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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

#291

Post by doctor_eval »

fidgewidge wrote: post #236
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…

OK, but US style right-libertarianism is also known as anarcho-capitalism [0], and the line between that and anarchy - which resists hierarchy, not organisation - is pretty thin. The main difference is that anarcho-capitalism, unsurprisingly, deeply favours those who own property.

[0] https://en.m.wikipedia.org/wiki/Anarcho-capitalism

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

#292

Post by initplus »

JohnFen wrote: post #189
initplus wrote: post #165

Earlier quoted context omitted.

Splitting deposits to stay under the 250k limit is artificial behaviour that doesn’t change the overall risk profile for FDIC. The total amount of money covered by insurance is the same regardless of how it’s subdivided. Splitting up deposits isn’t the intended outcome by regulators here. It doesn’t actually achieve anything meaningful.

Splitting deposits isn't the only option and is often not the best one. There are a number of other solutions available, including buying your own insurance. FDIC insurance isn't the only insurance available (and isn't even intended primarily for businesses). It's just the free one.

There isn't enough money in the world to insure the bank deposits of every business. Think about how big insurers would have to be if they needed to insure all the deposits of every business. "Every business should have private deposit insurance" isn't the goal of regulators because it's not a workable solution.

So instead the government acts as a sort of "insurer of last resort" by promising they will do everything they can to protect depositors in the case of banking instability.

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

#293

Post by worksonmine »

gtop3 wrote: post #202
worksonmine wrote: post #104

Earlier quoted context omitted.

Instead of all these complicated hoops, wouldn't a true libertarian expect his money in the deposits to be no-go for gambling. And a separate account for stocks. If the bank want's to gamble they would need the customers approval for that, IE lock your money with us for 10 years and get this interest. Insurance is socialist, even if it packaged as capitalism. The bank has to cover it, but not today. And it's an agree…

> Insurance is socialist, even if it packaged as capitalism. What? Insurance companies (in general) are some of the most capitalistic. They teams of actuaries calculating risk to leverage a large capital pool to generate more capital.

Yes, I'm being hyperbole. But my point still stands, the view that risk should be risk-free and someone should bail you out when shit hits the fan instead of sucking it up and writing it off as a bad bet is closer to socialism than capitalism.

In the US you have low taxes but have to insure against everything. In the EU we have high taxes but insurance is not a thing unless mandatory (car/home). I don't even have the latter, stupid yes, but I would suck it up and not blame it on the FED.

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

#294

Post by tracker1 »

beezle wrote: post #264
johnbellone wrote: post #121

Earlier quoted context omitted.

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

No, the answer is let the SVB depositors take a hair cut and then you will see far better management of free cash.

+1 ... Until poor investment decisions have real ramifications, from personal liability on executives and boards even levelled to bankrupt and possibly including criminal conviction, things won't change.

I wish the US Govt had done closer to what Iceland and a handful of others did in 2008... No, we aren't bailing you out, you pay out domestic deposits first, and then if there's anything left, the rest. And no, you don't get to take/keep bonuses for it.

Modern corporate structure and liability shields to the level they exist in the US is anything but libertarian. You make bad choices, you live with the consequences.

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

#295

Post by refulgentis »

wolfendin wrote: post #278
refulgentis wrote: post #105

Earlier quoted context omitted.

Correct. And they failed at it. Swap bonds for magic beans and see if it’s defensible. We know the bonds were worth less, but it doesn’t obviate failing to manage the half of the business that isn’t people handing you money

Magic beans could be anything. So I’m not sure that works

Correct. I think you are being blinded by the word "bonds" when evaluating the proportions you assign to mismanagement vs. being blindsided. I feel inviting swapping in a word that is anything except bonds may be a way to continue this interesting conversation

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

#296

Post by [deleted] »

tfehring wrote: post #181
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…

> 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. All major US banks - and all or virtually all US banks in general - have assets that are designated as held to maturity. Continuously marking all assets to market would create massive swings in banks' income and obscure the real gains and…

[deleted]

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

#297

Post by david927 »

FormerBandmate wrote: post #204
Animats wrote: post #42

Right. Without a bailout, each customer would have $250K today (if they had that much n deposit) and probably another 10-20% this week, as assets were sold off. The FDIC could have worked a deal so that depositors were paid off in a few weeks, but in Treasury bonds with 5-10 years to maturity, to match the maturities of SVB assets. Depositors who really had to could sell their bonds immediately at a discount. That wo…

There would have also been massive bank runs. Check out regional bank stocks, tons of them were down 30% this morning for no reason and a lot are still down. The rich panicked, which destroyed Washington Mutual and Wachovia in 08 and caused both the Great Recession and Great Depression

> for no reason

For reason. This is far from over.

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

#298

Post by tracker1 »

gtop3 wrote: post #202
worksonmine wrote: post #104

Earlier quoted context omitted.

Instead of all these complicated hoops, wouldn't a true libertarian expect his money in the deposits to be no-go for gambling. And a separate account for stocks. If the bank want's to gamble they would need the customers approval for that, IE lock your money with us for 10 years and get this interest. Insurance is socialist, even if it packaged as capitalism. The bank has to cover it, but not today. And it's an agree…

> Insurance is socialist, even if it packaged as capitalism. What? Insurance companies (in general) are some of the most capitalistic. They teams of actuaries calculating risk to leverage a large capital pool to generate more capital.

Should probably clarify as "Government (mandated) Insurance"
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