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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

#351

Post by gdy »

actually_a_dog wrote: post #342
yunwal wrote: post #334

Earlier quoted context omitted.

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 i…

"very little reason to care"

Maybe they should care. Why shouldn't an employee care about financial stability of their employer?

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

#352

Post by actually_a_dog »

gdy wrote: post #351
actually_a_dog wrote: post #342

Earlier quoted context omitted.

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 i…

"very little reason to care" Maybe they should care. Why shouldn't an employee care about financial stability of their employer?

Be honest: have you ever asked an employer what bank they use when you were interviewing? Is this your general policy? 10:1 says it's not, and you haven't. Even if you're the exception, I'm sure 99% of employees have literally never asked this question. Think about why that might be.

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

#353

Post by s1artibartfast »

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.

That is a libertarian. If you go to the US libertarian party website it will be much as you describe.

Libertarians have been increasingly confused with anarchists and specifically anarcho-capitalists, neither of which believe in government.

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

#354

Post by cm2187 »

matthewdgreen wrote: post #242
wstuartcl wrote: post #210

Earlier quoted context omitted.

They had 13b in cash going into this year and other highly liquid assets, those evaporated as the draw downs happened. Its not like they tucked away all assets into 10 year lockups (or higher risk loans). Even the bonds they did lock up -- in what would be considered 99% "normal" markets given the last few decades a sell off of those bonds would not have been highly problematic. It became problematic when they were s…

They had a customer base that would knife them at the first hint of a liquidity issue, then they had a liquidity issue. Of course a different approach would have reduced their returns, but then they’d still be in business.

Deposits from financials are treated as disappearing at the first opportunity from a regulatory point of view. Corporate deposits are considered volatile but less volatile. So the behaviour we have seen isn’t entirely unexpected.

It seems SVB has VC deposits and corporate deposits from startups that were effectively controlled by VC and behaved like financials in term of deposit outflows.

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

#355

Post by mtlmtlmtlmtl »

vxNsr wrote: post #319
mtlmtlmtlmtl wrote: post #122

Earlier quoted context omitted.

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…

Cool, now do socialism. Anything in the extreme is bad. Can any system work if everyone acts perfectly rationally and and the same time with full empathy? Sure, but such people in reality are few and far between so instead we need to account for the edge cases of which there are many. And as any good software engineer knows you end up spending 80% of your time chasing down the last 1% of your edge cases.

Socialism is not a great ideology if it's applied indiscriminately, but at least it has useful real world applications in some areas.

Libertarianism on the other hand is hardly even an ideology, but based on the ill-conceived notion that if we purposely make no collective effort to have a better society, it will somehow magically fall into place for us.

If libertarianism was a software project methodology, it would be the one where you just lock a bunch of programmers into an office with some computers and let them fend for themselves.

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

#356

Post by ummonk »

doodlesdev wrote: post #120
ummonk wrote: post #92

Earlier quoted context omitted.

The banks get their money from their profits. Same as how they would have taken an even bigger loss to their profits if this contagion had been allowed to spread.

That would all be ideal and ok if fractional banking wasn't a thing. Your bank makes money out of investing your money. That's just how it works. But for some reason, some banks are more privileged than others. Citibank can't stop receiving bailouts every 50 microseconds because their management sucks. Silicon Valley Bank depositors receive back money from _uninsured_ deposits. Ultimately, someone has to pay the bill…

Fractional banking has been a driving feature of capitalist growth for several centuries now.

As to "exceptions", there isn't any exception here. Standard practice in every bank collapse after IndyMac has been that depositors (including uninsured depositors) are made whole. It's just not something the FDIC will commit to because they don't want to commit to making depositors whole and be on the hook if an obviously risky and disreputable bank collapses and depositors want their money back.

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

#357

Post by kevingadd »

geysersam wrote: post #331
tracker1 wrote: post #301

Earlier quoted context omitted.

Exactly... they liquidate the bank's assets, payout the FDIC insured, and most of the depositors only lose about 10%... the shareholders would lose more... and the executives and board potentially lose everything to pay shareholders. That's how this is supposed to work under existing rules.

Why didn't the fed decide that course of action in this case? Seems the difference is small. Shareholders still lost everything, depositors lost nothing instead of 10% but that's a minor difference. Guess one difference is how long it'll take before depositors can access their money. Now they'll get it immediately. If they were waiting for liquidation of the banks assets, that would probably take longer.

Depositors would have lost up-to $X - 250000, not 10%.

SVB is down ~10% but that doesn't mean everyone would have actually been made whole from the money.

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

#358

Post by wstuartcl »

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…

SVB was a bank that mostly served corporate operations accounts for tehc nad healthcare startups and small businesses. People were not banking there for high returns. This is not at all about risky investments (ffs the bank liquidity crunch came from long term bonds being too illiquid -- not exactly exotic asset management). The accounts impacted are mostly payroll, daily operating accounts (for expenses/manufacturing expenses/real estate lease payments etc).

The bank managers and investors are not being bailed out -- they have already lost everything.

You seem to be attaching some kind of anger for some ill conceived and non existant "happy go lucky risk wall street bet" type of activity, when this is about buisnesses losing their operating accounts who did nothing wrong except for have accounts at this bank instead of the next bank over.

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

#359

Post by braingenious »

vxNsr wrote: post #319
mtlmtlmtlmtl wrote: post #122

Earlier quoted context omitted.

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…

Cool, now do socialism. Anything in the extreme is bad. Can any system work if everyone acts perfectly rationally and and the same time with full empathy? Sure, but such people in reality are few and far between so instead we need to account for the edge cases of which there are many. And as any good software engineer knows you end up spending 80% of your time chasing down the last 1% of your edge cases.

>Cool, now do socialism.

I didn’t “do” libertarianism? I recommended a book that I found interesting that’s related to the topic of the article that this discussion thread is in response to.

Socialism has been brought up a couple times in response to my book recommendation and I’m a little confused by that. Is the assumption that the reporter that spent years meticulously researching, interviewing, and documenting the factual record of events is a socialist? Am I a socialist for having read it?

Is this like an amish thing where everybody outside of the orthodox group is called “english”?

Anyway, it’s a good book and I stand by my recommendation!

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

#360

Post by kevingadd »

anon291 wrote: post #316
FormerBandmate wrote: post #204

Earlier quoted context omitted.

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

Okay well banks are not owed existence. If the banks went out of business give the deposit holders the choice of holding the underlying assets or the choice of selling them on the market. If you held the same portfolio as the bond, you too would not be able to withdraw at full face value. You are believing a lie if you think a ten million dollar deposit can be immediately withdrawn anywhere in its entirety.

Startups were in fact able to withdraw large amounts of money from SVB. That's why it collapsed, they did this to the tune of 42 billion, and lots of the pending transfers completed.
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