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I could not get into the article. But if what happened with SVB is any indicator, I am sure all the large commercial property owners will get a bailout. Small

by jmclnx 3y ago

I could not get into the article. But if what happened with SVB is any indicator, I am sure all the large commercial property owners will get a bailout. Small ones will be on their own. As for the Cities themselves (property taxes), I think this is were issues lie. Maybe time to think about selling municipal bonds ?

latchkey 3y ago
Bailout by whom? Banks? They are already struggling, you even mention SVB. The government? Sure... print more money.
- lumost 3y ago
  economically, printing more money isn't inherently wrong. Money was destroyed by default. Printing money to counterbalance this ... works. In principle, this is why communist regimes can get away with ordering organizations to do X, for Y. The problem is that if you do this every time, you are effectively entrenching the current power structures of society. This isn't a bad thing if those power structures are good - or necessary. But ... it's obvious that repeatedly doing this benefits a specific class of individuals (capital holders) by capping their downside. Capping the downside of existing capital holders also caps the upside of non-capital holders by creating an uneven playing field and eliminating opportunities available to those with "clean" balance sheets.
  - kristov 3y ago
    A chunk of the money created was by lenders, to charge borrowers for the risk of default. If you print more money then you remove the incentive to assess risk. I don't know if this is good or bad, but economics says risk assessment is how capital gets allocated to "good things". Here "good things" I guess means less wasted space in a city center.
mcs5280 3y ago
They will be bailed out guaranteed. Can kicking is the only solution.
- AmpsterMan 3y ago
  I don't think they will be salvaged actually. I think we'll have a combination of less city friendly states not assisting at all leading to companies wanting to force office work in some "spilled milk" style fallacy. There's less than zero chance any of these downtowns will be covered to residential. Offices and homes have very different needs, you basically can't convert.
- SV_BubbleTime 3y ago
  > Can kicking is the only solution. Oh come on, we can do far more than can kicking. There is always war, revolution, and decades of economic hardship!
  - marcosdumay 3y ago
    > decades of economic hardship That one is can kicking.
yeetcode 3y ago
But SVB didn't get bailed out though? At least not the investors. Only the depositors were given their money back.
- lacksconfidence 3y ago
  It's indirect. Softbank gave money to startups. Startups put the money in SVB. If the startups hadn't been made whole then softbank would have seen many of it's investments fold.
  - refulgentis 3y ago
    That doesn't really hold water. Its an argument that creates a bailout of whoever we want, as long as they're within 6 degrees of SVB. [^1] A huge rhetoric win, a loss for understanding. [^1]: https://en.wikipedia.org/wiki/Six_Degrees_of_Kevin_Bacon https://en.wikipedia.org/wiki/Six_Degrees_of_Kevin_Bacon
    - candiddevmike 3y ago
      If startups couldn't make payroll, what do you think would happen here?
      - refulgentis 3y ago
        Does asking this advance the discussion, or is it a passive-aggressive way to continue signalling you believe “seized the bank and sold it, keeping deposits whole” means “SoftBank bailout”?
        renewiltord 3y ago
        If you really think about it, it was a bailout of the American people. And that's why it was good and an example of socialist praxis. After all, startups take venture capital money from the rich and spend it primarily on t-shirts and catering - which primarily comes from small businesses who hire local unskilled labour. Marx would be proud of the FDIC for their work.
triceratops 3y ago
I don't understand this "SVB bailout" meme. If a company manufacturing lifesaving medication goes under and the government takes over its factories to keep manufacturing the medicine and prevent shortages, did all the patients get "bailed out"? Should they have known better than to buy their medication from only one manufacturer? Comments like this distract from real bailouts and moral hazards.
- mlyle 3y ago
  We had a longstanding regime and precedent for how bank defaults would be handled. Anyone with treasury experience knows about insurance limits and accordant risks. Then the venture capital industry and startups decided to ignore these risks and put massive amounts in one bank. Then they were made whole at 100 cents on the dollar, when it probably would have ended up at 85 cents on the dollar on the amount over $250k the other way. This is pretty much the definition of moral hazard: why diversify banking now? (Of course, I've always thought that the government should have come in with a dividend of 70 cents of deposits really quickly, to allow everyone to keep operating and reduce uncertainty). My employer (a nonprofit that I care about) banked with SVB; so my personal interests are not aligned with what I believe and what I'm arguing.
  - mywittyname 3y ago
    Counter-point: SVB's funds were in treasury bonds. Their losses were entirely paper losses caused by the Fed's decision to aggressively raise interest rates. The government caused this, so it's not unreasonable to expect that the government pay for the damaged caused. This was a completely predictable outcome of aggressive rate hikes - banks buy a whole lot of t-bonds. T-Bonds can lose money on paper. If someone buys a 1% 2-year T-Bond for $100 (expecting $102 in two years), and the next year, rates go to 3%, the book value of that bond (what it can be sold on the open market for) is now $99 because of how bond values are determined.
    - bugglebeetle 3y ago
      That’s entirely absurd. This is essentially saying there should be a special, perpetual class of government-backed securities with a guaranteed return in excess of all other market performance or conditions. If this was true, everyone would just invest in the special government stocks where you get 10% ROI forever and almost nothing in anything else. At that point, you’d have insane inflation or be better off with a state-run command economy.

by jmclnx 3y ago

latchkey 3y ago

Bailout by whom? Banks? They are already struggling, you even mention SVB. The government? Sure... print more money.

lumost 3y ago
economically, printing more money isn't inherently wrong. Money was destroyed by default. Printing money to counterbalance this ... works. In principle, this is why communist regimes can get away with ordering organizations to do X, for Y. The problem is that if you do this every time, you are effectively entrenching the current power structures of society. This isn't a bad thing if those power structures are good - or necessary. But ... it's obvious that repeatedly doing this benefits a specific class of individuals (capital holders) by capping their downside. Capping the downside of existing capital holders also caps the upside of non-capital holders by creating an uneven playing field and eliminating opportunities available to those with "clean" balance sheets.
- kristov 3y ago
  A chunk of the money created was by lenders, to charge borrowers for the risk of default. If you print more money then you remove the incentive to assess risk. I don't know if this is good or bad, but economics says risk assessment is how capital gets allocated to "good things". Here "good things" I guess means less wasted space in a city center.

mcs5280 3y ago

They will be bailed out guaranteed. Can kicking is the only solution.

AmpsterMan 3y ago
I don't think they will be salvaged actually. I think we'll have a combination of less city friendly states not assisting at all leading to companies wanting to force office work in some "spilled milk" style fallacy. There's less than zero chance any of these downtowns will be covered to residential. Offices and homes have very different needs, you basically can't convert.
SV_BubbleTime 3y ago
> Can kicking is the only solution. Oh come on, we can do far more than can kicking. There is always war, revolution, and decades of economic hardship!
- marcosdumay 3y ago
  > decades of economic hardship That one is can kicking.

yeetcode 3y ago

But SVB didn't get bailed out though? At least not the investors. Only the depositors were given their money back.

lacksconfidence 3y ago
It's indirect. Softbank gave money to startups. Startups put the money in SVB. If the startups hadn't been made whole then softbank would have seen many of it's investments fold.
- refulgentis 3y ago
  That doesn't really hold water. Its an argument that creates a bailout of whoever we want, as long as they're within 6 degrees of SVB. [^1] A huge rhetoric win, a loss for understanding. [^1]: https://en.wikipedia.org/wiki/Six_Degrees_of_Kevin_Bacon https://en.wikipedia.org/wiki/Six_Degrees_of_Kevin_Bacon
  - candiddevmike 3y ago
    If startups couldn't make payroll, what do you think would happen here?
    - refulgentis 3y ago
      Does asking this advance the discussion, or is it a passive-aggressive way to continue signalling you believe “seized the bank and sold it, keeping deposits whole” means “SoftBank bailout”?
      - renewiltord 3y ago
        If you really think about it, it was a bailout of the American people. And that's why it was good and an example of socialist praxis. After all, startups take venture capital money from the rich and spend it primarily on t-shirts and catering - which primarily comes from small businesses who hire local unskilled labour. Marx would be proud of the FDIC for their work.

triceratops 3y ago

I don't understand this "SVB bailout" meme. If a company manufacturing lifesaving medication goes under and the government takes over its factories to keep manufacturing the medicine and prevent shortages, did all the patients get "bailed out"? Should they have known better than to buy their medication from only one manufacturer? Comments like this distract from real bailouts and moral hazards.

mlyle 3y ago
We had a longstanding regime and precedent for how bank defaults would be handled. Anyone with treasury experience knows about insurance limits and accordant risks. Then the venture capital industry and startups decided to ignore these risks and put massive amounts in one bank. Then they were made whole at 100 cents on the dollar, when it probably would have ended up at 85 cents on the dollar on the amount over $250k the other way. This is pretty much the definition of moral hazard: why diversify banking now? (Of course, I've always thought that the government should have come in with a dividend of 70 cents of deposits really quickly, to allow everyone to keep operating and reduce uncertainty). My employer (a nonprofit that I care about) banked with SVB; so my personal interests are not aligned with what I believe and what I'm arguing.
- mywittyname 3y ago
  Counter-point: SVB's funds were in treasury bonds. Their losses were entirely paper losses caused by the Fed's decision to aggressively raise interest rates. The government caused this, so it's not unreasonable to expect that the government pay for the damaged caused. This was a completely predictable outcome of aggressive rate hikes - banks buy a whole lot of t-bonds. T-Bonds can lose money on paper. If someone buys a 1% 2-year T-Bond for $100 (expecting $102 in two years), and the next year, rates go to 3%, the book value of that bond (what it can be sold on the open market for) is now $99 because of how bond values are determined.
  - bugglebeetle 3y ago
    That’s entirely absurd. This is essentially saying there should be a special, perpetual class of government-backed securities with a guaranteed return in excess of all other market performance or conditions. If this was true, everyone would just invest in the special government stocks where you get 10% ROI forever and almost nothing in anything else. At that point, you’d have insane inflation or be better off with a state-run command economy.