The response to the Silicon Valley Bank situation has been wild and, from many corners, as Mike points out, nonsensical.

A perfect case in point is the response from Krystal and Saagar on Breaking Points. Admittedly, their understanding of economics is severely lacking, but with their constant haranguing about corporate monopolistic behavior, you would think they'd be in favor of preventing a run on the banks and in turn, creating more consolidation at the big 4-6 entities.

As I said, you would think that would be their stance, but you would be wrong...they just complained about the "bailout" (a word which I don't think is appropriate in this situation, but I digress) and how this is another government hand-out to big business; while lacking any foresight to the obvious consequences of their preferred position.

But then again, if there is more consolidation, they would have more to complain about when one of these big banks does something unethical or illegal, and then they can ask, "how did the government let this happen?" SMH

Check out my recent article on Corporate Zombies and Karen Incorporated on the mindless drones that just follow the company talking points without any introspection whatsoever: https://www.gordoncomstock.com/p/corporate-zombies-and-karen-incorporated

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100% on the culture maxing part. There’s something deeply wrong in a society that yells at a lady on twitter because her bank is failing just because she made what appears to be a success to do list app. It’s like people have forgotten how to wish well for other people.

Piratewires short fiction when?

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You want to know what is happening? Read Pirate Wires.

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Lots of good stuff in the piece and much to think about. This is the sort of thing I subscribe for.

However, I do have a question about the "we must protect the SVB depositors to save tech" reasoning. Let's say the depositors get treated like they had the actual insurance policy they had - they get their 250k right away, then they get - by most estimates - 80-90% of the rest in weeks/months. This is very bad for many companies, as they need cash now, so they have to raise new money. Founders' control is diluted, but they continue. Some don't, of course, but wouldn't those disproportionately be ones that VCs don't think are worthwhile? Further, we get a serious incentive to hold your money in better ways in the future and to ask some real questions about the soundness of financial institutions you do business with. That seems like a plus - and in SVB's case, the red flags aren't too hard to spot: no risk officer for months? Check. Acting like an investment fund rather than a bank? Check. etc. I want a strong vibrant tech industry, but part of a strong vibrant tech industry is the industry doing some due diligence when it puts very large sums of money into other people's hands for safe keeping. With both FTX and SVB we're seeing a lot of VCs who apparently don't bother to do even the most basic due diligence (given that FTX apparently couldn't produce a list of its bank accounts, and "where do you bank?" seems like a question quite early in any effort to do due diligence, someone sure dropped the ball there) and that sloppy attitude seems to have rolled over to the tech companies in which they invest.

As for Signature - what kind of business puts noted business genius Barney Frank on its board? Answer: One that lives to rent-seek. Live by the rent-seeking, die by the rent-seeking. If crypto institutions - and I did think part of the story of crypto was disconnecting money from governments - chose as their bank one that thought politicians were the best board members, then maybe they walked into the Colosseum and shouldn't be surprised that there are lions waiting for them. (I have to admit, there is some delicious schadenfreude to hearing Barney Frank complain that financial regulators lacked an objective reason to shut down his bank).

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The bailout language is correct. Yes the corporation no longer exists and the shareholders are wiped out. It is being said that the bailout money for those with accounts over $250k will come from the FDIC which will effectively drain the FDIC’s fund, they then will raise the insurance fees on banks and any other FDIC institutions to recapitalize. Those entities will then increase fees to their customers. So in the end it is a bailout that regular people will pay the price.

The problem is that this creates a moral hazard. Look, I am not a hater and it sucks when you have put your money in a safe place and then as a result of bad management you lose it. But these are rich and very savvy people.

It should have alarmed big depositors

(Ruduku had over 400 million in deposits) that the bank did not have a risk manager for 9 months and the person they hired was from Bear Stearns, the board of directors had only one person with significant finance experience. But hey 45 % were women. Pretty much every board member was a big democrat donor, and from reports much of management attention was on DEI and ESG activities as opposed to say running a bank. If this bank had been in Ohio I doubt it would have been bailed out

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How did SVB go bankrupt? Slowly through cringe, then all at once through memes. Here are the full receipts: https://yuribezmenov.substack.com/p/svb-linkedin-receipts

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I listened to Sacks and Vavek on Megyn Kelly arguing their differing points on bailing out SVB. I more align with Sacks’ reasoning, but Vavek has a good point about the FDIC limit not being some arbitrary cap, lifted whenever someone shits the bed.

Here’s my solution: Congress needs to have an emergency raising of the FDIC limit to $1M to assuage fears across the board, with a clause stating that this is an emergency action and that further protections to depositors may be forthcoming. Also, include a payroll protection mechanism that will give businesses that use SVB for payroll an immediate loan to cover payroll related expenses. This should require an agreement that the loan is to be used solely for payroll and any abuses will be forwarded to DOJ for fraud prosecution for the ownership and/or executive officers of the companies. Make it clear, this is a loan that will be repaid, not a debt that will be forgiven.

These suggestions are just for depositors, the rest of the bank and stockholders are being handled appropriately already.

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Congrats you finally got my $80 so I could talk smack in the comments...

#1 - Crypto Dog Food - Was I able to subscribe with crypto? No! No I was NOT so for all the lip service I read about "building" and "builders'' and "smart contracts" and "DEFI" and "NFTs" and "web3" nine years and a few days since Mt Gox blew up, here we are on this web 2.0 platform paying with Visa, banks, and $USD to talk (but not act) because legacy media shills and simps for the gov't AND big tech sold out us and the 1st amendment out...SO they don't get blamed by unelectable cuckqueans who lose elections to orange WWF narcissists! 10 years and crypto still fails at being a ubiquitous payment method regular joes use!!! No I'm not a crypto hater, in fact I wrote a crypto competitor to this site "dplatform.me" but don't check it out because crypto is hard and getting heard in all the noise is even harder! Want to protect crypto and tech its not rocket science "eat the crypto dog food" stop supporting corporate fascism, I can't stand that word but that's the correct definition, business (corporations) and government acting in cooperative authoritarianism, does whether its leftist or rightist really matter to you? How many crypto, tech, or VC firms self custody a stablecoin treasury? How many pay their employees stablecoins? How many stablecoin payroll services are there? How many employees get paid with stablecoins to their self custody wallet? How many employees can pay for gas, groceries, utilities, car loan, rent, a mortgage with stablecoins? Sorry bitcoin DOES NOT solve this, until its completely detached from fiat currency it will be too volatile, but stablecoins can solve this...see #3

#2 - Factions Smacktions - Even a child knows, when you give someone else something of value to hold for you, that you expect them to return it. So why is there a gripe about people expecting a deposit of $250, $250k, or $250 million back? Did they take the risk and earn the return or did the people holding their money or did the people the holders(yep ironic) of their money lent their money too? See "Panic of 1907" there has been over 100 years of political, bureaucratic, and regulatory human filth stack, polished, and paid for by generations of tax payers and yet here we are the "Panic of 2023". Well this is just a one off even right? Nope happens on average at least once a decade, look it up! So what are we paying, voting, and giving up control for people? One bank run every decade? "...those who give up liberty for security..."

#3 - Just Deposits - Operation Choke Point 2.0 is real, it was always going to be eventually. The US government hates Binance with a special passion, so attacking BUSD and Paxos is not surprising. It isn't very fond of Tether either probably for the same reasons, it prefers to stay offshore and rejects WallSt and its puppets in DC. Jeremy Allaire in the middle of the crisis had an interesting tweet regarding his solution "The Payment Stablecoin Act", go check it out. If I understand it correctly he wants an untouchable "deposits only" account at the Fed for backing USDC, "...banks are a threat to stablecoins..." At this exact moment in history I don't know what to think of Circle and USDC? Maybe you've heard of the term "crony capitalism". If you're center left check out "Mr Smith Goes To Washington'', socialist Hollywood knew in 1939 what most Americans still don't understand in 2023, your elected representatives serve money not you. If you're center-right, check out "The Robber Barons” by Ayn Rand (Youtube) . She explains the difference between "capitalism" and “legalized criminals” or "crony capitalism". So what type of capitalists are Circle and Jeremy Allaire? Is USDC the CBDC the Fed is looking for? Is Operation Choke Point 2.0 objective to “kill crypto” or push and consolidate stablecoin (crypto) users to a regulations, surveillance, and sanctions compliant USDC, the big banks, and the Fed? Would this scenario be preferable to a CCP style CBDC? Are the Fed and the big banks even on the same team as DC anymore? Or have they figured out like the rest of crypto that DC can't stop itself from spending, ZERPing, NERPing, QEing, inflating, debasing, and destroying the US Dollar and its reserve status?

dPlatform Yourself!

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I don't want to be dense but what is the concern with Vivek's point. Isn't it reasonable to expect rules to remain consistent and applied consistently?

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I just think we all need to buy Jason Calacanis a coffee for pulling out his semi-automatic CAPS Lock key and single-handedly (actually two-handedly) saving the world.

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I read Garry Tan’s main thread and when he got to: “If you or your company are affected, I recommend that you reach out to your local congressman to get this on their radar TODAY.”

I started to kinda be even more confused, how is that his main piece of advice? Really? The main thing that companies can do that were affected are hope and pray on their congressman?

I feel like opening a new bank account immediately running the playbook that a couple businesses did of here’s a coupon off to buy more was the smartest move and helped way more in the short term than trying to call a congressman.

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