Silicon Valley Bank unmasks the hypocrisy of libertarian tech bros(newstatesman.com)
newstatesman.com
Silicon Valley Bank unmasks the hypocrisy of libertarian tech bros
https://www.newstatesman.com/quickfire/2023/03/silicon-valley-bank-collapse-hypocrisy-libertarian-tech-bros
514 comments
I really don't understand the argument against Thiel. He might have help cause the bank run ... but he used his own influence in the market to withdraw all of his money. He took matters into his own hands without leveraging government intervention, right? That sounds as libertarian as it gets. What am I missing?
> HSBC bought the company’s British arm, which was still largely solvent, for £1.
I suspect “insolvent” is probably an adequate synonym anytime you have to use a qualifier word on “solvent”.
I suspect “insolvent” is probably an adequate synonym anytime you have to use a qualifier word on “solvent”.
You know what I hate the most in all of it ?
There was no panic to begin with - in the worst case scenario, the cut for depositors was definitely less than 10%, most probably 0.
The Jason Calacanis, David Sacks & co, decided that even that small % of losses were enough to start a bank run in order to get government involved - and make sure they are made whole.
Stress on 'THEY'. Just look at their recent tweets - did Mark Cuban said today that unlimited FDIC is a very bad thing - should 'Never' be a thing ? Amazing stuff. (edit: Here is the link => https://twitter.com/mcuban/status/1635282882259476486?s=20 )
Make no mistake - the 3 banks in trouble (there will be more. Once the fire is lit, it's hard to stop it) were extremely specific and were crypto / VCs banks. It's not random banks that failed. They failed specifically because of business they were servicing.
There was no panic to begin with - in the worst case scenario, the cut for depositors was definitely less than 10%, most probably 0.
The Jason Calacanis, David Sacks & co, decided that even that small % of losses were enough to start a bank run in order to get government involved - and make sure they are made whole.
Stress on 'THEY'. Just look at their recent tweets - did Mark Cuban said today that unlimited FDIC is a very bad thing - should 'Never' be a thing ? Amazing stuff. (edit: Here is the link => https://twitter.com/mcuban/status/1635282882259476486?s=20 )
Make no mistake - the 3 banks in trouble (there will be more. Once the fire is lit, it's hard to stop it) were extremely specific and were crypto / VCs banks. It's not random banks that failed. They failed specifically because of business they were servicing.
There's clearly a lot of pent up anger directed at VCs and big tech. The collapse of SVB may not actually be their fault, but it still seems to have brought all of this frustration out into the open. I'm not really sure why there is so much anger - yes they were hypocritical here but I'm not sure people would be so keen to point that out if they didn't already have an axe to grind!
In the interest of fairness, David Sacks makes some compelling counterpoints here: https://twitter.com/DavidSacks/status/1635747517752283137
When I started a company in Denmark, we were made very aware that we were not insured by the national depositors insurance schema and that we had no protections.
We were offered to buy insurance for e-banking theft and other types of fraud _and_ insurance for our deposits.
Is it really the case, that Americans assume to have all these sorts of insurances taken care of automatically?
We were offered to buy insurance for e-banking theft and other types of fraud _and_ insurance for our deposits.
Is it really the case, that Americans assume to have all these sorts of insurances taken care of automatically?
It felt like they only gave one guy as an example and tried to spin a tweet from someone to YC.
It seems mostly a fluff piece with little meat to it.
It seems mostly a fluff piece with little meat to it.
Hypocrisy? They are the ones who saw it coming, ran away, and survived the debacle. But hey, let's just find a scapegoat.
Just like the 2008 crisis let's just blame it on Michael Burry and those who looked under the layers of bureaucracy
Just like the 2008 crisis let's just blame it on Michael Burry and those who looked under the layers of bureaucracy
A comedic take at the same topic: "A Disrupter's POV on the Silicon Valley Bank Collapse" <https://www.youtube.com/watch?v=A13erYPcDVI> by Michael Kosta (The Daily Show).
No! Yes! Oh.
But rest assured, it's not just the libertarians and not just in the US.
Europe is currently facing shortages of skilled labour in many sectors of industry and business, what with the baby boomers entering retirement age in droves. Market forces of supply and demans would dictate that since the resource (skilled labour) demand increases, and the supply decreases, the price (wages) has to go ... upwards.
Basic economic theory of free markets.
So, does that happen? With few exceptions, nope. Wages continue to stagnate. Instead, lobbyists clamour for slashing social security to make part time jobs and retirement less desirable.
But rest assured, it's not just the libertarians and not just in the US.
Europe is currently facing shortages of skilled labour in many sectors of industry and business, what with the baby boomers entering retirement age in droves. Market forces of supply and demans would dictate that since the resource (skilled labour) demand increases, and the supply decreases, the price (wages) has to go ... upwards.
Basic economic theory of free markets.
So, does that happen? With few exceptions, nope. Wages continue to stagnate. Instead, lobbyists clamour for slashing social security to make part time jobs and retirement less desirable.
The article is kind of low quality. First they name Peter Thiel as the poster child for libertarianism. Second they accuse libertarians being against state intervention. Third they say libertarians are asking for state help, so they think they've found a kind of paradox.
But Peter Thiel withdraw his money from SVB in time and he didn't ask for the government's help. So the article authors are kind of contradicting themselves.
Also, blaming libertarians for being against massive state intervention in economy is akin to blaming a fish because he swims in water. It's all what that fish is about and knows to do.
But Peter Thiel withdraw his money from SVB in time and he didn't ask for the government's help. So the article authors are kind of contradicting themselves.
Also, blaming libertarians for being against massive state intervention in economy is akin to blaming a fish because he swims in water. It's all what that fish is about and knows to do.
I’m glad we’ve identified the boogy man. I was waiting for the political slant, it finally arrived
I don't understand why bailing out DEPOSITORS is a big deal:
* when I put money in a bank, I am just depositing it, I am not "investing". If I wanted to invest (take risk for a chance of profit) I would buy bonds or shares etc. I expect the money to be safe and accessible.
* the "product" being sold by SVB is a bank account. It's low interest (if any at all) and comes with a bunch of charges (so most people will not even break even). If they were offering a 10% interest current account, that might be different. But until then no one has been compensated for the risk of losing their "capital".
If I leave clothes with a dry cleaner or tools at a storage unit, those are mine. I am not "investing" my clothes in the dry cleaner. The same should apply for standard, low interest, current accounts for individuals and businesses.
Maybe in the 1950s, people only used accounts for saving, and they were expecting a return and it was the main way for people to invest. At the same time people/businesses did most of their business in cash (literal folding notes etc). But the opposite is true now. People and Businesses need a risk free account to make a receive payments. They're not looking to be "on risk".
* when I put money in a bank, I am just depositing it, I am not "investing". If I wanted to invest (take risk for a chance of profit) I would buy bonds or shares etc. I expect the money to be safe and accessible.
* the "product" being sold by SVB is a bank account. It's low interest (if any at all) and comes with a bunch of charges (so most people will not even break even). If they were offering a 10% interest current account, that might be different. But until then no one has been compensated for the risk of losing their "capital".
If I leave clothes with a dry cleaner or tools at a storage unit, those are mine. I am not "investing" my clothes in the dry cleaner. The same should apply for standard, low interest, current accounts for individuals and businesses.
Maybe in the 1950s, people only used accounts for saving, and they were expecting a return and it was the main way for people to invest. At the same time people/businesses did most of their business in cash (literal folding notes etc). But the opposite is true now. People and Businesses need a risk free account to make a receive payments. They're not looking to be "on risk".
Um, no. The true libertarians would rather burn down the Federal Reserve and enjoy the whipsaw's of market dynamics that actually allow for economic mobility. No one can buy jacksh*t in terms of assets with this 'controlled demolition' aspect. Every single market participant with means is always prepared for a buying opportunity. The ones 'pulling themselves up by their bootstraps' cannot.
So, heck yes, you scream and yell at the fools that started all of this. We gave away too much money, made money artificially cheap, then tried to pull the e-brake when it was too late.
Truthfully the only critique is the hypocrisy of enjoying high valuations due to the idiocy of monetary and fiscal policy.
So, heck yes, you scream and yell at the fools that started all of this. We gave away too much money, made money artificially cheap, then tried to pull the e-brake when it was too late.
Truthfully the only critique is the hypocrisy of enjoying high valuations due to the idiocy of monetary and fiscal policy.
I appreciate that this might be a little tone deaf, but what the article is accusing Thiel of isn't hypocrisy. It is a completely consistent libertarian position to observe that government intervention gives people an unfair advantage and then attempt to take advantage of that advantage if people make it clear they aren't going to change the situation.
I'm of a very libertarian bent and think the money printing is stupid, but I'm careful to position my assets to take advantage of the money printing. That is not necessarily honourable, but it is consistent.
I'm of a very libertarian bent and think the money printing is stupid, but I'm careful to position my assets to take advantage of the money printing. That is not necessarily honourable, but it is consistent.
The irony is that regional smaller banks would now be supporting larger banks with insurance contributions if unlimited deposit insurance becomes a real perpetual thing.
So the logic here is "it's the right thing to do, but it should have been delayed to annoy our political opponents and maybe cause them harm". I feel it is extremely hard to view such approach with any sympathy.
Silicon Valley isn't libertarian.
All my feeds right now are full of libertarians who are upset about this.
The bailout itself isn't the main issue, it's mainly the Fed's irresponsible policies over decades.
They kept interest rates too low for too long, contributing to high inflation, then quickly jack rates to fix the problem they caused, then when banks begin to fail because of this rapid interest rate swing they fix that problem by rendering the FDIC $250k deposit insurance meaningless, furthering moral hazard, and to fix that problem they will...
All my feeds right now are full of libertarians who are upset about this.
The bailout itself isn't the main issue, it's mainly the Fed's irresponsible policies over decades.
They kept interest rates too low for too long, contributing to high inflation, then quickly jack rates to fix the problem they caused, then when banks begin to fail because of this rapid interest rate swing they fix that problem by rendering the FDIC $250k deposit insurance meaningless, furthering moral hazard, and to fix that problem they will...
The title, and this is the article's title, screams angst. "Ha, gotcha!"
Principle: there should never be a single point of failure in a well designed system. This is really just a lesson that we will keep re-learning and exposing as ecosystems get massive and companies make decisions at scale.
Wait, when did "tech bro" went from an oxymoron joke about smart morons, and turned into a turn of phrase people accept without blinking ? (When scammers overran cryptocurrencies I guess ??)
Peter Thiel supports libertarian causes. Larry Page suggested there should be an upper bound on laws. Presumably that would be somewhere below restricting everyone from doing anything. Yet, the article doesn't quantify what a libertarian is in any meaningful context and how it applies to the topic.
Libertarian has become an amorphous category partisan writers can hurl at their opponents. Meanwhile, canonical libertarian content is highly restricted on this site. When it is posted it is often dismissed out of hand based upon the source.
Perhaps it is worth looking at what prominent libertarians are actually saying here?
https://news.ycombinator.com/from?site=mises.org
Intellectual curiosity indeed.
Libertarian has become an amorphous category partisan writers can hurl at their opponents. Meanwhile, canonical libertarian content is highly restricted on this site. When it is posted it is often dismissed out of hand based upon the source.
Perhaps it is worth looking at what prominent libertarians are actually saying here?
https://news.ycombinator.com/from?site=mises.org
Intellectual curiosity indeed.
it just bears remembering that whenever anyone in SV says "government bad!" - the government saved their asses
The argument in the article is weak.
First they build their case against libertarians going at length against Peter Thiel, Elon Musk, and Larry Page.
Then, they point at the hypocrisy citing Garry Tan, David Sacks, and Bill Ackman.
These are different people.
Where is the hypocrisy of Thiel, Musk, or Page? It makes me think there is none since they can't provide examples and they have to switch. But I guess building an article on the second set of people, which is far less known than the first, would have not attracted enough clicks.
First they build their case against libertarians going at length against Peter Thiel, Elon Musk, and Larry Page.
Then, they point at the hypocrisy citing Garry Tan, David Sacks, and Bill Ackman.
These are different people.
Where is the hypocrisy of Thiel, Musk, or Page? It makes me think there is none since they can't provide examples and they have to switch. But I guess building an article on the second set of people, which is far less known than the first, would have not attracted enough clicks.
The premise of this article is dumb. All tech bros are libertarian? Oy vey.
I have no horse in this race. I work for a retail/porn company in LA.
I have no horse in this race. I work for a retail/porn company in LA.
This article fails to make a valid point. It starts by talking about Thiel as the epitome of the libertarian venture bro, and how they are all asking for the government to step in now that the banks are failing, but then goes on to say that he got all his money out on time, no government intervention needed.
??
??
David Sacks wants to run for President. He watched Trump's election closely. He wants to be the smart guy that uses the idiot's playbook. He is working hard to get placed on as much media as possible as a commentator. He is connected to many of the richest and most powerful people in the country.
He is, at the end of the day, a bored billionaire with some very pedestrian ideas. He does go to great effort to shout them louder. He does seem to have some serious ego issues, but I guess what politician doesn't?
I think the hilarity of Calacanis literally tweeting his own similar ideas is that it was a transparent attempt to be louder. ie: he just didn't feel heard about his ideas, so they needed amplification.
He is, at the end of the day, a bored billionaire with some very pedestrian ideas. He does go to great effort to shout them louder. He does seem to have some serious ego issues, but I guess what politician doesn't?
I think the hilarity of Calacanis literally tweeting his own similar ideas is that it was a transparent attempt to be louder. ie: he just didn't feel heard about his ideas, so they needed amplification.
Dang, how does this title not qualify as flame bait?
Context: https://en.wikipedia.org/wiki/New_Statesman
> Today, the magazine is a print–digital hybrid. According to its present self-description, it has a liberal and progressive political position.[3] Jason Cowley, the magazine's editor, has described the New Statesman as a publication "of the left, for the left"[4] but also as "a political and literary magazine" with "sceptical" politics.