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Ignore the fluff piece. The reality is you're being laid off because the company can make more money by taking your salary and buying government bonds. When yo

by mabbo 4y ago

Ignore the fluff piece. The reality is you're being laid off because the company can make more money by taking your salary and buying government bonds. When your team got spun up to work on this project, interest rates were low and it was a sound investment to try this project out. If it was successful, it might have made/saved a moderate amount of money. It made sense to invest in it, compared to all the other options available at the time. But alas, inflation soared and interest rates rose faster than predicted, so now the bonds are a better bet than you and your team doing whatever it was you were doing. According to this spreadsheet, it wasn't nearly as profitable as the bonds.

dx034 4y ago
Government bonds yield 3-4%. I don't think they ever calculated with a margin of just 4%. It's true that liquidity has dried up to some degree and companies have alternatives what to do with their money, but it's not like they though they'd yield only 3% by hiring more people.
- zeroonetwothree 4y ago
  Closer to 5% now
  - mrfox321 4y ago
    back down to 4.3 for short term t-bills yields dropped almost 1 point after depositor bailouts for SVB. the running belief is that the fed will slow down in response to fixed-income positions held by banks.
  - oblio 4y ago
    What maturity? I'm only seeing 3.XX% here: https://www.treasurydirect.gov/marketable-securities/treasury-bonds/ https://www.treasurydirect.gov/marketable-securities/treasur...
onlyrealcuzzo 4y ago
Hard to make money adjusted for inflation buying government bonds that are still negative in real terms... Also, FB isn't buying treasuries...
froidpink 4y ago
If I am a Meta investor, and I see they use my capital to buy government bonds, why would I invest in them? I'd just buy the bonds myself. Meta is supposed to be a Tech company and invest the capital they have in technology plays
- boveus 4y ago
  I believe that is the point the OP was making. If you're ROI on employee X is 3% of the investors' dollar, the investor would simply buy a bond since the ROI on the bond is higher. Because of this discrepancy it no longer makes sense to keep employees or business units with a 3% ROI or an ROI lower than what the expected return on a bond is.
notShabu 4y ago
I think this is really good intuition on what the Fed effectively does. When it's really easy to teleport money from the future, all that money competes in the present for a limited supply of good. This causes inflation and reduces margins and can cause profitable endeavors to become non-profitable "hobbies."* Increased interest rates suck up this money because now there is something better to do with that money. Why "Do Stuff" when the returns on doing stuff is less than the ultra high savings yield you are now being offered. It's virtuous when the stuff being done actually is destructive due to easy access to capital (e.g. 100 Ramen shops driving each other into further and further debt) but it's also a ham-fisted solution. It disrupts long term planning, even relatively conservative ones like "buy government bonds", and also just punts the problem b/c it's reducing demand by... promising more money in the future.

by mabbo 4y ago

dx034 4y ago

Government bonds yield 3-4%. I don't think they ever calculated with a margin of just 4%. It's true that liquidity has dried up to some degree and companies have alternatives what to do with their money, but it's not like they though they'd yield only 3% by hiring more people.

zeroonetwothree 4y ago
Closer to 5% now
- mrfox321 4y ago
  back down to 4.3 for short term t-bills yields dropped almost 1 point after depositor bailouts for SVB. the running belief is that the fed will slow down in response to fixed-income positions held by banks.
- oblio 4y ago
  What maturity? I'm only seeing 3.XX% here: https://www.treasurydirect.gov/marketable-securities/treasury-bonds/ https://www.treasurydirect.gov/marketable-securities/treasur...

onlyrealcuzzo 4y ago

Hard to make money adjusted for inflation buying government bonds that are still negative in real terms... Also, FB isn't buying treasuries...

froidpink 4y ago

If I am a Meta investor, and I see they use my capital to buy government bonds, why would I invest in them? I'd just buy the bonds myself. Meta is supposed to be a Tech company and invest the capital they have in technology plays

boveus 4y ago
I believe that is the point the OP was making. If you're ROI on employee X is 3% of the investors' dollar, the investor would simply buy a bond since the ROI on the bond is higher. Because of this discrepancy it no longer makes sense to keep employees or business units with a 3% ROI or an ROI lower than what the expected return on a bond is.

notShabu 4y ago

I think this is really good intuition on what the Fed effectively does. When it's really easy to teleport money from the future, all that money competes in the present for a limited supply of good. This causes inflation and reduces margins and can cause profitable endeavors to become non-profitable "hobbies."* Increased interest rates suck up this money because now there is something better to do with that money. Why "Do Stuff" when the returns on doing stuff is less than the ultra high savings yield you are now being offered. It's virtuous when the stuff being done actually is destructive due to easy access to capital (e.g. 100 Ramen shops driving each other into further and further debt) but it's also a ham-fisted solution. It disrupts long term planning, even relatively conservative ones like "buy government bonds", and also just punts the problem b/c it's reducing demand by... promising more money in the future.