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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

#231

Post by beezle »

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

They did not buy everything in one day long before the Fed moved. The moves by the Fed were well telegraphed in advance and once the initial hike was done it was off to the races so to speak.

SVB had many opportunities to do hedge and honestly, why on earth should bank or anyone else "take the Fed at their word". People make mistakes, institutions make mistakes, people misunderstand and on and on.

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

#232

Post by [deleted] »

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…

[deleted]

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

#233

Post by dools »

mtlmtlmtlmtl wrote: post #122
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…

Check out the Dave Troy podcast Dave Troy Presents

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

#234

Post by nerdponx »

fnordpiglet wrote: post #108
ralph84 wrote: post #47

Earlier quoted context omitted.

Why hedge when we privatize the profits and socialize the losses? SVB execs sold tens of $millions in stock before the failure. Are the execs going to be forced to return the compensation they received for showing higher profits by not hedging?

Yes. It’s called clawback provisions. They were summarily fired and their compensation was clawed back. And how are the losses being socialized? The assets of the bank are collateralizing the lines of credit they’re getting to stay solvent. It won’t cost anyone a thin penny, other than bank management and shareholders.

I imagine taxpayers did pay at least something in the form of treasury and fed employees working over the weekend and getting paid overtime. Or is that not how it works?

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

#236

Post by fidgewidge »

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…

This book isn't about libertarians. It's about anarchists.

"Once upon a time, a group of libertarians got together and hatched the Free Town Project, a plan to take over an American town and completely eliminate its government ... They built a tent city in an effort to get off the grid. The bears smelled food and opportunity."

Nobody who knows anything about libertarians and is trying to accurately represent it would write that, because the whole reason it exists as an independent thing from anarchism is that libertarians do not want to eliminate the government. They have very clear ideas about what exactly the government should do and that role is much less expansive than in a socialist country or even in America of today, but it's not literally nothing and it certainly doesn't involve living in tents. That's much closer to the Occupy Wall Street crowd in behaviour than libertarians.

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

#237

Post by exmicrosoldier »

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…

They had other choices - they could have lowered the interest rate they return to account holders as more and more deposits came in. They could have lowered their profit guidance to shareholders instead of taking actions that wiped them out.

As I understand it, the reason they failed is because they gambled on interest rates staying low and chased returns to maximize profits to shareholders.

Shareholders deserve to lose money when they are pushing - or even remaining silent on - increasingly risky corporate behaviors as absentee owners.

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

#238

Post by wstuartcl »

fnordpiglet wrote: post #84
fach wrote: post #69

Earlier quoted context omitted.

Aren’t the order of operations here incorrect? They were experiencing a lack of deposits due to VC pullback due to the interest rate rise, while depositors did not cut spending. This led to a liquidity crunch where they needed to sell discounted bonds to fill the gap. When the gap was conveyed to shareholders, the run began. If this is true, isn’t marking to market providing feedback about a potential liquidity crunc…

The “when the gap” bit is the piece that’s suspect to me. This isn’t an irregular occurrence in the world. The events are a little fishy to me because this isn’t crisis material. Banks go public precisely for the purpose of having access to additional liquidity in situations like this. The balance sheet hole was tiny compared to their assets. Liquidity calculations for banks definitely include mark to market for HTM…

this is why imho I see the pull out of the clients especially those that happened before the sale offer even came to term as an orchestrated ploy to tank the bank and then be in a position to offer shark bridge loans to those impacted. These were not naive clients making the move early -- and to me it seems less to do about the actual bank asset state and more to do with wanting blood in the water for wringing out equity and loan shark rates on those bridge offers.

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

#239

Post by checkcircuits »

jacktribe wrote: post #8

Is there a term for someone that is libertarian inclined, but does believe in a minimal level of government regulation and intervention? A "Lite-Libertarian" of sorts.

"Libertarian" is a sliding scale from basically anarcho-capitalism to traditional Republicanism.

While it has been humorous to see these faux-libertarians say in one breath they want small government, but in the very next breath demand to be saved, tankies and other far-left extremes have used this as an opportunity to lump all libertarians into the same boat.

There's no such thing as a "true" libertarian as most libertarians believe in small government, but what that government can do, is generally up to interpretation in all but the most extreme cases. A major central belief the non-aggression principle. However social issues tend to be more wishy-washy.

Prior to the balkanization of America Libertarian-lite could probably be approximated by a classical liberal.

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

#240

Post by sangnoir »

seanw444 wrote: post #200
JohnFen wrote: post #91

Earlier quoted context omitted.

> 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?

Why does everyone conflate libertarians with ancaps? It's not the same thing. Libertarians accept that there is a degree of government that is necessary.

There is no conflation: parent very clearly pits private deposit insurance (which exists today) vs. a hypothetical government insurance for amounts >$250,0000 (which doesn't exist, proposed by gp).

Perhaps I misunderstand the different strands of libertarianism, but what kind of libertarian prefers mandatory government insurance over voluntary private insurance?

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