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We need to break up big tech

ygolo

My termites win
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I think there are flimsy startups that had dubious business models (or worse). I definitely don't want to see bailouts like 2008. I don't think there's any political will to do that.

Ultimately, SVB was a bank though. If you deposit money there to hold it there till you then have to take it out to pay your employees, but suddenly it's gone on payday, people got screwed. The people who got screwed aren't the bankers (yet).

If the FDIC gets depositors the money the had in the bank (up to their limit) this will maintain faith in banking as a concept.

If that doesn't happen (especially if the reason given is that the depositors are disliked), I think banks all around the globe will see runs on their banks also.

edit:
some developments:
Also Garry Tan (of Y-combinator) had a bunch of small businesses ceos and founders sign a petition:
It'll be interesting if we can see some people get jail time this time:
 
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ygolo

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Here's a list of bank failures:

So I can't agree that a bank run is a black swan. Also, the 0s in 2021-2022 might be as @DiscoBiscuit said based on the essentially free money.

But again, FDIC needs to make good on it's insurance, otherwise how do we know if any of the money we hold in any bank is safe?

With SVB, a lot of the insiders got the money out causing the bank run, primed by a mismatch in time of cashflows by the bank.

If the bank gets any amount of bailouts, or if depositors over the limit are made whole before everyone under the FDIC limit is made whole, we know the system is rigged against ordinary people.
 

DiscoBiscuit

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Here's a list of bank failures:

So I can't agree that a bank run is a black swan. Also, the 0s in 2021-2022 might be as @DiscoBiscuit said based on the essentially free money.

But again, FDIC needs to make good on it's insurance, otherwise how do we know if any of the money we hold in any bank is safe?

With SVB, a lot of the insiders got the money out causing the bank run, primed by a mismatch in time of cashflows by the bank.

If the bank gets any amount of bailouts, or if depositors over the limit are made whole before everyone under the FDIC limit is made whole, we know the system is rigged against ordinary people.

The problem is that for most depositors in a bank like SVB 250k is a drop in the bucket as opposed to most normal banks.

If you hold 3 mil in SVB and get 250k back they might as well just piss on your foot.

In a truly calamitous situation where the whole system nosedives the FDIC doesn't have the cash to give every depositor the 250k it guarantees.

The whole thing is a house of cards held together with bailing wire. I don't know the answer to the problem. But I do know eventually a breeze will come along strong enough to expose system wide structural flaws.
 

DiscoBiscuit

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Deciding you do not, in fact, want a shit sandwich for lunch.

1678659129507.png
 

ygolo

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Bold move Cotton, lets see how that plays in 2024.

View attachment 28553
I'm skeptical too.

As long as people actually insured get their money tomorrow morning, I am not really changing what I personally do.

If all depositors get their money with no extra tax burden while the banks go under and people go to jail, I will be pleasantly surprised. I'm not holding my breath for that though.
 

Virtual ghost

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Objectively, the whole financial system is basically a zombie on life support for years and years at this point. Therefore the current situation is nothing more than mess pilled one upon the another. I have no doubts that the institutions will try to keep the system floating but it is quite questionable if this will have real results on the long run. What is because the whole financial system as it is defined now is based on transactions behind which there is often nothing of real or truly useful value. What basically makes the whole system a house of cards. Therefore as long as there isn't more concrete foundations and results behind all financial numbers we are all basically sleepwalking into financial abyss. Especially since little of concrete results mixed with plenty of money by definition leads to high inflation.
 

ygolo

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With Silverlake, SVB, and signature bank there's a decent explainer in my eyes:

A more thorough, though more technical explainer is here:

When I heard how the magic of covering all depositors (including uninsured) without affecting tax-payers is actually being done, I'm simultaneously confused and not pleasantly surprised like I thought I would be. This feels somehow like a misdirection, but I am not understanding how it's done or what new risks are being posed.
 

ygolo

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Here are two sides of the argument going on:


I tend to favor "little tech". As they say take 4 to 10 employees, how many months of payroll is below the FDIC limit? Do you hire someone as a solopreneur just to load balance payroll?

With that said, I have trouble believing that no depositors at all need to take a "haircut" to solve this problem. It still seems like magic, and I don't know where the real value gets made.
 

ceecee

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Here are two sides of the argument going on:


I tend to favor "little tech". As they say take 4 to 10 employees, how many months of payroll is below the FDIC limit? Do you hire someone as a solopreneur just to load balance payroll?

With that said, I have trouble believing that no depositors at all need to take a "haircut" to solve this problem. It still seems like magic, and I don't know where the real value gets made.
Exactly.
 

ygolo

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More developments:

More commentary:

 

ygolo

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Choke-point Capitalism, monopoly, and monopsony. Important concepts to understand.


It's interesting as I think about just surviving in the current market, strategizing how to deal with stroke symptoms, thinking about counter positioning, cornered resources, and switching costs are baked into the idea creation. There really isn't a choice to not do that and hope to survive.

I don't really hold Animus towards the big winners. It's in some sense, just Moloch at work. The bad actors in this game are deeply incentivised to do what they do (though some things are beyond the pale still)

Perhaps the idea is to take off the "rebel hat" once we win, so that strategic power doesn't turn into rent seeking. I'm still struggling to understand how to deal with the dynamics of Moloch (a generalization of the tragedy of the commons)
 

ygolo

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About the writers strike and the importance of unions. The people being interviewed are not "woke millennials".

I know grad students and post-docs have a union, but I think there's a good argument for a scientist guild.

A large number of scientists end up not doing science and instead "sell out" and become a part of big tech instead.
 
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