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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

#481

Post by ryan_lane »

DrThunder wrote: post #460
ryan_lane wrote: post #434

Earlier quoted context omitted.

> One thing Libertarians have right, is the idea that many government services are out of control with spending and not doing anything to actually help the people they supposedly serve. How many of those services were purposely broken by libertarians, so that they could be targeted for privatization? I've worked in government, and have yet to see a service run more efficiently or cheaper after it's been privatized. T…

"How many of those services were purposely broken by libertarians," Umm none? I don't recall a Libertarian ever being in power. "When something is privatized, it's usually given a monopoly via bid." Yes, a bid from the government....

> Umm none? I don't recall a Libertarian ever being in power.

A pretty good percentage of the republican party considers themselves libertarians, and libertarians vote for republicans who hold views strikingly similar to them.

The post office is a great example of a (previously excellent) government service that's been purposely degraded so that it can be made a target for privatization.

The public school system has already started going through this with charter schools, which are mostly an unregulated mess filled with thieves.

> Yes, a bid from the government....

I'm not sure what point you're trying to make with this. Yes, the government makes a work spec, and puts that up for companies to bid on. A single company will win that bid. This isn't a capitalist arrangement where there's multiple companies providing the same service and competing against each other. It's literally just a worse form of government with someone taking a profit.

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

#482

Post by frankreyes »

lotsofpulp wrote: post #184
frankreyes wrote: post #109

Earlier quoted context omitted.

This is the argument for CBDC. the Fed taking over deposits. The issue comes when you want to get a loan or mortgage. How does the Fed know if you're financially stable? How on earth can the Fed know how to centrally decide? In general the answer is: split the savings and investments in two different entities. One entity that saves but has forbidden to invest, and an independent entity that invests.

If you want to borrow money, you can go to a lender, just like you do now. Lenders do not have to be banks that take deposits.

I don't care about borrowing. I care about keeping my money safe. And for that I need an Entity that does not play the lottery with my savings.

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

#483

Post by frankreyes »

spiralx wrote: post #467
lotsofpulp wrote: post #373

Earlier quoted context omitted.

Depositors who want to earn interest.

Banks don't lend out deposits though.

Except that they do... That's how banks make money. With interest. They lend it as mortgage or as T-bills lending it to the government.

Just look at the balance sheet of SVB

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

#484

Post by fidgewidge »

doctor_eval wrote: post #478
fidgewidge wrote: post #308

Earlier quoted context omitted.

Libertarianism isn't the same as anarcho-capitalism. If some people are claiming they're the same thing then, well, see above.

Just because you say it isn't, doesn't mean it isn't. And if you read the link that I referred to, which talks at length about the relationship between anarcho-capitalism and libertarianism, maybe you wouldn't be so glib with your arguments. While there may be differences between libertarianism and anarcho-capitalism, I've struggled to see them in practice, and in my experience the definition of these terms can be va…

"While there may be differences between libertarianism and anarcho-capitalism, I've struggled to see them in practice"

I don't think either are actually implemented in practice at the moment, although you can argue that certain aspects of certain politicians or their agendas lean libertarian, and that some societies have in the past been a lot more libertarian than they are today.

The primary difference is this: anarchists of any kind, ancap or not, see no role for the state whatsoever. Libertarianism requires a state to exist, but has a very clearly defined set of roles for it such that anything outside those roles is considered more properly the role of the private sector. At a minimum, the state is expected to implement:

- [Border] defense (armies, navies, passports)

- A violence monopoly within their territory (police, courts, jails, laws against murder, abuse, etc). Yes, this doesn't always sit easy with the US specific gun culture, but the "out" is to say you can own a gun only for self defense, hunting and overthrow of an out of control state, which doesn't infringe on this principle.

- Contract law (civil law courts, ability to levy financial penalties)

- Property rights (land registers, stock markets, bond markets and other financial infrastructure, also quite often IP rights)

- Sufficient taxation to fund those things and subsequent state functions

- Anti-monopoly enforcement

And a bunch of other things that are less well agreed on, but in some interpretations might involve attempts at limiting externalities.

So a libertarian state still has a relatively extensive civil service, it would still have a parliament or congress, tax authorities and so on, but it's smaller and more tightly focused than a non-libertarian state. It is actually implementable in the real world, today, without violating any of the known basics of human nature or government. Libertarians accept that some current roles of the state have evolved for sound reasons but propose that those roles can be done equally well or better by the private sector (e.g. instead of bank bailouts you have narrow banks). We know such countries can exist because they have also existed in the past, for example the early US government was much closer to this ideal than the current one.

Ancaps on the other hand propose a theoretical society that has no government at all yet is also peaceful and prosperous. No such society has ever existed, not even anything close to it, and there are many obvious open questions with no known answers. It's very different.

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

#485

Post by miguelazo »

fidgewidge wrote: post #340
miguelazo wrote: post #332

Earlier quoted context omitted.

I suppose some or even most libertarians would agree with that, although that system is just rigidly regulated in a different way. I think the classic Libertarian model would be private banks, totally disassociated from government. Further, full reserve banking and fixed supply monetary systems are the stuff of fantasies. Totally infeasible in the real world.

They're both entirely feasible. The usual canard is that without fractional reserve there is no lending or not "enough" lending, but with full reserve there is still lending of course because people would like a return on their assets. There would be less bad lending but that's what we want, even if it leads to a temporary drop in GDP.

Wasn't the main concern that a fixed quantity of money chasing a constantly increasing quantity of goods/services would eventually cause severe deflation?

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

#486

Post by dang »

MrMan wrote: post #412
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…

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

#487

Post by trilobyte »

norswap wrote: post #464
trilobyte wrote: post #253

Earlier quoted context omitted.

Any investment strategy will require addressing various forms of risk and making tradeoffs, but it is a choice. SVB did not properly hedge against this risk which, as soon as interest rates started rising, should have been a priority for their leadership to have a plan to address.

Could they have done better? Sure. Hindsight is 20/20. Would it have been a reasonable assumption? No. As pointed out in the parent, every bank pretty much works like this, they're all liable to go under in the presence of a big enough run. Also if it must have been so obvious to them, it probably should have been obvious to the regulatory agencies in charge of monitoring banks and avoiding exactly these situations,…

This isn't a hindsight thing, this is a well-understood risk in finance. The lead time on rising interest rates was also significant enough for SVB to have shifted their investment strategy. Regulatory bodies in the US are both underfunded and hamstrung in their ability to regulate, and for a bank of SVBs size, they would not have been a prime target for regulators.

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

#488

Post by pas »

ETH_start wrote: post #479
pas wrote: post #450

Earlier quoted context omitted.

The boring non-libertarian (political realist, non-radical) arguments about those are that doing the bailout is still better than the other possibilities. Also note that the bailouts tend to have positive financial returns to the government (because they get a lot of financial instruments at a very low cost, and then either sell them when they turn a profit or hold them to maturity, which again tend to be profitable…

Doing the bailout prevented the financial sector from being restructured through bankruptcy and market share reallocation. Systemically, it seems extremely implausible that preventing the normal function of the market, which incites good behavior and allocates capital to the best stewards of it, could ever be the right call.

The too big to fail financial market is already in a pathological state, it's too small, not enough competition, etc.

Yes, just brushing things under the carpet is bad, but whatever restructuring would have happened in that chaos would not have been an improvement.

It's unfortunately very much politics. For example see how the FASB tried to eliminate HTM accounting, but had to back down (and that chair resigned).

Yet! If the market already doesn't give enough shit to check the stuff in parentheses in a report for a 200B bank, then I suspect it's more of a theater than we like to admit.

https://blogs.cfainstitute.org/marketintegrity/2023/03/13/th...

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

#489

Post by tracker1 »

enaaem wrote: post #465
tracker1 wrote: post #262

Earlier quoted context omitted.

As a libertarian, I'm perfectly fine with letting a business fail, and holding the management and board to personally account/liability for their actions.

The issue with that is that there’s often no adequate compensation for damages done. Individuals can get extraordinary rewards for high risk behaviour and positive tail outcomes but there is a limit how much you can take from them in case of a catastrophic (societal) outcome. Regulation is really the only way manage this asymmetry.

"Regulation" is what created those limits... Of course, the true limit being, the loss of their wordly posessions and assets, and possible jail time for anti-trust action. Lack of regulation defaults to common law, which is as much as possible restoring those harmed by those responsible.

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

#490

Post by nullc »

pas wrote: post #395
cm2187 wrote: post #354

Earlier quoted context omitted.

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.

what does financials mean in this? can you explain this term, please?

"non-suckers"
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