This weekly roundup thread is intended for all culture war posts. 'Culture war' is vaguely defined, but it basically means controversial issues that fall along set tribal lines. Arguments over culture war issues generate a lot of heat and little light, and few deeply entrenched people ever change their minds. This thread is for voicing opinions and analyzing the state of the discussion while trying to optimize for light over heat.
Optimistically, we think that engaging with people you disagree with is worth your time, and so is being nice! Pessimistically, there are many dynamics that can lead discussions on Culture War topics to become unproductive. There's a human tendency to divide along tribal lines, praising your ingroup and vilifying your outgroup - and if you think you find it easy to criticize your ingroup, then it may be that your outgroup is not who you think it is. Extremists with opposing positions can feed off each other, highlighting each other's worst points to justify their own angry rhetoric, which becomes in turn a new example of bad behavior for the other side to highlight.
We would like to avoid these negative dynamics. Accordingly, we ask that you do not use this thread for waging the Culture War. Examples of waging the Culture War:
-
Shaming.
-
Attempting to 'build consensus' or enforce ideological conformity.
-
Making sweeping generalizations to vilify a group you dislike.
-
Recruiting for a cause.
-
Posting links that could be summarized as 'Boo outgroup!' Basically, if your content is 'Can you believe what Those People did this week?' then you should either refrain from posting, or do some very patient work to contextualize and/or steel-man the relevant viewpoint.
In general, you should argue to understand, not to win. This thread is not territory to be claimed by one group or another; indeed, the aim is to have many different viewpoints represented here. Thus, we also ask that you follow some guidelines:
-
Speak plainly. Avoid sarcasm and mockery. When disagreeing with someone, state your objections explicitly.
-
Be as precise and charitable as you can. Don't paraphrase unflatteringly.
-
Don't imply that someone said something they did not say, even if you think it follows from what they said.
-
Write like everyone is reading and you want them to be included in the discussion.
On an ad hoc basis, the mods will try to compile a list of the best posts/comments from the previous week, posted in Quality Contribution threads and archived at /r/TheThread. You may nominate a comment for this list by clicking on 'report' at the bottom of the post and typing 'Actually a quality contribution' as the report reason.
Jump in the discussion.
No email address required.
Notes -
Link from my blog SVB failure: the limitations of moral hazard, and the difficulty of assessing risk
The moral hazard and regulatory arguments are generally inadequate at explaining or preventing future banking crisis, like the collapse of SVB. There are so many ways banks can fail, or triggers that can cause a cascade of failure, that regulation is always chasing a moving target. SVB was actually capitalized well within the guidelines of Dodd Frank but it still failed.
Moreover, assessing risk is also really hard, even for professionals/experts, and even when all the information is known. SVB was done-in by needing to raise additional capital from a $1.8 billion bond market loss (out of a $22 billion investment). That is it. We're not talking hundreds of billions of dollars like 2008. In the grand scheme of things, this is peanuts. Yet it spiraled out of control, and the bank was insolvent 2 days later.
If you read the original press release from SVB on March 8th, nothing about it screams "this is fucked". It's like "We need to raise some money because we lost some money on bonds." If I read it and had to make a judgment call, not knowing what transpired, I would have said it was not that big of a deal (bad news, yes, but not catastrophic).
Overall, it is easier or more practical to just have to suffer with occasional bailouts, than aspiring to some unobtainable ideal of a financial system that is immune from ever failing. Bailouts are bad, but so are second order effects from economic contagion.
They should have let it fail. A policy of insuring 100% of deposits is simply incompatible with the idea that private banks make loans. If all deposits are insured that effectively means that banks will be loaning the governments money instead which will either result in 1. The government deciding how and who to issue credit to or 2. Theft from the public.
They are all ready trying to walk this back (listen to Janet Yellen at 1 hour 30 minutes): https://youtube.com/watch?v=WVTmS4mM5zk&t=5718s
It’s going to get ugly when they do inevitably have to let some depositors take a loss, as they will basically be admitting that svb only got a bailout because the depositors are politically well connected.
Frankly I’ve also been kind of surprised with attitudes on the motte about this issue. I can only assume that most of the posters here are adjacent enough to venture capital and broader sv ecosystem to be benefiting from this too such a degree that the usual
Libertarian ideals expressed here can be ignored on this issue.
I agree fully with letting everybody eat the full loss. I just lurk more than I post.
More options
Context Copy link
I'm not really seeing a consensus. I'm against a bailout and one would certainly help my department.
More options
Context Copy link
I don't think most people here were ever libertarians in any strict sense. It's more like libertarian ideals are more pragmatic in some instances, and less so in others.
More options
Context Copy link
FWIW, I agree. At least give them a haircut.
I’m not sure it’s related to Silicon valley connections, the motte is relatively pro-bailout as far as 2008 is concerned. From what I can tell, out of a mixture of respect for expert opinion and rellying on speculative counterfactual scenarios of (greater) destruction if no bailout happened. I’m not convinced by those: the experts had some major conflicts of interest, and a banking bloodbath/bad debt wipeout might have been just what the patient needed.
I’m sure most here can see clearly that saving the coal industry at great cost to the taxpayer in 70s britain isn’t the ‘prudent’ move, even though it also has major ramifications for the rest of the economy. But when people in suits excuse their mistakes and beg for their useless jobs, we like to defer to their expertise. One day perhaps they'll decide and explain if they're private or public sector.
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link