpayer, or any American company is obligated to provide support is pre entitlement.” That was before the SVB collapse. On March 10, 2023, Sacks sang a different tune: “Where is Powell? Where is Yellen? Stop the crisis NOW. Announce that all depositors will be safe.” I'm no Sacks apologist, but they took his first quote completely out-of-context, making it sound like he was saying the US government shouldn't support failing companies, when he was in fact talking about the US supporting Ukraine. See: https://twitter.com/DavidSacks/status/1634357137873969152 https://twitter.com/DavidSacks/status/1634357137873969152
- Apocryphon 4y agoI think it's just typos. The third paragraph alone has the misspelling "SBV’s"
- feross 4y ago[flagged]
- conorcleary 4y agoThey're using their new automated writing tools without proofreading.
- blooalien 4y agoI had this exact thought just as I happen to scroll upon your comment…
- gr1zzlybe4r 4y ago
- easton 4y agoThe effects would trickle down, no? If your payroll money was in SVB and you lost it, your workers won’t get paid?
- rhaway84773 4y agoThe government intervention was the right move. The point is how fascinating it was to see several otherwise loud Uber-libertarian SV VCs suddenly, and once again loudly, discover socialism and the necessity of government intervention when their own money was at risk. If their response to this is that, maybe there is a balance to be struck and there is an important role for government regulation, in certain cases, fair enough. And maybe the fact that people they know, who did nothing wrong still suffered, and needed the government to step in to help them, might indicate that there are substantially poorer people who may also be in a bad shape either due to no fault of their own, or due to minor misjudgments becoming magnified due to circumstances who could also do with help from the govt, such as, maybe, the homeless. But I’m not optimistic that will be the case.
- titzer 4y agoBecause rhetoric is just rhetoric. The only rule is rule #1: look out for number #1, and a dose of hypocrisy with a whole lotta bluster is the antidote to ever having to deal with the consequences of your actions or that darned hard-knock life comin' a knockin.
- sputr 4y agoSure, but zooming out a bit - by caving in, you make this part of "the plan". For banks and their customers. But if companies knew that no such bailout is incoming, they would act differently.
- erulabs 4y agoFrustrating. Depositor insurance is not socialism, and it's a somewhat shockingly stupid thing to suggest that it is. And even the suggestion that depositor insurance is what's at play here is a stretch; the word from the fed is "No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer".
- Workaccount2 4y agoThe truth is "No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer who doesn't use a bank." Strictly speaking, the loss of the depositors money is being socialized across bank customers.
- credit_guy 4y agoThat is not what the word "taxpayers" means. Let's say that somehow the Fed managed to do what they are doing now not by sourcing their funds from banks, but from the top 10 billionaires in this country. Since these 10 guys are also taxpayers, would you decry this as a "taxpayer funded bailout"?
- rhaway84773 4y agoIt would exactly be a tax funded bailout. Most people would indeed decry it because the people complaining about tax payer funded bailouts would be wondering why we were willing to tax 10 billionaires more money to make whole people with more than $250k, instead of using that money to prevent the discontinuation of a program that say, reduced child poverty by 46% in the US. For the record, I don’t consider this a bailout. Making whole people’s deposits isn’t what I would consider a bailout because I look at a bailout as protecting entities from the negative consequences of bad decisions, whereas I don’t see depositing money in a bank as a bad decision. This is the equivalent of the govt using its vast assets and reputations to make while the victims of Madoff, for example, which without govt intervention would have meant that the fund’s assets were disposed in a fire sale, so the victims get less money than they would have if the govt intervened and provides short term liquidity allowing those assets to be disposed off at a higher market value. But it’s still socialistic, and it strongly indicates the need for government regulation and intervention, because no private entity could do this, and basically undermines strong economic libertarianism.
- Prbeek 4y agoIt would be unconscionable to let those start ups collapse. The bank though can go to hell
- lotsofpulp 4y agoThe US government lets a lot of unconscionable things happen. How can we move things like Medicaid reimbursing enough (or even as much as Medicare) so that more healthcare providers accept it so more poor people get healthcare up the priority list, to near where “not letting startups collapse” might be?
- 4dayworkweek4u 4y agoYes, US needs to provide free health care to the world. (If that's not possible -- everyone could move into the US).
- Redoubts 4y agoWhy not round-robin the dollars, so the people with the most uninsured cash take most of the hit?
- jacobr1 4y agoWhy? They took on direct financial risk. They are "sophisticated" financial actors unlike the general public, with access to professional advice on managing their risk profile. I think it would be better for the economy and the long-term prospect for American innovation to ensure a robust start-up sector, and thus support the current plan to cover the banks deposits (and probably make a profit at doing so, so won't even cost taxpayers). But I don't think these companies have any sort of "moral right" to their deposits against the interests of the rest of society.
- telaelit 4y agoI'm so confused because if I understand correctly the employees of the company were not given board positions or any sort of ownership over the means of production, which would be socialism. We live in a capitalist economic system, and using the tools that capitalism provides the government stepped in using capitalist tools to fix the problem. This isn't socialism, this is capitalism protecting itself from failing.
- DubiousPusher 4y agoFDIC insurance is mandatory. It is not a "market" product. They are asking for an extraordinary extension of this program to recover losses incured by bad market behavior.
- adra 4y agoI think you're generally trying to refer to communism where everyone's the generally assumed to be equally "owning" a thing, so if we all own it, anyone can be the boss. Socialization is often the act of governments taking responsibility or ownership of production in order to satisfy the needs of the greater populace. Although the general act is similar, materially they are very different. The bank was a for profit entity made to put money in the pockets of their owners. It failed. If you let the thing fail in capitalism, the losses incurred are put upon the limited liability owners until their investment is zero, then the money is gone, forever. Nobody gets a dime. That's capitalism. If depositors paid for insurance above 250k and ended up reaping those insurance wins, THAT is capitalism. Inversely, if a (quasi) government agency swoops in to bail out said failing business, it's "socializing" the liabilities left by the company. This is why you often hear the bailout credo, "private profits, socialized losses". The losses that would be incurred are paid directly or indirectly by the entire population. In this case there's a one-degree of separation extra from the federal government bailing out the depositors, vs. the federal reserve. The net outcome is that a bank that acts poorly and loses a bunch of their customers money can expect governments to prop up their mistakes. So fuck it, live fast and break shit because gov'ment going to bail me out!
- reso 4y agoI think its overplaying your hand to call this "socialism for the rich". It's just regulation. That being said, I do think its hilarious how many people who were promoting crypto as a way to destroy the regulatory state have now had their asses saved by the regulatory state.
- pc_edwin 4y agoIt's ironic how Silicon Valley played a significant role in the current administration's rise to power. I'm not even referring to the peculiar moderation strategies employed by Twitter, YouTube, and Facebook. What's truly fascinating to me is the extent of donations from billionaires and high-earning employees to get these politicians elected. The sheer amount of money involved is mind-boggling. To be honest, a part of me was against the idea of backstopping (bailouts). I wanted these people (you guys) to see the consequences of the monster they have created. And just to be clear, this is your making and its just the beginning. It's a result of a chain of events that can be traced back to the lockdowns and MMT economics. While it's easy to blame individual actors for the collapse of SVB, the truth is that all of this could have been predicted. It's not sustainable to continuously pump money into the system, creating an extreme level of fragility, only to drain it out later without any consequences.
- pc_edwin 4y agoTo elaborate, I'm convinced that Jerome Powell knew something like this was bound to happen. However, in my opinion, the decision was made that it would be more feasible to address any issues that arose from rate hikes than attempting to address the potential consequences of inflation runoff.
- sshine 4y ago> MMT economics https://www.investopedia.com/modern-monetary-theory-mmt-4588060 https://www.investopedia.com/modern-monetary-theory-mmt-4588... «Modern monetary theory (MMT) is a heterodox macroeconomic supposition that asserts that monetarily sovereign countries (such as the U.S., U.K., Japan, and Canada) which spend, tax, and borrow in a fiat currency that they fully control, are not operationally constrained by revenues when it comes to federal government spending. Put simply, modern monetary theory decrees that such governments do not rely on taxes or borrowing for spending since they can print as much money as they need and are the monopoly issuers of the currency. Since their budgets aren’t like a regular household’s, their policies should not be shaped by fears of a rising national debt. - Modern monetary theory (MMT) challenges conventional beliefs about how the government interacts with the economy, the nature of money, the use of taxes, and the significance of budget deficits. - These beliefs, critics say, are a hangover from the gold standard era and are no longer accurate, useful, or necessary. - MMT is used in policy debates to argue for such progressive legislation as universal healthcare and other public programs for which governments claim to not have enough money to fund.»
- CoBE10 4y agoThe only class that always has class solidarity...