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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

#341

Post by selectodude »

tripletao wrote: post #333
selectodude wrote: post #329

Earlier quoted context omitted.

>Put it in bonds of whatever duration the bank chooses, but require sufficient equity that the shareholders will bear the loss and not the depositors? But that's literally what they did. They put it in 10 year treasuries that they had to sell for 87 cents on the dollar because every "thought leader" in Silicon Valley had the same idea at the same time and triggered a bank run on their own bank. Everybody who has depo…

The depositors are getting 100% of their money now because the FDIC has guaranteed all deposits, including deposits in excess of the usual $250k limit. Any shortfall will be socialized among all participating banks. The SVB's shareholders didn't get bailed out, but their depositors absolutely just did. https://www.federalreserve.gov/newsevents/pressreleases/mone... If the SVB had been forced to recognize its loss soo…

The depositors are getting 100% of their money because the fed is lending against their assets at par. [1] The FDIC can be confident that they'll be able to make everybody whole because their assets exceed their liabilities. The Fed is going to hold the assets to maturity and get paid back by the Federal Government. "Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law." is legalese, nothing more.

[1] https://www.federalreserve.gov/newsevents/pressreleases/mone...

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

#342

Post by actually_a_dog »

yunwal wrote: post #334
actually_a_dog wrote: post #323

Earlier quoted context omitted.

Banks are not being "bailed out." Depositors are. SVB no longer exists. Now, you can certainly argue over the merits of bailing out depositors, but disingenuously framing it as a "bank bailout" is not the position to start from. On that point, the government does have an obligation to "provide for the common defense and the general welfare of the United States," and that is clearly one of the overarching purposes of…

This is really semantics to me. Customers gave SVB their money because they paid high returns and engaged in risky behavior. That money was used to fund exec and employee salaries. People who take risks should bear the responsibility. Whether the bank still exists or not doesn't really concern me, since the people who ran it into the ground can turn around and do the same thing tomorrow. > "provide for the common def…

You really think employees of SVB bank clients should bear the burden of decisions made by their employers without their input, likely without their knowledge, and very little reason to care 99.99% of the time? Quick, without looking at your paystub, what bank does your employer use?

I don't disagree that doing things like addressing medical debt are worthy ways to promote the general welfare, but let's not pretend it's an either/or, thing here, either. You don't seem to want to acknowledge the full context of the situation, which seems at least on the edge of disengenuousness. This as well, after you try to frame it as a "bank bailout" then backpedal when called on it.

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

#343

Post by DrThunder »

JabavuAdams wrote: post #286
mtlmtlmtlmtl wrote: post #190

Earlier quoted context omitted.

Who's that quote from? It's funny you should use that one, I happen to be an avid Tolkien nerd, starting around that age :D Bit of a tangent, but it continues to amaze how relevant Tolkien continues to be to this day considering he started developing his legendarium almost a century ago now. Gender issues, sexism, addiction, free will, the allure of power and wealth, all explored in an amazingly prescient way that st…

It hasn't aged well in some other ways. I was a die-hard Tolkien fan from an early age -- I think I read LotR at around age 10 or so. But ... it's kind of hard to read to your beautiful brown daughter when you constantly have to stop and do teaching moments because Tolkien goes on and on about how fair and beautiful all the good guys are, and how swarthy etc. the nasty Southrons are.

It's not, unless you're pointedly telling your daughter she's a "dirty" Southron and should be ashamed because her skin color matches the descriptors in LOTR.

I wouldn't be surprised though because this does seem to be the modern leftist agenda, to turn every brown person into a victim incapable of helping themselves.

Maybe explain to your daughter it's based on Nordic mythology and turn it into a positive history lesson. OH! And you could tell her that her skin color really isn't the most important thing about her. Just a thought.

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

#344

Post by DrThunder »

oblio wrote: post #330
vxNsr wrote: post #321

Earlier quoted context omitted.

Or you could just explain that fair and beautiful refer to the content of their character and swarthy is a synonym for smarmy, or evil and has nothing to do with skin color at all.

But that's not what he meant and we both know it.

Oh look I found one of the "Rings of Power" writers.

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

#345

Post by TheOtherHobbes »

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's fascinating how so many of these unfortunate events seem to be explained as "You can't seriously expect us to have a professional understanding of financial risk. We're just a bank."

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

#346

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

#347

Post by gdy »

yunwal wrote: post #334
actually_a_dog wrote: post #323

Earlier quoted context omitted.

Banks are not being "bailed out." Depositors are. SVB no longer exists. Now, you can certainly argue over the merits of bailing out depositors, but disingenuously framing it as a "bank bailout" is not the position to start from. On that point, the government does have an obligation to "provide for the common defense and the general welfare of the United States," and that is clearly one of the overarching purposes of…

This is really semantics to me. Customers gave SVB their money because they paid high returns and engaged in risky behavior. That money was used to fund exec and employee salaries. People who take risks should bear the responsibility. Whether the bank still exists or not doesn't really concern me, since the people who ran it into the ground can turn around and do the same thing tomorrow. > "provide for the common def…

"People who take risks should bear the responsibility."

Exactly. In Russia we had people who'd serially deposit money into the shadiest of banks offering highest returns. Deposits are ensured upto some amount, so they'd collect interest, get their money from the state after a bank bankrupts (while the bank owners are enjoying stolen money in a no extradition country) and go to the next bank.

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

#349

Post by cm2187 »

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…

More problematically it would create uncontrolled swings in their regulatory capital ratios.

But those assets are typically hedges against long term fixed rate bonds issued by the bank, or are funded by a diversified (and mostly retail, ie more stable) deposit base with a large enough liquidity pool to sustain a period of stress, as mandated by liquidity regulations.

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

#350

Post by DrThunder »

UncleSlacky wrote: post #276
varispeed wrote: post #140

Libertarianism, socialism, capitalism etc. all fail to take into account human nature and that's where all the conflicts come from. Regulation is necessary to ensure that people who manage to get into position of power, who have certain kinds of personality disorders and other issues won't be able to game the system to their own personal advantage or satisfaction. In most cases whether it is socialism or capitalism,…

"To look at people in capitalist society and conclude that human nature is egoism, is like looking at people in a factory where pollution is destroying their lungs and saying that it is human nature to cough." - Andrew Collier

Yes... because no one is coughing from pollution in North Korea or China.

Name a society where no one is in power.

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