“That’s how capitalism works”!!
Has he been scrolling r/antiwork and r/collapse, signing in at the Bear of Hex, keep a copy of the Communist Manifesto bedside?
Is this just a joke?
On a serious note, if it’s not, how far are the puppets in government prepared to go in what could be a cataclysmic moment of comeuppance for the Economic Terrorists of Wall St?
Feels like he's just saying things to make it seem like the government isn't going to do a bailout even though they've already taken steps to do so without calling it a bailout as has been pointed out in the past few days here.
They aren't calling it a bailout because it's not a bailout. A bailout would be a loan to the shareholders (the owners) of SVB. What the Fed is doing is basically connecting the SVB deposit accounts (the customers) directly up the Fed so that businesses can pay their bills. Whatever difference there is between assets and liabilities will be paid out of the Deposit Insurance Fund run by the FDIC and paid for by premiums from FDIC member institutions (other banks). If there isn't enough money in the DIF, the FDIC can either borrow from the Fed or issue debt to cover the rest. SVB equity will be/is worthless and their creditors (people who lent money to SVB) are shit out of luck, which is why it's not a bailout.
A bailout is when you try to keep a company from failing, which means bailing out the owners who fucked up. The FDIC is liquidating all of SVB's assets to cover it's liabilities and filling in the rest from the DIF. Depositors are not owners of SVB, they are customers. They don't have control over SVB's risk management, or lack thereof.
FDIC insurance is $250K per account type per customer per bank. Once you hit $250K in a checking account at one bank, thats it. You can't open another checking account at the same bank that will be insured. What you are suggesting is that companies with millions of dollars that they need to pay their bills (including payroll) should go around opening hundreds of checking accounts at different banks to pay their bills and have it all insured. That's not logistically possible.
What you are suggesting is that companies with millions of dollars that they need to pay their bills (including payroll) should go around opening hundreds of checking accounts at different banks to pay their bills and have it all insured
That is, in fact, exactly what a lot of companies in this space are doing IIRC. It's not hundreds, but still; look at this for example. They split those startups' money into nine 250k batches, ensuring at least 2.25m$ is protected. I found these guys randomly but I'm sure they're neither alone nor the largest.
I have worked for everything from Fortune 50 companies to startup. Almost no one uses CDARS or any of the alternatives. I've never worked anywhere that used it. $2.25M is one payroll cycle at a lot of medium-sized companies. Amazon does ~$1B every two weeks just to it's warehouse employees.
CDARS is still limited by the number of FDIC members. There are corporations who still wouldn't be able to meet payroll and pay their bills even if they maxed out CDARs. Amazon would almost max that number every two weeks just paying their warehouse employees.
It's almost like having entities this large is inherently problematic from an economic perspective or something.
They have that mechanism! It's the Fed stepping in to magically make folks whole even though they don't have the requisite insurance. Insurance only works when it can average over lots of smaller events. It doesn't work well for things like this where this are very infrequent very massive events. So there cannot be insurance for bank failures like this. Instead, the capitalists have access to the money printer and will hold copy when shit goes wrong like this.
Maybe? I don't know as much about insurance, but they would still rely on banks to pay out claims like this, which would just cause a bank run somewhere else. The whole reason this is going so fast is that it's not supposed to happen with regular deposit banking. Banks are supposed to have way better risk management than SVB and Signature, but that's also not necessarily regulated. I would think that this is going to have to result in new regulations, but the fact that the Fed is saying that SVBs shareholders and creditor can get fucked might mean that the industry is going to start requiring new controls internally.
Or nothing will change and the industry and politicians will waive it off as an aberration. It's pretty hard to say.
You're right, but the only losers in that scenario are the workers. The porkies at the top will make it out relatively unscathed either way, but taking steps to avoid covering those uninsured deposits means payroll is missed and workers aren't paid for work already done and are fired immediately
I'm sure that even in a collapse of SV startups, the evil ones will survive. Deregulation machines funded by Thiel and the Saudis aren't going to collapse because some of their cash vanished. The other major genre of startup is R&D department cost cutting, and again I imagine the established tech giants who are doing it would rather just do a cash injection than long term commitments to their own R&D. I don't necessarily think the R&D ones are always evil, but if it's not one of these two major categories I'm not sure the companies are significant enough to matter anyway lol.
There is a deposit product called Insured Cash Sweeps (ICS) which moves chunks of 250k around to different banks. SVB supposedly offered this product and yet no one was using it
The assets that are being liquidated include the liabilities the bank couldn’t cover in the short term because they were paired with a long play on low interest rates. Since it’s pretty likely the fed will lower rates now whoever buys the banks assets or even certain liabilities will make out like a bandit.
Even if they don’t lower rates, whoever buys the “bad” assets will have already benefited from the shakeout whose negative repercussions were almost completely covered by the fed.
The action the fed is taking has the outcome of covering a shortfall not for the entity “Silicon Valley Bank” but for everyone exposed to it including the investors.
There’s people at the left side of the bell curve meme saying “it’s a bailout” and people at the right side saying “it’s a bailout” and here you are saying “it’s actually not a bailout, here’s a detailed explanation”.
You’re right, it’s not technically a bailout but that’s not much solace to people seeing the fart huffing psychopaths in California whose big idea was to make investments with the stipulation that the capital be all held in this one totally not a scam institution do a trust fall with the goddamn fed.
Liabilities are not being liquidated. Assets (like their bond portfolio) are being liquidated to cover liabilities (deposits).
I have no idea if the Fed is going to lower or pause rates. The CPI numbers come out tomorrow. The fact that they are setting up this Bank Term Funding Program makes me think that they aren't going to pause. And even then, the Fed isn't going to lower interest rates to the point where those treasuries are selling at par value. They would have to decrease the interest rate 3-4% overnight to do that.
Once again, this does not cover a shortfall for investors or creditors. The FDIC is stepping in such to the point where Assets = Liabilities, not to the point where Assets = Liabilities + Equity (the balance part of a balance sheet). SVB investors and creditors are likely losing all of the investments they had made in the bank.
Yeah I should have proofread that before I posted. Hopefully this one’s not got a bigass idiot error in it.
Broadly speaking though it does cover investors. The same companies pumping vc money to startups with the stipulation that it be held in svb were investing in svb. That’s why they didn’t push ics (not that anyone (1) does) or payroll management or anything on these absolute buffoons getting free money to have adult daycares.
So they end up buying assets at a discounted price and use that to turn their lost investment into a haircut. One side of the straddle, if you can call it that, idk what the real word for that investment strategy is, is accounted for and oh look, they get to keep riding the ten wagers on black they had going too, all courtesy of the us government’s largesse, saving the hardworking job creators at “Uber for pet rentals”.
(1) I don’t even have enough to worry about it and an ics equivalent was offered me by the bank. Two small businesses I’ve worked for I know for a fact we’re covered by similar schemes. It’s always surprising when the accepted wisdom is that no one worries about that stuff although I imagine after this shakes out no one really ever will again.
It means I'm talking with leftists who have no understanding how modern finance capitalism works.
What do you mean by increased bank fees? How is that a result of this?
The funds that will be covering all these billions in deposits will come from a fund created by fees the feds have levied on the banks. It's a special assessment just levied on the banks. They will collect that loss of revenue through charging their customers more.
So in a long time about way. Off another tax payer bailout
Everything needs to be explained since we are not born with innate knowledge of the world. Except maybe how to poop, I think we know that from birth
I came into this world knowing pee pee, poo poo and I never learned anything else
I think people would understand a bailout to mean something to helps the bankers, not the people with money in the bank.
The govt is selling the bank assets and distributing that money. The FDIC is not giving out that money. The only federal cost is the cost of administering all of this
It's not a bail out. It's the death of American capitalism but we are going to act like it's just no big deal
I have 0 faith in these ghouls but there's a difference between investors in these banks and people who keep their money there, and so far it's only the latter that are being protected by FDIC actions.
absolutely, and either way we all know who's getting fucked here, it's the people that didn't get paid friday
i love the tidbit where a normal bank will shard out a business's accounts into 250k chunks for better insurance but because SVB was too busy disrupting they didn't know they could do that
The govt isn't giving its money to the startups though. They're selling bank assets and giving that to the depositors, including the businesses. Which seems fine. The bankers lose their assets
Afaik all they're doing is making sure that depositors are paid out first from liquidating the bank assets. Which I wouldn't really call a bailout.
Yea the first thing that came to mind is that they won't bail out the banks this time because they WANTED businesses to start falling to raise unemployment rates and lower salaries
2008 was different because the collapse was not predicted or engineered
These businesses are also leeches that add instability to the economy. The Fed has an interest in pulling the insane amount of slack out of the economy other than just disciplining labor. There isn’t even really an organized labor movement to need to break
Biden may be senile now, but he was a slick operator throughout his career. Signs of it still poke though at times today. For example, Biden was the one that stopped the special forces from just using a timer on the explosives to blow up Nordstream, according to Seymour Hersh.
Not just a timer but like a two day timer. That would have gone off two days after some massive NATO sea exercises in the area. Not suspicious in the slightest
I believe :thinky-felix: called him a Sundowning Alpha which I think fits
Biden was the one that stopped the special forces from just using a timer on the explosives to blow up Nordstream, according to Seymour Hersh.
Can you unpack this? What's gained or lost by using/non using a timer?
Well if there's a fixed timer on the bomb, you can't control when it blows up. And if it blows up, say, 36 hours after a NATO exercise in the area, it can arouse suspicion
By controlling when it explodes, you can choose when it blows up. Allows for tactical flexibility and plausible deniability.
They can pick the precise moment it goes off, and if it goes off at all.
What do you mean? There could be a circumstance where they want to abort the mission, and more importantly having the bombs go off right away is far more suspicious.
Pretty sure what RonJonGuaido is saying is that "of course you'd use a remote detonator instead of a timer. It's obvious a timer would be foolish and anyone who doesn't come immediately to that conclusion is an imbecile." And I agree. It's not shrewd of Biden if he's the one who suggested it, it's shocking how incompetent the other conspirators were if there was ever even discussion of just going with a timer.
The issue with the remote detonation according to the report was that it required a complex work around, it wasn't as simple as swapping out a timer for remote activation. Biden apparently insisted which forced them to go back to the drawing board and come up with a new and modified plan.
Oh ok. I haven't read the report yet. Still it seems obvious (for all the reasons you and others listed up thread) why a plain timer would be a terrible idea from the get-go, complex work around or not.
Remember when banks used to hold people's money and made a small profit off of investing it very conservatively. There were completely separate financial institutions that were not legally banks that did all the risky investing stuff. Then both of these started bleeding into each other because fin-tech was a productive and profitable sector for the future of global capitalism or something.
It's pretty funny that the Fed did this very obvious class warfare signally about raising rates, and all the folks that are supposed to understand this stuff super well and respond to the changing situation with their piles of wealth and bets are getting caught in the rate trap now. This supposed to be simple class warfare, but because all these folks are idiots, they are doing friendly-fire all over the place.
There's a lot more of us than there are of them, so the friendly fire (while absolutely hilarious) is no great consolation.
But then again, there's a lot more of us so we can [REDACTED].
The Irishman has been activated
Trust the plan, the banks are only the beginning
Soon the puzzle pieces will fall into place :biden-harbinger:
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Queen: Dead
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Boris and Liz: Removed
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Unionist: Destroyed
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IRA: Armed
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Northern Ireland: Mostly Catholic
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Sinn Féin: Funded
IRA Brandon is ready :biden-leftist:
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I don't think he means it in the way you think. He's using it inside the framing of capitalism, as in thinking "this is just the free market at work, you win some and you lose some."
We know that capital allows capitalists to control the supposed free-market but he is merely looking at it through tinted glasses of how its "supposed to work".
He also hasn't gotten the call yet from his donors. If more dominos fall, expect him to reverse course.
What if their assets have secretly been dogshit wrapped in cat shit the whole time
I mean, he’s totally the “tough love” kind of guy. But that he added the bit about capitalism just seems…way out of character and surprising.
Supposedly it was a 4min national address about the #BankCrash. And we know how this bullshit goes. It’s a carefully crafted and parsed public relations statement to appease the masses, ultimately an attempt to restore “confidence.” And he left abruptly without questions. With the whole world is suspense about what these clowns were gonna do in this case, after yet another greedfest debacle gone awry.
Seemed like he just stopped short of saying things we’d say, like, “these Wall St scams are built of quicksand, with the last sucker holding the empty bag slowly but surely going under. That’s capitalism!”
I’d just like to personally today take a moment while we sit back and sip drinks watching this shit unfold to acknowledge the efforts of the Occupy movement for refocusing our enmity on the real culprit killers.
The banks and the government are bedfellows, but sometimes one side hogs the covers and we end up with a lovers' quarrel.
is this a signal that amerika is moving away from the neoliberalism of the past few decades? possibly indicating a fork where amerika descends further into fascism or shifts to a more post-war-Keynesian approach with more infrastructure spending and lower interest rates. that or they change nothing and we get a recession
that or they change nothing and we get a recession
This is the most boring outcome and therefore the most likely
Neoliberalism is dead or dying. This is the time period where new economic formations have to bubble to the surface. Everyone keeps talking about reshoring industry like we can return to Fordism but the rate of profit is too low to manage that social compact. Something new will have to happen and - fingers crossed - hopefully it doesn’t take another world war to get it settled
rate of profit is too low to manage that social compact
this is why it necessarily has to be a public project (whether by neoliberals, fascists, or a future socialist state). things are warming up, we can all sense it, and its unlikely the current gov will do much to ameliorate this oncoming recession. anything short of the Works Progress Administration and amerika is fucked. cant wait to witness the death of empire :inshallah:
ofc the elephant in the room in discussions like this is nuclear weapons. amerika is like a parasite that is so embedded that you cant kill it without killing the host. it will be difficult to negotiate the death of empire without a significant amount of nuclear attacks
Sometimes empires die slowly over time without being superseded by another hegemon. The retreat of Rome to the east left a slowly declining western empire that collapsed into the dark ages rather than crowning a clear successor. Nuclear armament may lock the US in as the final hegemon of the capitalist era as things collapse and sink back to a lower level of complexity. “The common ruin of the contending classes” is always an option
but China is the obvious successor. the businesses in amerika have so much IP that are restricted as internal documents, allowing that to be destroyed by collapse would be like a million libraries of Alexandria. China may be offering amerika structural loans in a decade :lenin-laugh:
also there are 150+ million workers in amerika who will be increasingly receptive to socialist concepts as conditions worsen
That’s the assumption that the dialectic of history has brought about a subject-object class in this moment of political economy that can finally end pre-history and usher in communism, but Marx failed to consider nukes and the glassing of the earth.
:shrug-outta-hecks: I know who I’m rooting for, but I also know I won’t live to see it. Let’s hope someone can amend the protracted people’s war for nuclear warfare. 20th Century forms of revolution will not be sufficient. The theory must catch up to the moment
Neoliberalism is dead or dying. This is the time
period where new economic formations have to bubble to the surfaceof monsters.
So if we’re just gonna ignore the $250k FDIC limit is that going to be codified going forward or is it going to have to be a whole show and dance anytime depositors need saving by the Fed?
This is their finest hour tbh, Biden's gov are spinning a massive loss into a win
The Executive Officer referred to in the Tweet is John China, President of SVB Capital
:some-controversy:
