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
Anthony “I represent science” Fauci can now stand beside Richard “I am not a crook” Nixon in the history books as someone who received the poison pill of a preemptive pardon.
While Nixon was pardoned for specific charges related to Watergate, the exact crimes for which Fauci was pardoned are not specified. Rather, the pardon specifies:
Baseless and politically motivated investigations wreak havoc on the lives, safety, and financial security of targeted individuals and their families. Even when individuals have done nothing wrong – and in fact have done the right things – and will ultimately be exonerated, the mere fact of being investigated and prosecuted can irreparably damage reputations and finances.
In other words, the dying breath of the Biden administration appears to be pardoning Fauci for crimes he didn’t commit, which would seem to make a pardon null and void. The pardon goes further than simply granting clemency for crimes. Clemency usually alleviates the punishment associated with a crime, but here Biden attempts to alleviate the burden of investigations and prosecutions, the likes of which our justice system uses to uncover crimes.
It’s one thing to pardon someone who has been subjected to a fair trial and convicted, to say they have already paid their dues. Gerald Ford, in his pardon of Richard Nixon, admitted that Nixon had already paid the high cost of resigning from the highest office in the land. Nixon’s resignation came as the final chapter of prolonged investigations into his illegal and unpresidential conduct during Watergate, and those investigations provided us the truth we needed to know that Nixon was a crook and move on content that his ignominious reputation was carve d into stone for all of history.
Fauci, meanwhile, has evaded investigations on matters far more serious than Watergate. In 2017, DARPA organized a grant call – the PREEMPT call – aiming to preempt pathogen spillover from wildlife to people. In 2018 a newly formed collaborative group of scientists from the US, Singapore, and Wuhan wrote a grant – the DEFUSE grant – proposing to modify a bat sarbecovirus in Wuhan in a very unusual way. DARPA did not fund the team because their work was too risky for the Department of Defense, but in 2019 Fauci’s NIAID funded this exact set of scientists who never wrote a paper together prior or since. In late 2019, SARS-CoV-2 emerged in Wuhan with the precise modifications proposed in the DEFUSE grant submitted to PREEMPT.
It’s reasonable to be concerned that this line of research funded by Fauci’s NIAID may have caused the pandemic. In fact, if we’re sharp-penciled and honest with our probabilities, it’s likely beyond reasonable doubt that SARS-CoV-2 emerged as a consequence of research proposed in DEFUSE. What we don’t know, however, is whether the research proceeded with US involvement or not.
Congress used its constitutionally-granted investigation and oversight responsibilities to investigate and oversee NIAID in search of answers. In the process of these investigations, they found endless pages of emails with unjustified redactions, evidence that Fauci’s FOIA lady could “make emails disappear,” Fauci’s right-hand-man David Morens aided the DEFUSE authors as they navigated disciplinary measures at NIH and NIAID, and there were significant concerns that NIAID sought to obstruct investigations and destroy federal records.
Such obstructive actions did not inspire confidence in the innocence of Anthony Fauci or the US scientists he funded in 2019. On the contrary, Fauci testified twice under oath saying NIAID did not fund gain-of-function research of concern in Wuhan…but then we discovered a 2018 progress report of research NIAID funded in Wuhan revealing research they funded had enhanced the transmissibility of a bat SARS-related coronavirus 10,000 times higher than the wild virus. That is, indisputably, gain-of-function research of concern. Fauci thus lied to the American public and perjured himself in his testimony to Congress, and Senator Rand Paul (R-KY) has referred Fauci’s perjury charges to the Department of Justice.
What was NIAID trying to preempt with their obstruction of Congressional investigations? What is Biden trying to preempt with his pardon of Fauci? Why do we not have the 2019 NIAID progress report from the PI’s who submitted DEFUSE to PREEMPT and later received funding from NIAID?
It is deplorable for Biden to preemptively pardon Fauci on his last day in office, with so little known about the research NIAID funded in 2019 and voters so clearly eager to learn more. With Nixon’s preemptive pardon, the truth of his wrongdoing was known and all that was left was punishment. With Fauci’s preemptive pardon, the truth is not yet known, NIAID officials in Fauci’s orbit violated federal records laws in their effort to avoid the truth from being known, and Biden didn’t preemptively pardon Fauci to grant clemency and alleviate punishment, but to stop investigations and prosecutions the likes of which could uncover the truth.
I’m not a Constitutional scholar prepared to argue the legality of this maneuver, but I am an ethical human being, a scientist who contributed another grant to the PREEMPT call, and a scientist who helped uncover some of the evidence consistent with a lab origin and quantify the likelihood of a lab origin from research proposed in the DEFUSE grant. Any ethical human being knows that we need to know what caused the pandemic, and to deprive the citizenry of such information from open investigations of NIAID research in 2019 would be to deprive us of critical information we need to self-govern and elect people who manage scientific risks in ways we see fit. As a scientist, there are critical questions about bioattribution that require testing, and the way to test our hypotheses is to uncover the redacted and withheld documents from Fauci’s NIAID in 2019.
The Biden administration’s dying breath was to pardon Anthony Fauci not for the convictions for crimes he didn’t commit (?) but to avoid investigations that could be a reputational and financial burden for Anthony Fauci. A pardon to preempt an investigation is not a pardon; it is obstruction. The Biden administration’s dying breath is to obstruct our pursuit of truth and reconciliation on the ultimate cause of 1 million Americans’ dying breaths.
To remind everyone what we still need to know, it helps to look through the peephole of what we’ve already found to inspire curiosity about what else we’d find if only the peephole could be widened. Below is one of the precious few emails investigative journalists pursuing FOIAs against NIAID have managed to obtain from the critical period when SARS-CoV-2 is believed to have emerged. The email connects DEFUSE PI’s Peter Daszak (EcoHealth Alliance), Ralph Baric (UNC), Linfa Wang (Duke-NUS), Ben Hu (Wuhan Institute of Virology), Shi ZhengLi (Wuhan Institute of Virology) and others in October 2019. The subject line “NIAID SARS-CoV Call – October 30/31” connects these authors to NIAID.
It is approximately in that time range – October/November 2019 – when SARS-CoV-2 is hypothesized to have entered the human population in Wuhan. When it emerged, SARS-CoV-2 was unique among sarbecoviruses in having a furin cleavage site, as proposed by these authors in their 2019 DEFUSE grant. Of all the places the furin cleavage site could be, the furin cleavage site of SARS-CoV-2 was in the S1/S2 junction of the Spike protein, precisely as proposed by these authors.
In order to insert a furin cleavage site in a SARS-CoV, however, the researchers would’ve needed to build a reverse genetic system, i.e. a DNA copy of the virus. SARS-CoV-2 is unique among coronaviruses in having exactly the fingerprint we would expect from reverse genetic systems. There is an unusual even spacing in the cutting/pasting sites for the enzymes BsaI and BsmBI and an anomalous hot-spot of silent mutations in precisely these sites, exactly as researchers at the Wuhan Institute of Virology have done for other coronavirus reverse genetic systems. The odds of such an extreme synthetic-looking pattern occurring in nature are, conservatively, about 1 in 50 billion.
The virus did not emerge in Bangkok, Hanoi, Bago, Kunming, Guangdong, or any of the myriad other places with similar animal trade networks and greater contact rates between people and sarbecovirus reservoirs. No. The virus emerged in Wuhan, the exact place and time one would expect from DEFUSE.
With all the evidence pointing the hounds towards NIAID, it is essential for global health security that we further investigate the research NIAID funded in 2019. It is imperative for our constitutional democracy, for our ability to self-govern, that we learn the truth. The only way to learn the truth is to investigate NIAID, the agency Fauci led for 38 years, the agency that funded gain-of-function research of concern, the agency named in the October 2019 call by DEFUSE PI’s, the agency that funded this exact group in 2019.
A preemptive pardon prior to the discovery of truth is a fancy name for obstruction of justice. The Biden administration’s dying breath must be challenged, and we must allow Congress and the incoming administration to investigate the possibility that Anthony Fauci’s NIAID-supported research caused the Covid-19 pandemic.
Republished from the author’s Substack
Author
From the Brownstone Institute
This article was co-authored with Mary Beth Pfieffer.
In a seismic political shift, Republicans have laid claim to an issue that Democrats left in the gutter—the declining health of Americans. True, it took a Democrat with a famous name to ask why so many people are chronically ill, disabled, and dying younger than in 47 other countries. But the message resonated with the GOP.
We have a proposal in this unfolding milieu. Let’s have a serious, nuanced discussion. Let’s retire labels that have been weaponized against Robert F. Kennedy, Jr., nominated for Health and Human Services Secretary, and many people like him.
Start with discarding threadbare words like “conspiracy theory,” “anti-vax,” and the ever-changing “misinformation.”
These linguistic sleights of hand have been deployed—by government, media, and vested interests—to dismiss policy critics and thwart debate. If post-election developments tell us anything, it is that such scorn may no longer work for a population skeptical of government overreach.
Although RFK has been lambasted for months in the press, he just scored a 47 percent approval rating in a CBS poll.
Americans are asking: Is RFK on to something?
Perhaps, as he contends, a 1986 law that all but absolved vaccine manufacturers from liability has spawned an industry driven more by profit than protection.
Maybe Americans agree with RFK that the FDA, which gets 69 percent of its budget from pharmaceutical companies, is potentially compromised. Maybe Big Pharma, similarly, gets a free pass from the television news media that it generously supports. The US and New Zealand, incidentally, are the only nations on earth that allow “direct-to-consumer” TV ads.
Finally, just maybe there’s a straight line from this unhealthy alliance to the growing list of 80 childhood shots, inevitably approved after cursory industry studies with no placebo controls. The Hepatitis B vaccine trial, for one, monitored the effects on newborns for just five days. Babies are given three doses of this questionably necessary product—intended to prevent a disease spread through sex and drug use.
Pointing out such conflicts and flaws earns critics a label: “anti-vaxxer.”
Misinformation?
If RFK is accused of being extreme or misdirected, consider the Covid-19 axioms that Americans were told by their government.
The first: The pandemic started in animals in Wuhan, China. To think otherwise, Wikipedia states, is a “conspiracy theory,” fueled by “misplaced suspicion” and “anti-Chinese racism.”
Not so fast. In a new 520-page report, a Congressional subcommittee linked the outbreak to risky US-supported virus research at a Wuhan lab at the pandemic epicenter. After 25 hearings, the subcommittee found no evidence of “natural origin.”
Is the report a slam dunk? Maybe not. But neither is an outright dismissal of a lab leak.
The same goes for other pandemic dogma, including the utility of (ineffective) masks, (harmful) lockdowns, (arbitrary) six-foot spacing, and, most prominently, vaccines that millions were coerced to take and that harmed some.
Americans were told, wrongly, that two shots would prevent Covid and stop the spread. Natural immunity from previous infection was ignored to maximize vaccine uptake.
Yet there was scant scientific support for vaccinating babies with little risk, which few other countries did; pregnant women (whose deaths soared 40 percent after the rollout), and healthy adolescents, including some who suffered a heart injury called myocarditis. The CDC calls the condition “rare;” but a new study found 223 times more cases in 2021 than the average for all vaccines in the previous 30 years.
Truth Muzzled?
Beyond this, pandemic decrees were not open to question. Millions of social media posts were removed at the behest of the White House. The ranks grew both of well-funded fact-checkers and retractions of countervailing science.
The FDA, meantime, created a popular and false storyline that the Nobel Prize-winning early-treatment drug ivermectin was for horses, not people, and might cause coma and death. Under pressure from a federal court, the FDA removed its infamous webpage, but not before it cleared the way for unapproved vaccines, possible under the law only if no alternative was available.
An emergency situation can spawn official missteps. But they become insidious when dissent is suppressed and truth is molded to fit a narrative.
The government’s failures of transparency and oversight are why we are at this juncture today. RFK—should he overcome powerful opposition—may have the last word.
The conversation he proposes won’t mean the end of vaccines or of respect for science. It will mean accountability for what happened in Covid and reform of a dysfunctional system that made it possible.
Republished from RealClearHealth
Author
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