181–190 of 349 posts
CalPers, the largest public employee retirement system in the US was not getting the kind of returns that they needed. They were restricted from purchasing stocks in certain industries, such as oil, weapons, etc.. However, they recently switched to investing in private equity funds and now they are getting much better returns, without all the pesky moral issues involved with it.
> Larry Summers warned against “moral hazard lectures” and demanded SVB depositors be made whole immediately in 2023, months after calling student loan relief inflationary and unfair. Moral hazard for borrowers, bailouts for banks. Not lost on the public. I can't believe I'm about to say something that could be construed as a defense of Larry Summers, but here goes: bank depositors are not engaging in risky behavior,…
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That's why it should be a one time event in conjunction with reworking the whole system. Why can I, as an 18 year old, sign for a loan that _cannot_ be forgiven, graduate into a crashed economy, and still be held accountable for choices that impact me when I only had a small part in them? The system needs reformed, and we need to do something for the people still on the hook of the old system (and I say this as someo…
As a parent of a 16 and almost 14 year old i'm effectively home schooling personal finance with them. My wife and I got none from our parents and were preyed upon constantly. I think I was 45 when i finally got my student loans paid off. My wife did many years in a dangerous, low-performing, HS as a teacher to get hers forgiven. Sending an 18 year old off to college without a solid understanding of finance is like th…
In other words, they don't teach anything about how our economy works.
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Your solution means that only the wealthy can attend university, someone who grew up poor wouldn’t stand a chance.
Your argument is basically that current university costs are intrinsic and can't possibly be reduced but we know that isn't true. We have not two generations ago people paying for their college tuition with money from their part time jobs. My grandpa paid his way to a PhD as a line cook. Got no financial support from family who were only slightly above dirt poor. Like I don't want to be completely reductive but a goo…
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> bank depositors are not engaging in risky behavior, Because the taxpayers (and all users of USD) repeatedly bail them out. I could define anything as not being risky if I knew taxpayers would bail it out. More importantly, if there is no risk, what purpose does a bank serve? They’re a pretty bloated middleman if their sole purpose is to update a database to reflect incoming and outgoing cash flow. The government sh…
There has been a lot of discussion about how the basic setup of banks (borrow short, lend long, collect the spread) is probably not a great idea, and we should just separate these two activities (see Money Stuff). People who want to lend long should do that with their own money, and people who just want to save should be able to do that. But, at least in the US, regulators keep blocking the 1st step: narrow banking.…
Can you provide some more information, because I'm not really seeing the value in being required to interact with more financial institutions in practice.
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That's not our problem to solve, but seeing how millions of other businesses were able to pay people maybe it's SVB that needs to figure out how to do this and not lowly commentators.
Millions of other businesses do not have a secret strategy to pay people without ever landing >>$200k in a single account. Their banks just didn’t fail so it wasn’t a problem.
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> Because the taxpayers bail them out. I could define anything as not being risky if I knew taxpayers would bail it out. I feel like I must be misunderstanding something here because it sounds like you're saying depositing funds in a bank is considered risky behaviour?
It is supposed to be if the amounts are above $250,000. I have no problem with the first $250k being risk free, that is a policy that is well published and that we all "agree" on. Making arbitrary policy decisions that in some cases depositors should be made whole when risky behavior (such as depositing above the insurance limit) bites them is problematic. Stick to the policy or change the policy don't make one off e…
$250k is not much at all for a business
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> bank depositors are not engaging in risky behavior, they are putting cash in a bank That is risky behavior. You can't earn interest without taking a risk.
Is there a lower risk, lower interest option with the same capabilities (ability to use the money to pay others)? Genuine question, I have no idea, but I didn't choose my bank based on interest rate. I can't pay bills or transfer money if it's cash under the mattress.
> Larry Summers warned against “moral hazard lectures” and demanded SVB depositors be made whole immediately in 2023, months after calling student loan relief inflationary and unfair. Moral hazard for borrowers, bailouts for banks. Not lost on the public. I can't believe I'm about to say something that could be construed as a defense of Larry Summers, but here goes: bank depositors are not engaging in risky behavior,…
Yeah that quote fundamentally misunderstands what it meant to make depositors whole. That's not bailing out the bank, it's bailing out the depositors, which is exactly what the FDIC is for. In the case of SVB most of the depositors were businesses, but in any case depositing money in a bank is intended to not be a risky activity at all, and FDIC is part of how the government acts to ensure that is so.
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Ok, but forgiving student loans doesn't do that. It signals to borrowers that they don't have to repay high loans if their career can't support it. It tells borrowers that they can make risky loans without a chance of default. It tells universities that they can keep charging exorbitant tuitions because kids can still get loans to pay them. The solution is to allow judges the discretion to default them in bankruptcy…
That's not a solution at all, because it will price out way too many students. The solution is to do what Germany and most of the EU does - pay universities with tax money and do not charge students anything at all (or maybe a few hundred to thousand euros).
People do not value things they get for free.