If I didn't need healthcare I wouldn't worry. COBRA will drain my emergency fund twice as fast as if I didn't need it. Moreover, I grew up poor. I will not go back. I've come too far to let some silver spoon patagonia wearing pricks take my livelihood from me.
That's because it is a charade. The fed's entire job is basically a dependency injection in an otherwise free market. Money creation in a modern economy is literal magic and while they may claim it's tied to "metrics" these metrics are tenuous at best. Unfortunately, the clown show has been run for the last 20 years by people who do not have the country's best interests at heart. We are now reaping what was sown with the 20 years of free money to banks.
The problem is they aren't wiped out enough. Bankers who instigated the GFC got jobs elsewhere. One of them was even the CEO of SVB!
Breach of fiduciary duty in any other context is essentially a death sentence for a career in finance. Clearly being wiped out isn't enough. The complexity in the matter is that depositors reasonably expect to be able to get all of their money out at any time. As they should. It's their money. At the command of the fed their reserve rates were dropped to zero essentially making the cash value of an account a meaningless number in a computer.
Given this risk, the bank should be the sole party responsible for paying such insurance for it's depositors. It's a cost of doing business, and importantly taking a risk and fiduciary responsibility over a client. We demand doctors insure themselves because they can destroy a patients life. A bank should be the same. To have the depositor (or patient) front the cash in any form should be made illegal. Hence my demand to insure the funds are secured only through the bank owners themselves. Ideally, the executive board carries enough insurance to make all depositors whole in the event of a bank collapse. This should be uncontroversial.
The better question of course is who pays for this? They're quiet about it because it's not the banks. The banks paying it is only a technicality. This additional premium they will inevitably have to pay will come from depositors. So, effectively, people who trusted their money with banks are being punished for putting money in banks that abandoned their fiduciary duty to their customers.
Unless the banks themselves pay it and something is in place to prevent these costs being past down to their depositors this should be a non-starter. It is TARP by any other name.
> Equity is getting zeroed out. Management was fired. Depositors were made whole almost immediately. SVB's assets are apparently not impaired; SVB would have held them to maturity had the bank run not happened, and now somebody else will instead.
Part of the problem is that the system that enabled them to end up in this situation is the erosion of Dodd-Frank. The systemic risk to depositors isn't going away. If pissant SVB (relative to it's contemporaries) can lobby congress effectively imagine what other banks are up to. Speculation? Sure you can say I'm speculating. But the apple doesn't fall far from the tree.
> Meanwhile: the point of the FDIC system is for customers not to have to do this kind of risk assessment themselves.
The issue of course is that the total balances required the FDIC to dip into special capital reserves in order to make the bold faced lie the taxpayer won't front this.
Anyone who knows the surface level details of a bank know that these FDIC "loans" are effectively collateralized by the taxpayer. Banks pay an assessment. With what money? The depositor's money. A perfect example of a hidden tax.
> But SVB is gone, so it's not much fun calling them out. I feel like people are flailing looking for someone else to blame.
Credit Suisse is in big trouble and getting a bailout. Several other banks have collapsed in the wake of SVB. The only people not worried have their heads buried so deep in the sand only their feet are showing. Calling Chicken Little because you believe it was only SVB and not a massive market level problem suddenly beginning to show it's head is not a very effective argument.
I'd ask you to consider the economy that allowed these levels of capital to even exist. Years of ZIRP and near-ZIRP allowing effectively free money. As it stands, the mainstream media currently blames the fed for this and implores it to once again lower rates. The problem of course is that there has been no sign of stoppage in market speculation and we are only now starting to see VCs really tighten their belts. History doesn't repeat itself but it often rhymes and terrible, borderline predatory, VC funding practices begin to approximate NINJA loans in the limit. There's no reason to believe it's just SVB and there are plenty of reasons to believe we have very serious economic concerns ahead of us. Only difference this time is the criminals responsible will be wearing Patagonia.
It's not a theory nor is it a conspiracy insofar as it is lacking evidence. The collapse during the great depression was used to sell the fallibility of the small banks. Senator Aldrich took the bill written by the wealthiest bankers in America straight to congress to form the fed.
It's relatively well known in fact [0]. Once you realize that was the intention to begin with the structure of modern banking starts to make a lot of sense.
If you paid attention the last week or so there have been a lot of accounts here promoting the fed bank as a solution.
You are correct and I agree with your assessment for what it's worth. Dozens of banks collapsing has two outcomes. Centralization into TBTF banks or a fed bank. Given the desire to manipulate currency further with CBDC I would suspect the modern money "theorists" in congress are salivating.
There's not much you can do to "decompress" when you go to work, sentence dogs to death, and then go home to your family pet and look at them thinking they could've been one of those dogs. I've met meat packers who still are haunted by the animals they killed.
It's because humans have moral and ethnical frameworks. Despite a document drafting XYZ is okay because "its for science" it still is wrong in the sense you are sacrificing something with a memory, sadness, happiness, etc for a possible "greater good". Especially for dogs, an animal deeply engrained and coevolved with humans, I cannot imagine the amount of cognitive dissonance, or more likely, sociopathy that would be required to engage in such experiments.
We trivialize the fact it's unethical to experiment on humans. I am not a treehugger or anything but to suggest talk therapy will help solve a very real moral and ethical problem...well I'm not sure you understand. Veterinarians have an extremely high suicide rate for a reason. Moreover, I will never forget the callousness of the veterinarian who suggested I put my family dog down for something that wasn't immediately fatal. It's only a small step from that asshole to these assholes and that step is complete transcendence into pathological psychopathy. We simply sometimes benefit from these psychopaths gassing dogs and pigs. It does not imply such a thing is either morally or ethically correct and no amount of "decompressing" will fix it. It just is what it is and some people have developed the pathological brain wiring to allow themselves to do it.
The odd, perhaps not entirely coincidental, relationship between ivy league pedigree and job at FAANG. While there's a correlation between talent and ivy league the relationship is often tenuous. In my experience the difference between a new grad from MIT and a new grad from state school is almost zero in the professional world. Yet, one of these people have a fast pass to FAANG. This is not unusual. Look at Finance. However, to assert that "talent" plays a bigger role than pedigree is simply a falsehood refuted by the evidence.
The fact my company turns down over 80 applications a week and only 1/5 of the accepted applicants make it through the first interview tells me you're wrong. It's only an easy meal ticket if you're deluded. Highly motivated, hungry, individuals are not the usual candidate. The usual candidate is a code school graduate who got tricked by an influencer into spending 18k for a moonshot.
ML guys build the fun stuff, go to conferences, etc. We maintain their stuff and work the 60 hour weeks answering pages.
It's mind numbing. Arguably some of the most boring work I've ever done especially knowing that you're just a CI/CD robot. Nothing has motivated me towards looking into starting a business more than watching other people have fun and you cleaning up their messes.
I've lived in a LCOL my entire life and really made actual development money by going remote. I've done it for so long and the wage disparity is so great I will likely have to leave the industry if remote dries up. Owning a home does not permit me to move around the country and I'm not going to do staff level engineering for under $150k (and that's the lowest I'd ever go). Far easier to just go work somewhere else in a different field because at least then I'd be starting from the bottom with no memory of the past.
Remote work seems to be more difficult to get these days with all of the applications coming from people thinking it's an easy meal ticket. I've gotten most of my jobs through my network. Who knows how long that'll last. Pair this with the general apathy of doing coding interviews and other song-and-dance nonsense to get a job and this current job I have may be my last in the industry anyway. When skills are not valued over CS brain teasers the shark has been jumped.
"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.
This is akin to seeing a terrible movie, announcing to the markets you're selling every share you own of the company, and then everyone doing the same.
Victim blaming isn't useful here. Bank depositors are de facto investors in the bank. Pulling your money and saying "this company is terrible leave" is not illegal and not a problem. Don't have a bad business with bad business practices controlling tens of billions of people's money.
If a bank can't produce the money I gave them that's their problem. They deserve to collapse and I deserve to be made whole. This whole "forgive the banks they have to make money too" non-sense ignores the fact the fed told these same banks they don't need any reserves in march of 2020. It's borderline criminal just like the idea of fractional reserve banking itself.
Interestingly the list of some of the richest people capable of destroying such an institution would likely be highly correlated with the banks that can handle it. As it turns out the Fed's existence is due to such rich people desiring the ability to crush the mom-and-pop banks.
We can't let the taxpayer cover such mistakes. Even though they have "explicitly" said that the taxpayer won't you simply have to follow the money to figure it's the case. Someone will be on the hook for the other end of their loan should it go bad. If you didn't insure your capital over FDIC you honestly deserve what came to you. I've never been a controller but I've been close enough to the bank accounts to know this is absolutely common sense.
The system is working as designed. Take stupid risks, win stupid prizes. I don't mean to be so mean about it but the alternative is unfortunately what we've done as of today. The FDIC insured everyone will be made whole. This means, effectively, FDIC insurance is limitless for a big enough failure and banks are free to do as they please knowing daddy G will come bail them out before it gets too bad. Worse there won't be jail time for the problem. I'm not sure who was responsible for thinking taking short money and buying long bonds was brilliant but it feels like at the very least a breach of fiduciary duty. I might have a softer view if they at least diversified along the yield curve and tranched their other investments properly.
There's far too much astroturfing going on here and elsewhere that these banks "did everything right and got crushed by a run". No, the run was the effect. The cause was piss poor risk management. The spin going on right now is dizzying and if you weren't paying close attention on Thursday and Friday you might even be forgiven for thinking the banks are innocent.
As a side note I'd be interested in a deep dive into why VCs recommended Silicon Valley Bank so feverishly. Perhaps there's a connection there to explore beyond "it's a popular stable bank" considering there are many better stable banks available.