Brownstone Institute
Where Is Occupy Silicon Valley?
From the Brownstone Institute
Bank failures tend to come in waves, and we are experiencing at least a mini-wave now.
Banks fail for three basic reasons: 1. Credit transformation: deterioration in borrower creditworthiness, usually due to an adverse economic shock (e.g., a real estate bust). 2. Maturity transformation: borrowing short, lending long, and then getting hammered when interest rates rise. 3. Liquidity transformation combined with an exogenous liquidity shock, a la Diamond-Dybvig, where idiosyncratic depositor needs for cash lead to withdrawals that exceed liquid assets and therefore trigger fire sales of illiquid assets.
The two most notable failures of late–Silicon Valley Bank and Silvergate–are examples of 2 and 3 respectively.
In some respects, SVB is the most astounding. Not because a bank failed in the old-fashioned way, but because it was funded primarily by the deposits of supposed financial sophisticates–and because of the disgusting policy response of the Treasury and the Fed.
SVB took in oodles of cash, especially in the past couple of years. The cashcade was so immense that SVB could not find enough traditional banking business (loans) to soak it up, so they bought lots of Treasuries. And long duration Treasuries to boot.
And then Powell and the Fed applied the boot, jacking up rates. Bonds have cratered in the last year, and took SVB’s balance sheet with it.
Again, an old story. And hardly a harbinger of systemic risk–unless such reckless maturity mismatches are systemic.
SVB was the Banker to the Silicon Valley Stars, notably VCs and tech firms. These firms are the ones that deposited immense sums in exchange for a pittance of return. Case in point, Roku, put almost $500 million–yes, you read that right, 9 figures led with a 5–into SVB!!!
I mean: what the eff? Was the Treasurer a moron? For who other than a moron would hold that much in cash in a single institution? (Roku claims its devices “make your home a smarter.” Maybe they should have hired a smarter treasurer and CFO, or replaced them with one of its devices). Hell, why is a company holding that much in cash period?
A few of these alleged masters of the universe (like Palantir) saw the writing on the wall and yanked their deposits: deposits fell by a quarter on Friday alone, sealing the bank’s doom. Those who were slow to run howled to the high heavens over the weekend that if there was not a bailout there would be a holocaust in the tech sector.
Even though the systemic risk posed by SVB’s failure is nil (or if not, then every bank is systemically important), the Treasury Department and the Fed responded to these howls and guaranteed all the deposits–even though the FDIC’s formal deposit insurance limit is $250,000. You know, .05 percent of Roku’s deposit.
When evaluating this, one cannot ignore the reality that the Democratic Party is completely beholden to Silicon Valley. This is beyond scandalous.
Occupy Silicon Valley, anyone?
Treasury Secretary Janet Yellen insulted our intelligence by assuring us this is not a bailout. Well, it’s not a taxpayer bailout, strictly speaking, because the Treasury is not providing the backstop. Instead, it is being funded by a “special assessment” on solvent banks. Which are owned and funded by people who also pay taxes. And such an “assessment” is a tax in everything but name–because it is a contribution by private entities compelled by the government.
The policy implications of this are disastrous. The whole problem with such bailouts is moral hazard. What is to stop banks from engaging in such reckless behavior as SVB did if they can obtain seemingly unlimited funding from those who know that they will be bailed out if things go pear-shaped?
And the regulatory failure here demonstrates that bank regulation–despite the supposed “reforms” of Frankendodd–can’t even catch or constrain the oldest bet-the-bank strategy in the book. Free banking–no deposit insurance, no bailing out of depositors–couldn’t do worse, and would likely do better.
No, the failure of SVB is not the scandal here. The scandal is the political response to it. This reveals yet again how captured the government is. This time not by Wall Street, but by tech companies and oligarchs that are currently the primary source of Democratic political funding.
A couple of weeks ago the Silvergate story looked juicy, but SVB has put it in the shade. Silvergate also grew dramatically, but on the back of crypto rather than SV tech. It became the main banker for many crypto firms and entrepreneurs. The crypto meltdown did not affect Silvergate directly, but it did crush its depositors, the aforesaid crypto firms and entrepreneurs. They withdrew a lot of funding, and an old-fashioned liquidity mismatch did it in.
In traditional banks, deposit funding is “sticky.” Banks that rely on wholesale funding (“hot money”) are more vulnerable to runs. Silvergate’s funding was not traditional sticky deposit funding, nor was it hot money per se. It was money that was pretty cool as long as crypto was cool, and became hot once crypto melted down.
A run started, but the run was precipitated by a liquidity shock. Simple story, really.
Silvergate’s failure was not a scandal. SVB’s failure per se was not a scandal (except to the extent that our vaunted banking regulators failed to prevent the most prosaic type of failure).
Again–the scandal is the politically tainted response that will have baleful consequences in the future, as the response virtually guarantees that there will be more SVBs in the future.
Author
From the Brownstone Institute
How many genuine, shocking – and unexposed – scandals actually occurred in the last four years? To partially answer this question, I composed another of my List Columns.
The Most Epic of Scandals Might Be…
The world’s most epic scandal might be the massive number of citizens who’ve died prematurely in the last four years. This scandal could also be expressed as the vast number of people whose deaths were falsely attributed to Covid.
My main areas of focus – “early spread” – informed my thinking when I reached this stunning conclusion: Almost every former living person said to have died “from Covid” probably did not die from Covid.
The scandal is that (unreported) “democide” occurred, meaning that government policies and deadly healthcare “guidance” more plausibly explain the millions of excess deaths that have occurred since late March 2020.
My research into early spread suggests that the real Infection Fatality Rate (IFR) of Covid should have already been known by the lockdowns of mid-March 2020.
If, as I believe, many millions of world citizens had already contracted this virus and had not died, the Covid IFR would be the same, or perhaps even lower, than the IFR for the common flu – said to be 1 death per 1,000 infections (0.1 percent).
Expressed differently, almost 100 percent of people who contracted this virus did not die from it – a fact which could and should have been known early in the “pandemic.” The fact this information was concealed from the public qualifies as a massive scandal.
Evidence That Would ‘Prove’ This Scandal
Furthermore, one does not need early spread “conjecture” to reach the conclusion that only a minute number of people who were infected by this virus later died from Covid.
After April 2020, a researcher could pick any large group or organization and simply ascertain how many people in these groups later died “from Covid.”
For example, more than 10,000 employees work for the CDC. About 10 months ago, I sent an email to the CDC and asked their media affairs department how many of the CDC’s own employees have died from Covid in the past three-plus years.
This question – which would be easy to answer – was never answered. This example of non-transparency is, to me, a massive “tell” and should be “scandalous.”
To be more precise, if the CDC could document that, say, 10 of their employees had died from Covid, this would equate to a disease with a mortality risk identical to the flu.
My strong suspicion is that fewer than 10 CDC employees have died from Covid in the last four years, which would mean the CDC knows from its own large sample group that Covid is/was not more deadly than influenza.
I’ve performed the same extrapolations with other groups made up of citizens whose Covid deaths would have made headlines.
For example, hundreds of thousands if not millions of high school, college, and pro athletes must have contracted Covid by today’s date. However, it is a challenge to find one definitive case of a college or pro athlete who died from Covid.
For young athletes – roughly ages 14 to 40 – the Covid IFR is either 0.0000 percent or very close to this microscopic fraction.
One question that should be obvious given the “athlete” example is why would any athlete want or need an experimental new mRNA “vaccine” when there’s a zero-percent chance this disease would ever kill this person?
The scandal is that sports authorities – uncritically accepting “guidance” from public health officials – either mandated or strongly encouraged (via coercion) that every athlete in the world receive Covid shots and then, later, booster shots.
Of course, the fact these shots would be far more likely to produce death or serious adverse events than a bout with Covid should be a massive scandal.
More Scandals
Needless to say, all the major pediatrician groups issued the same guidance for children.
In Pike County, Alabama, I can report that in four years no child/student between the ages of 5 and 18 has died from Covid.
I also recognize that the authorized “fact” is that millions of Americans have now “died from Covid.” However, I believe this figure is a scandalous lie, one supported by PCR test results that would be questioned in a world where investigating certain scandals was not taboo.
Yet another scandal is that officials and the press de-emphasized the fact the vast majority of alleged victims were over the age of 79, had multiple comorbid conditions, were often nursing home residents, and, among the non-elderly, came from the poorest sections of society.
These revelations – which would not advance the desired narrative that everyone should be very afraid – are similar to many great scandals that have been exposed from time to time in history.
Namely, officials in positions of power and trust clearly conspired to cover up or conceal information that would have exposed their own malfeasance, professional incompetence, and/or graft.
This Might Be the No. 1 Scandal of Our Times
As I’ve written ad nauseam, perhaps the most stunning scandal of our times is that all-important “truth-seeking” organizations have become completely captured.
At the top of this list are members of the so-called Fourth Estate or “watchdog” press (at least in the corporate or “mainstream” media).
In previous articles, I’ve estimated that at least 40,000 Americans work as full-time journalists or editors for mainstream “news organizations.” Hundreds of MSM news-gathering organizations “serve” their readers and viewers.
In this very large group, I can’t think of one journalist, editor, publisher, or news organization who endeavored to expose any of the dubious claims of the public health establishment.
When 100 percent of professionals charged with exposing scandals are themselves working to conceal shocking revelations…this too should qualify as a massive scandal.
To the above “captured classes” one could add college professors and administrators, 99 percent of plaintiffs’ trial lawyers, 100 percent of CEOs of major corporations, almost all elected politicians, and, with the exception of perhaps Sweden, every one of the public health agencies in the world, plus all major medical groups and prestigious science journals.
Or This Might Be Our Greatest Scandal
Yet another scandal – perhaps the most sinister of them all – would be the coordinated conspiracy to silence, muffle, intimidate, bully, cancel, demonetize, and stigmatize the classes of brave and intelligent dissidents who have attempted to reveal a litany of shocking truths.
The Censorship Industrial Complex (CIC) is not a figment of a conspiracy theorist’s imagination.
The CIC is as real as Media Matters, News Guard, The Trusted News Initiative, the Stanford Virality Project, and the 15,000-plus “content moderators” who probably still work for Facebook.
Government officials in myriad agencies of “President” Joe Biden’s administration constantly pressured social media companies to censor content that didn’t fit the authorized narrative (although these bullying projects didn’t require much arm-twisting).
Here, the scandal is that the country’s “adults in the room” were identified as grave threats to the agenda of the Powers that Be and were targeted for extreme censorship and punishment.
When people and organizations principled enough to try to expose scandals are targeted by the State and the State’s crony partners, this guarantees future scandals are unlikely to be exposed…which means the same unexposed leaders are going to continue to inflict even greater harm on the world population.
This Scandal Is Hard to Quantify
Other scandals are more difficult to quantify. For example, it’s impossible to know how many citizens now “self-censor” because they know the topics they should not discuss outside of conversations with close friends.
This point perhaps illustrates the state of the world’s “New Normal” – a now-accepted term that is scandalous if one simply thinks about the predicates of this modifier.
It should be a scandal that the vast majority of world citizens now eagerly submit to or comply with the dictates and speech parameters imposed on them by the world’s leadership classes.
The “New Normal” connotes that one should accept increasing assaults on previously sacrosanct civil liberties.
What is considered “normal” – and should now be accepted without protest – was, somehow, changed.
As I routinely write, what the world has lived through the past four-plus years is, in fact, a New Abnormal.
This Orwellian change of definition would qualify as a shocking scandal except for the fact most people now self-censor to remain in the perceived safety of their social and workplace herds.
The bottom line – a sad one – might be that none of the above scandals would have been possible if more members of the public had been capable of critical thinking and exhibited a modicum of civic courage.
As it turns out, the exposure of scandals would require large numbers of citizens to look into the mirror (or their souls) and perform self-analysis, an exercise in introspection that would not be pain-free.
It’s also a scandal our leaders knew they could manipulate the masses so easily.
Considering all of these points, it seems to me that the captured leadership classes must have known that the vast majority of the population would trust the veracity of their claims and policy prescriptions.
That is, they knew there would be no great pushback from “the masses.”
If the above observation isn’t a scandal, it’s depressing to admit or acknowledge this is what happened.
To End on a Hopeful Note
What gives millions of citizens hope is that, belatedly, more citizens might be growing weary of living in a world where every scandal cannot be exposed.
Donald Trump winning a presidential election by margins “too big to steal” is a sign of national hope.
Mr. Trump nominating RFK, Jr. to supervise the CDC, NIH, and FDA is definitely a sign of hope, an appointment that must outrage and terrify the world’s previous leadership classes.
For far too long, America’s greatest scandal has been that no important scandals can be exposed. Today, however, it seems possible this state of affairs might not remain our New Normal forever.
Republished from the author’s Substack
Author
From the Brownstone Institute
“Authorities have attacked, detained, prosecuted, and in some cases killed critics, broken up peaceful protests, closed media outlets, and enacted vague laws criminalizing speech that they claim threatens public health”
Didn’t give much thought to freedom until four years ago, at age 63. Freedom was just there, like the water surrounding a goldfish. And then the Covid-19 pandemic blew in, the world locked down, and admonitions to “stay the ‘$^#&’ home” blazed through social media. No freedom was too important to discard in the name of public safety: jobs, family businesses, artistic endeavours, public meetings, social connections that kept despair at bay, all took a backseat to the grim business of saving grandma (who ended up getting Covid anyway). No discussion of moral or practical trade-offs, no pushback from the press, nothing. It felt wrong to me on a cellular level.
Apparently I was the only one in my middle-class liberal circle to harbour misgivings about this astonishing new world. If I tried, ever so timidly, to articulate my concerns on Facebook or Twitter, the online warriors shot back with a string of epithets. “Go lick a pole and catch the virus,” said one. “Crawl back into your cave, troglodyte,” said another. And my all-time favourite: “You’re nothing but a mouth-breathing Trumptard.”
From the get-go, I perceived Covid as more of a philosophical problem than a scientific one. As I wrote on more than one occasion, science can inform our decisions, but not dictate them. What ultimately powers our choices are the values we hold. I saw Covid as a morality play, with freedom and safety cast as the duelling protagonists, and it looked like safety was skipping to an easy victory.
It was a heady time for the health bureaucrats, whose increasingly arcane rules betrayed a naked impulse to control: the Canadian high-school students required to use masks on both their faces and their wind instruments during band practice, the schoolchildren forced (for hygiene reasons) to study on their knees for hours in an Alaska classroom, the “glory-hole” sex advised by the British Columbia Centre for Disease Control. The lack of public pushback against these absurdities heightened my awareness of the fragility of our freedoms.
One of the earliest memes to surface during the pandemic was “muh freedumb.” The locution became a shorthand for a stock character – a tattooed man wearing camo gear and a baseball cap, spewing viral particles while yelling about his rights. A selfish idiot. The memes kept coming: “Warning, cliff ahead: keep driving, freedom fighter.” “Personal freedom is the preoccupation of adult children.” Freedom, for centuries an aspiration of democratic societies, turned into a laughing stock.
Eventually, pro-freedom voices began trickling into the public arena. I wasn’t alone, after all. There were others who understood, in the words of Telegraph writer Janet Daley, that the institutional response to Covid-19 had steamrolled over “the dimension of human experience which gives meaning and value to private life.” Lionel Shriver decried how “across the Western world, freedoms that citizens took for granted seven months ago have been revoked at a stroke.” And Laura Dodsworth brought tears to my eyes when she wrote, in her 2021 book A State of Fear, that she feared authoritarianism more than death.
Once the vaccines rolled out, the war on freedom of conscience went nuclear. If you breathed a word against the products, or even the mandates, you were “literally killing people.” The hostility towards the “unvaxxed” culminated in a Toronto Star front page showcasing public vitriol, splashed with such sentiments as: “I honestly don’t care if they die from Covid. Not even a little bit.”
This, too, felt viscerally wrong. I knew several people who had refused the vaccine, and they all had well-articulated reasons for their stance. If they didn’t fully trust the “safe and effective” bromide recycled by all government and pharmaceutical industry spokespeople, I could hardly blame them. (And I say this as someone who writes for Big Pharma and got five Covid shots.)
One of the most deplorable casualties of Covid culture was freedom of expression, a core principle in the United Nations’ Universal Declaration of Human Rights. Experts speaking publicly about the harms of lockdown faced systematic ostracism from mainstream media, especially left-wing news outlets. By early 2021, Human Rights Watch estimated that at least 83 governments worldwide had used the Covid-19 pandemic to violate the lawful exercise of free speech and peaceful assembly.
“Authorities have attacked, detained, prosecuted, and in some cases killed critics, broken up peaceful protests, closed media outlets, and enacted vague laws criminalizing speech that they claim threatens public health,” the group wrote in a media release. “The victims include journalists, activists, healthcare workers, political opposition groups, and others who have criticized government responses to the coronavirus.”
But what about misinformation? Doesn’t it kill people? Newsflash: misinformation has always existed, even before TikTok. It’s up to each of us to sift the credible folks from the cranks. The best defence against misinformation is better information, and it’s the policy wonks’ job to provide it. Modern science itself depends on this tug-of-war of ideas, which filters out weaker hypotheses and moves stronger ones ahead for further testing.
Besides, misinformation comes not just from cranks, but from “official sources” – especially those tasked with persuading the public, rather than informing it. Remember when Rochelle Walensky, former director of the Centers for Disease Control and Prevention in the US, asserted that “vaccinated people do not carry the virus?” Or when Anthony Fauci maintained that getting vaccinated makes you a “dead end” in the chain of transmission? I rest my case.
The marketplace of ideas is like a souk, with a lot of hollering and arguing and the odd snatched purse – and that’s exactly how it should be. It’s an ingenious and irreplaceable process for getting to the truth. There are few ideas too sacrosanct to question or too ridiculous to consider. That’s why, unlike just about everyone in my left-leaning circle, I take no issue with Elon Musk’s shakedown of the old Twitter, now the Wild West of X.
Under Musk’s algorithms, my feed has become a true philosophical souk, with wildly disparate views smashing into each other, leaving me to sift through the rubble in search of a gold nugget or two. Love him or hate him, Musk offers a much-needed counterweight to the ideological lockstep in much of the mainstream media. And when it comes to free speech, Musk has put his money where his mouth is: when media personality Keith Olbermann recently hopped on X, where he boasts a million followers, to call for Musk’s arrest and detainment, Musk made no move to censor him. Works for me.
While the “old normal” has thankfully returned to our daily lives, save the odd mask in a shopping mall or subway car, the stench of censorship that blew in with the pandemic has yet to dissipate. An obsession with disinformation permeates the zeitgeist, spurring lawmakers in several Western countries to censor the flow of thoughts and ideas that gives a free society its pulse.
We cannot excise personal freedom from a democratic society, even in the interests of the “public good,” without poisoning the roots of democracy itself. Article 3 of UNESCO’s 2005 Universal Declaration of Bioethics and Human Rights states this plainly: “The interests and welfare of the individual should have priority over the sole interest of science or society.” In our post-pandemic reality, the statement seems almost quaint. Nonetheless, it expresses an enduring truth: that a democracy must never discard the idea of freedom – even in a pandemic.
Freedom desperately needs a comeback from its current incarnation as an expendable frill. In my own small way I’m trying to make this happen: never much of an activist before Covid, I’m now part of a small group preparing to launch a Free Speech Union in Canada, modelled after the highly successful one in the UK. The organisation will offer legal advice to individuals facing censorship, cancellation, or job loss because of their words. I look forward to supporting people caught in this anti-freedom web, including those whose words I heartily disagree with.
My newfound respect for free speech is also what propels me to keep talking about Covid. The response to the pandemic exceeded the bounds of public health, and we need to expose the forces that drove it. Here’s Daley again: “The world went crazy. There is no other way to account for what was an almost nihilistic dismantling not just of particular liberties and rights, but of the very idea of liberty.” We can’t let it happen again.
Republished from Perspective Media
Author
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