Crash the train to stop it

[Rajoo]

Originally Posted by whell

...and those big tech companies and millionaires are the ones that taxpayers will get stuck with the bill for bailing out once again.

Here's one of those beneficiaries, Mr Hair Gel: https://theintercept.com/2023/03/14/...-hes-a-client/

Everyone I know is dependent on technology. The internet, Social Media, EV etc. so I am OK with it. Not to worry, Biden will make it up with a middle class tax cut.

On a serious note, I am not a fan of bailouts at all. But in SVB's case it happened very quickly and a lot of employee payrolls were affected, which is why the $250K (FDIC limit was raised I believe). Waiting to see the final analysis of what and why, or if the bailout was unavoidable.

I will still blame the regional bank on de-regulations because they were put in to avoid such an event and they were removed. Now it will be analyzed why they were removed and how it may have contributed. There are over 5,000 banks in the US and it may be impossible to watch them all. People may now migrate away from small banks and we will see if more go under or will consolidate. Credit Suisse in the news today, 20% down! Are they Woke too, its Switzerland, banking capital of the world!

[whell]

Originally Posted by Rajoo

On a serious note, I am not a fan of bailouts at all. But in SVB's case it happened very quickly and a lot of employee payrolls were affected, which is why the $250K (FDIC limit was raised I believe).

In fact, I've not heard a justification from the Biden administration on why they're insuring all depositors at full value, rather than the FDIC limit of $250K. More than 90% of the bank's deposits would not have been covered by $250K FDIC insurance.

The administration also keeps saying that this is not a taxpayer-funded bailout. That's an outright, bald-faced lie. OF COURSE taxpayers will foot the bill for this!

[Rajoo]

Originally Posted by whell

In fact, I've not heard a justification from the Biden administration on why they're insuring all depositors at full value, rather than the FDIC limit of $250K. More than 90% of the bank's deposits would not have been covered by $250K FDIC insurance.

The administration also keeps saying that this is not a taxpayer-funded bailout. That's an outright, bald-faced lie. OF COURSE taxpayers will foot the bill for this!

The Biden administration decided to fully fund SVB mainly because of payroll money. This may not be the official reason but what I have heard. Whether this is good or bad, I will wait and see.

We do not know yet if this is a "bail out" or temporary custody of the bank. Once again I reserving judgement since the accounting has not been settled yet. SVB had the underlying assets though their bonds currently were below face value and they wanted to raise new capital to cover the $1.8B loss they took liquidating some of their bonds. They notified their board and this is what launched a domino effect on the bank Why did the investors begin dumping their stocks will be revealed soon and so also what the board members did etc. Also if the bank was already on wobbly legs due to their undervalued equity bond holdings, why were they handing our huge bonuses?

[whell]

Originally Posted by Rajoo

The Biden administration decided to fully fund SVB mainly because of payroll money. This may not be the official reason but what I have heard. Whether this is good or bad, I will wait and see.

I doubt it. $250B is a whole lotta money to cover payroll. Start-ups need to have access to "burn" funds, but still, that's a ton of money just for burn which would include payroll. To put it in perspective, $250B is the rough equivalent to the GDP of countries like Portugal, New Zeeland or Peru.

Originally Posted by Rajoo

We do not know yet if this is a "bail out" or temporary custody of the bank. Once again I reserving judgement since the accounting has not been settled yet. SVB had the underlying assets though their bonds currently were below face value and they wanted to raise new capital to cover the $1.8B loss they took liquidating some of their bonds. They notified their board and this is what launched a domino effect on the bank Why did the investors begin dumping their stocks will be revealed soon and so also what the board members did etc. Also if the bank was already on wobbly legs due to their undervalued equity bond holdings, why were they handing our huge bonuses?

1) It is the temporary custody of bank assets. In this case, the custody of assets is being managed by Silicon Valley Bridge Bank (SVBB). SVBB was created and funded by the FDIC. Where does the FDIC get its money? Banks pay fees based on deposit volume to the FDIC to insure those deposits. Where does the bank get the money to pay its fees to the FDIC? That would be you and I, assuming you and I also have funds on deposit with a bank. Will the costs of insuring deposits for the customers of SVB, Signature, and other banks go up because of this? Yes sir! And who's going to pay for that? That would be you and I.

2) The Biden Admin announced that long bonds held by banks would be redeemed at face value. That means the Fed would buy back those bonds at a loss. Where would the Fed get the money to cover that loss? That would be you and I.

3) Regarding the SVB stock sales in the run-up to SVB's failure, I absolutely agree that if any insider trading is discovered, Justice should bring charges pronto.

4) Regarding bonuses, we don't have all the details on those. If the bonuses were payable as part of employment agreements, the bank may not have had the discretion to pay those out. It certainly doesn't make for good optics, for sure.

[Rajoo]

Originally Posted by whell

I doubt it. $250B is a whole lotta money to cover payroll. Start-ups need to have access to "burn" funds, but still, that's a ton of money just for burn which would include payroll. To put it in perspective, $250B is the rough equivalent to the GDP of countries like Portugal, New Zeeland or Peru.



1) It is the temporary custody of bank assets. In this case, the custody of assets is being managed by Silicon Valley Bridge Bank (SVBB). SVBB was created and funded by the FDIC. Where does the FDIC get its money? Banks pay fees based on deposit volume to the FDIC to insure those deposits. Where does the bank get the money to pay its fees to the FDIC? That would be you and I, assuming you and I also have funds on deposit with a bank. Will the costs of insuring deposits for the customers of SVB, Signature, and other banks go up because of this? Yes sir! And who's going to pay for that? That would be you and I.

2) The Biden Admin announced that long bonds held by banks would be redeemed at face value. That means the Fed would buy back those bonds at a loss. Where would the Fed get the money to cover that loss? That would be you and I.

3) Regarding the SVB stock sales in the run-usp to SVB's failure, I absolutely agree that if any insider trading is discovered, Justice should bring charges pronto.

4) Regarding bonuses, we don't have all the details on those. If the bonuses were payable as part of employment agreements, the bank may not have had the discretion to pay those out. It certainly doesn't make for good optics, for sure.

I am going to take SVB bailout as a special case and chances are that most of the money will be eventually recovered. If not, it is still worth saving the bank and Silicon Valley. Still do not understand the Signature Bank bailout, it was crypto based, no great loss since this is a group that wants to work outside of our banking system.

Consider this, Trump capped our tax deduction for mortgage interest and property tax and the additional money sent by SV dwellers will more than cover the $250B cost, which is the total asset of the back, give or take.

[Ike Bana]

Originally Posted by whell

https://www.politico.com/news/magazi...-debt-00057606

Powell sounds like a big Volker fan. Volker crashed the economy to stop runaway inflation, fueling a recession that lasted through the early 80's. He got inflation under control but not after a few tough years. Powell is going to have a much tougher job.


This matters for a simple reason. When the Fed tightens the money supply and raises interest rates, it inflicts pain on U.S. taxpayers who must pay interest on the nation’s debt. The higher the debt, the higher the pain.

It was the Fed’s own experiments that helped create all this national debt in the first place. The Fed did so through an experimental program called quantitative easing, or QE. The importance of QE can’t be overstated. Under this program, the Fed created about 9 trillion new dollars between 2008 and today. (To put that in perspective, the Fed created only about $1 trillion in its first 95 years of existence. So it has printed 900 years’ worth of money in a little over 10 years, when measured against its historic rate.) All that money was injected straight into the Wall Street banking system, pumping up the very markets, like stocks and bonds, that are now threatened by the Fed’s tightening.

Years of QE and voracious spending, from Reagan to Bush to Clinton to Bush to Obama to Trump to Biden, all fueled by debt. And that debt sounds like its going to get a LOT more expensive.

Bullshit MAWA/Q-ANON PROPAGANDA. Goes right a long with the Covid-19 propaganda and the Ukrainians are all nazis propaganda.

Sabotaging QE
By Paul Krugman
WSJ 11/23/10

When short-term interest rates are up against the zero lower bound, whatever power the Fed has to influence the economy comes largely from its ability to affect expectations. This is true even for Bernanke-style quantitative easing: you can’t really push down longer-term yields unless the market believes that you’re going to keep buying until the rates are where you want them. It’s even more true when it comes to credibly raising expected rates of inflation.
So if a large political faction begins yelling and screaming as the Fed attempts quantitative easing, this will have the effect of undermining the policy’s effectiveness. And so it’s proving.

Sometimes printing more money is exactly the right thing to do. The "austerians" are wrong, the Keynesians are right.

First...this inflation and the price of fucking gasoline has nothing to do with Biden and Democrats. It has to do with Americans coming out of lockdowns and a pandemic and spending their brains out. Inflation is about simple supply and demand...the more demand, the higher the price, it's not fucking rocket science. Stupid fucking Americans hear about inflation and start buying more and more to beat the inflation and their reward is...more fucking inflaction. But the primary reason right now is corporatists are price gouging our fucking brains out. Just look at gas prices in the light of the obscene all-time world record profits and profit margins being racked up by big oil...it's all you have to do. The current price of WTI crude oil as of March 16, 2023 is 68.24 per barrel. Historically, and this is recent history, the cost of a gallon of regular when crude is $100/bbl is between 3.50 and 3.85/gal. Gasoline prices on average peaked at a record $4.10 a gallon in 2008, when oil hit $147 a barrel. We're paying between $3.50 and $4.10/gal all over the country, and the cost of crude is under, way under $75/bbl.

But nope we got a country half full of racist, anti-democracy seditionistas who get what they need to support their racism, sexism, bigotry and homophobia from their all day long doses of fascist alt-right propaganda all over the internet and selected media outlets. So here...in this little corner of the web, we can thank whell for the constant reminders of what we are dealing with.

My fucking apologies for using all of the words we have at our disposal, quite so often in this fucking post.

[Dondilion]

Originally Posted by Rajoo

I am going to take SVB bailout as a special case and chances are that most of the money will be eventually recovered. If not, it is still worth saving the bank and Silicon Valley. Still do not understand the Signature Bank bailout, it was crypto based, no great loss since this is a group that wants to work outside of our banking system.

Consider this, Trump capped our tax deduction for mortgage interest and property tax and the additional money sent by SV dwellers will more than cover the $250B cost, which is the total asset of the back, give or take.

Whether a bank was crypto-based or otherwise the essential aim was to prevent awful optics. Now customers of medium and small banks can transfer their funds to the bigger banks in a less pressured manner.

[Dondilion]

An often-overlooked effect of successive Quantitative Easings is the advantage it bestows on those close to money printing.

[Rajoo]

The libertarian view:

It was particularly unfortunate that this was happening to a sector that has historically rejected state interventions of any kind, railing against attempts at heavier regulation and insisting all its problems would be solved if only the government would just back off. Elon Musk’s behaviour at Twitter is a perfect example of the general attitude of Silicon Valley; when Zuckerberg came up with his mantra, “move fast and break things”, he didn’t just mean code.

Thiel himself is so committed to libertarianism that he has established an eponymous foundation to “defend and promote freedom”. He has also invested at least $500,000 into the Seasteading Institute, an organisation that wants to establish a series of tiny, ocean-bound nations, each run according to laws set by their founders. Larry Page, the co-founder of Google, has previously suggested a “limit” on laws to “some set of pages”. “When you add a page, you have to take one away,” he said.

But stuck on a sinking ship this weekend, Silicon Valley found itself begging the state for help. “This is an *extinction level event*,” warned Garry Tan, the CEO of Y Combinator. “Where is [the chairman of the Federal Reserve, Jay] Powell? Where is [the Treasury secretary, Janet] Yellen? Stop this crisis NOW,” tweeted the venture capitalist David Sacks – the same David Sacks who is a friend of Thiel and Musk, and who has previously heavily criticised “special-interest corruption” and bank bailouts. Bill Ackman, a billionaire hedge fund manager and Donald Trump supporter that has in the past complained about attempts by the government’s Securities and Exchange Commission to regulate one of his investment funds, performed some spectacular mental gymnastics over the weekend, calling on the FDIC to “guarantee all bank deposits”.

Short article and worth reading imo.

https://www.newstatesman.com/quickfi...rian-tech-bros

[donquixote99]

Originally Posted by Rajoo

The libertarian view:





Short article and worth reading imo.

https://www.newstatesman.com/quickfi...rian-tech-bros

There are no libertarians when THEY need government help! Fah!