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SVB shows that there are few libertarians in a financial foxhole

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Re: SVB shows that there are few libertarians in a financial foxhole

#121

Post by johnbellone »

JohnFen wrote: post #91
gregw2 wrote: post #61

From a Libertarian perspective why would we not: 1) have Congress+FDIC create a new form of deposit insurance that goes up to 10-25 million dollars[1] that is to be used for a new form of account legally dedicated to payroll; funded by a new set of fees since the private market clearly is not handling this issue well (Everybody knows about FDIC limits, and people who spend more than a fraction of time thinking about…

> have Congress+FDIC create a new form of deposit insurance Such insurance exists on the private market already and is commonly used by businesses who have large sums of cash on deposits. Presumably, the depositors at SVB didn't do that because they didn't want to pay for it. Wouldn't a libertarian prefer that over having the government do it?

The government needs new regulations to force depositors and banks to purchase this insurance. Otherwise, we're looking at one grift after another.

Re: SVB shows that there are few libertarians in a financial foxhole

#122

Post by mtlmtlmtlmtl »

braingenious wrote: post #15

This reminds me of one of my favorite books from the past couple years, A Libertarian Walks Into a Bear. It’s a fascinating deep dive into an attempt to create a sort of libertarian utopia in a small town called Grafton, New Hampshire. The speed at which they arrive at “we need government services” after they eviscerate government services is… unsurprising. 10/10 I highly recommend it for anyone that’s interested in…

I'm probably wrong more often than I'm right when it comes to politics on average.

But libertarianism has been obviously illogical to me since I was about 15, half my lifetime ago. Since then I've spoken to some very intelligent libertarians at length and... nope, it still doesn't make any sense. It makes less sense than ever, in fact. At least when I was 15 I just thought they must be stupid, but no, not necessarily. Now my operating theory is that it's similar to how some people become completely engrossed in a fictional universe and wish it was the real world.

Re: SVB shows that there are few libertarians in a financial foxhole

#124

Post by sdfghswe »

notch898a wrote: post #107
sdfghswe wrote: post #75

Earlier quoted context omitted.

Wrong. The business model of banking is managing the money to an appropriate duration. Locking it up isn't a business model.

Demand deposits can be immediately be recalled, so where exactly do you suggest they park it? In the central bank -- no bueno they've denied banking license for narrow banking. Margin lending that allows recall at any moment? I can think of some options but frankly I'd rather have my money in a bank that over-extends themselves on treasuries than most the alternatives. At least I'd most likely get 90+% of my money ba…

> Only retroactively in a bank run are you really able to see just what duration and what amounts were the limit.

Exactly, so don't lock it up. Glad you agree with me.

Re: SVB shows that there are few libertarians in a financial foxhole

#125

Post by scrozier »

worksonmine wrote: post #53
elzbardico wrote: post #11

The author ignores that behind the downfall of SVB was a climate of excess liquidity on the markets, a bonanza created by the authorities that made SVB see itself with a glut of funds. Now, SVB, loaded with money, could have tried loaning it like crazy, but instead, decided to go the conservative way and buy bonds. Someone could argue that they could have foreseen that this abundance of liquidity in the markets, alon…

SVB locking money they might need access to is the FEDS fault do I understand you correctly? Did they hold a gun to their head? I'm not saying they're doing anything different than their competitors, but that's a stupid excuse. The only thing that's broken is the financial system. A customer should be aware when depositing money that that money might be locked away, and agree to those terms, and get a cut. This is SV…

Why/how does the IRS care if you store it under your bed? Serious question.

Re: SVB shows that there are few libertarians in a financial foxhole

#126

Post by machina_ex_deus »

elzbardico wrote: post #11

The author ignores that behind the downfall of SVB was a climate of excess liquidity on the markets, a bonanza created by the authorities that made SVB see itself with a glut of funds. Now, SVB, loaded with money, could have tried loaning it like crazy, but instead, decided to go the conservative way and buy bonds. Someone could argue that they could have foreseen that this abundance of liquidity in the markets, alon…

"It turned out that one of the biggest risks to our business model was catering to a very tightly knit group of investors who exhibit herd-like mentalities"

And I kind of agree. Yes, the mistake was not hedging MBS and treasuries interest rates.

But are they really the only bank in the world doing that mistake?

What truly made it fatal is the VCs. That's also why nobody is coming to buy them. The speed at which the bank run happened, showed exactly how much they valued the bank.

If you're swimming with sharks, it's a big mistake to bleed. But let's not pretend the sharks are innocents. Bleeding isn't usually so fatal.

Which is why I don't think the sharks deserve a bailout.

Re: SVB shows that there are few libertarians in a financial foxhole

#127

Post by tyrrvk »

gregw2 wrote: post #61

From a Libertarian perspective why would we not: 1) have Congress+FDIC create a new form of deposit insurance that goes up to 10-25 million dollars[1] that is to be used for a new form of account legally dedicated to payroll; funded by a new set of fees since the private market clearly is not handling this issue well (Everybody knows about FDIC limits, and people who spend more than a fraction of time thinking about…

From a Libertarian perspective why would we not:

1) have Congress+FDIC...

This made me chuckle. I thought Libertarians want gov _out_ of their lives. :)

Re: SVB shows that there are few libertarians in a financial foxhole

#128

Post by strbean »

worksonmine wrote: post #53
elzbardico wrote: post #11

The author ignores that behind the downfall of SVB was a climate of excess liquidity on the markets, a bonanza created by the authorities that made SVB see itself with a glut of funds. Now, SVB, loaded with money, could have tried loaning it like crazy, but instead, decided to go the conservative way and buy bonds. Someone could argue that they could have foreseen that this abundance of liquidity in the markets, alon…

SVB locking money they might need access to is the FEDS fault do I understand you correctly? Did they hold a gun to their head? I'm not saying they're doing anything different than their competitors, but that's a stupid excuse. The only thing that's broken is the financial system. A customer should be aware when depositing money that that money might be locked away, and agree to those terms, and get a cut. This is SV…

[flagged]

Re: SVB shows that there are few libertarians in a financial foxhole

#129

Post by cypherpunks01 »

Grimburger wrote: post #85
cypherpunks01 wrote: post #55

Earlier quoted context omitted.

Probably transformed from this article: https://www.belfercenter.org/publication/no-atheists-foxhole... 2008 pub date

Which is incredibly strange because I remember libertarians screaming to the hills against bailouts back then. Plenty of people who weren't in that camp were against it too. The 2008 bailouts directly led to Occupy Wallstreet which was a big tent of political affiliations. Satoshi Nakamoto released bitcoin with "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks" recorded in the first block which i…

I think the "phrase" in question has a more limited meaning than you are trying to ascribe to it.

It means that people who are in a situation where they stand to directly benefit from a bailout (depositors, bondholders, shareholders) will lean away from libertarian views, based on their own needs at the time. It doesn't claim that libertarians are for/against bailouts in general.

People who would not be directly helped, or who might even be harmed by a bailout (taxpayers), rail against them as being unfair, as in the examples you point out.

Re: SVB shows that there are few libertarians in a financial foxhole

#130

Post by sdfghswe »

ren_engineer wrote: post #111
sdfghswe wrote: post #24

Earlier quoted context omitted.

> But in the end, even if we could argue that SVB should have been more prescient, it is clear that the root cause of the problems is the actions of the government and the FED. No. SVB hid market to market losses by saying "these securities are held to maturity so I don't have to realize losses". THAT is the source of the problem. Not all banks did this. Sure excess liquidity was necessary for this behavior to be pos…

at the time they bought them the Fed was saying they had no plans to increase rates. You can blame SVB somewhat for not hedging but they took the Fed at their word and got burned for it, not exactly something that builds confidence in the financial system. The Fed bowed to political pressure related to high inflation rather than following the plan they laid out

> The Fed bowed to political pressure related to high inflation rather than following the plan they laid out

When circumstances changed, they changed their plan. What do you normally do?

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