Zone1 The Undeserving Rich, Bank Bailouts, And America's Soaring Inequality

[Winston]

Are you flippin kidding me?

SVB bought long-term US Treasuries.

What a dumbass.

Biden is a dumbass.

Treasuries will tank if Republican's refuse to increase the debt limit.

They already tanked. And now they caused a couple of bank failures.

What stupid shit buys long term Treasuries in this market? I mean seriously, inflation has been a problem that was easily anticipated, like all the way back to 2020. So that shit is on them, and honestly, they should have been left to go belly up without a government rescue. All those companies with all that money deposited, WTF, does the words "due diligence" not mean anything?

And actually, if you knew how things works, the buying of Treasuries was not the problem. The problem was the assault on assets as companies began to withdraw their funds and the bank was forced to sell those assets at a loss to cover those funds. Not a problem now, the FED will loan them the money to cover those withdrawals.

 

[BackAgain]

The standard conservative explanation for why inequality has widened is that individuals are paid what they’re “worth” — and that a few Americans at the top are now worth extraordinary sums while most Americans are not.

The people who now hold a record share of the nation’s wealth justify their wealth (and their low tax rates) by utilizing three myths.

The first is trickle-down economics. They claim that their wealth trickles down to everyone else as they invest it and create jobs. Yet for over 40 years, as wealth at the top has soared, almost nothing has trickled down. (Trump provided a giant tax cut to the wealthiest Americans, promising it would generate $4,000 in increased income for everyone else. Did you receive it?)


The super-wealthy do not create jobs or increase wages. Jobs are created when average working people earn enough money to buy all the goods and services they produce, forcing companies to hire more people and pay them higher wages.

The second myth is the “free market.” As I noted above, the ultra-rich claim they’re being rewarded by the impersonal market for creating and doing what people are willing to pay them for. The wages of other Americans have stagnated, they say, because most Americans are worth less in the market now that new technologies and globalization have made their jobs redundant.

Rubbish. There’s no reason why the “free market” would reward vast multiples of what the rich were rewarded decades ago. Besides, the market can induce great feats of invention and entrepreneurialism with lures of hundreds of thousands or even millions of dollars — not billions.


The ultra-wealthy have rigged the so-called “free market” in America for their own benefit. Billionaires’ campaign contributions have soared from a relatively modest $31 million in the 2010 elections to $1.2 billion in the most recent presidential cycle — a nearly 40-fold increase. What have they got for their money? Tax cuts, freedom to bash unions and monopolize markets, and government bailouts. Their pockets have been further lined by privatization and deregulation.

The third myth is that they’re superior human beings — rugged individuals who “did it on their own” and therefore deserve their billions.

Baloney. Sixty percent of America’s billionaires are heirs to fortunes passed on to them by wealthy ancestors. Others had the advantages that come with wealthy parents.

There is no moral justification for today’s extraordinary concentration of wealth at the very top. It is distorting our politics, rigging our markets, and granting unprecedented power to a handful of people.

The undeserving rich, the bank bailouts and America's soaring inequality

Last week’s bailout of small banks (and it was a bank bailout) needs to be seen in the larger context of America’s soaring inequality. The standard conservative explanation for why inequality has widened is that individuals are paid what they’re “worth” — and that a few Americans at the top are...

www.rawstory.com

The usual complaint from liberals about inequality is not very well thought out. Equality is a virtue if properly defined and applied to reasonable aspects of our lives.

Wealth inequality isn’t on that list.

In fact, why should it be? I don’t care if someone else is rich. But if I were poor, I still wouldn’t envy the rich. I’d perhaps be motivated to work harder or smarter to get a little more of the pie. But the fact that some guy beat me to it? Pfft simply not a problem.

 

[Toddsterpatriot]

What stupid shit buys long term Treasuries in this market? I mean seriously, inflation has been a problem that was easily anticipated, like all the way back to 2020. So that shit is on them, and honestly, they should have been left to go belly up without a government rescue. All those companies with all that money deposited, WTF, does the words "due diligence" not mean anything?

And actually, if you knew how things works, the buying of Treasuries was not the problem. The problem was the assault on assets as companies began to withdraw their funds and the bank was forced to sell those assets at a loss to cover those funds. Not a problem now, the FED will loan them the money to cover those withdrawals.

What stupid shit buys long term Treasuries in this market?

That'd be SVB.

I mean seriously,

Seriously.

they should have been left to go belly up without a government rescue.

They did. Their stock is worthless. Their bonds are worthless. Their officers are fired.

All those companies with all that money deposited, WTF, does the words "due diligence" not mean anything?

Depositors should have asked how many 10-year Treasuries they owned or were thinking of buying?

And actually, if you knew how things works, the buying of Treasuries was not the problem.

They lost over a billion. It ends up, that was a problem.

The problem was the assault on assets as companies began to withdraw their funds and the bank was forced to sell those assets at a loss to cover those funds.

They would have been forced to sell MORE assets. And, of course, they didn't have enough liquid assets and couldn't sell them quickly enough.

 

[Toddsterpatriot]

Nope.

p.s. Learn how to quote.

Yeah, Treasuries.

Risky business​

Silicon Valley Bank locked billions of dollars away into 10 year bonds. But there were risks it wasn't seeing.

Risk #1: Access. Those billions were now locked up for years. It wouldn't be easy to get that money in an emergency.

Risk #2: Interest rates. When interest rates started going up, the market value of Silicon Valley Bank's bonds went down.

That's because the bank bought its government bonds before interest rates started going up. The price you get from bonds is directly tied to interest rates. When interest rates go up, the market price of older bonds goes down because new bonds pay out higher interest rates.

When rates started climbing quickly, the price of Silicon Valley Bank's bonds tumbled.

Risk #3: Really, really rich customers. When rumors started up about the bank, customers panicked and and started pulling their money out. Because they were rich individuals and companies, that meant multi-million, even multi-billion dollar accounts cashing out all at once.

Silicon Valley Bank needed a lot of cash fast. But, of course, a lot of its cash was locked up in 10 year bonds. Now it had to try and sell those now to get cash.

Government Bond Fire Sale​

That's where the interest rate risk bit Silicon Valley Bank: Trying sell those second hand, low interest rate bonds at a moment when all the new bonds being issued paid out far more was not easy.

"Now, that same bond and the yield would be about 20 times higher," says Mark Williams. "So, to encourage investors to even think about your old bond, you would have to discount it."

Discount as in, a fire sale.

Silicon Valley Bank took huge losses selling off its bonds, and more investors panicked and pulled out their money. Williams says it was a bank run on a scale the U.S. hadn't seen since the Great Depression.

"In a single day last week, depositors knocked on the door and pulled 41 billion depositor dollars out," says Williams. "That's about a quarter of their total deposits. No bank, no matter how strong, could ever survive that sort of withdrawal... that sort of run on the bank."


P.S. Get a clue

 

[Toddsterpatriot]

Most of the pandemic stimulus occurred on his watch, and so did most of the Fed's expanded balance sheet, which went from $4 trillion to $7.5 trillion.

That's awful!!

I'm glad Biden told the Fed to shrink their balance sheet the day he took office.

He did that, right?

 

[Toddsterpatriot]

See, other banks have rich customers, too. You think JP Morgan doesn't have rich customers? So explain that - if you can. I doubt it. That requires knowledge beyond copy/pasting.

SVB had a relatively small number of business accounts with very large balances.
They were heavily concentrated in a small community and their panic spread quickly.

Was that enough knowledge for your tiny lib brain to handle?

Or are you still working on $30-$3=$27?

 

[multivita-man]

SVB had a relatively small number of business accounts with very large balances.
They were heavily concentrated in a small community and their panic spread quickly.

In other words, it wasn't a real bank, but it was posing as one. Biden's responsible for that how? Whatever happened to personal responsibility? Oh that only applies to black people on welfare - never mind.

 

[Toddsterpatriot]

SVB stupidly bought long-term bonds on an open market. Pretty much every bank in the country deals in bonds. The difference is that other banks hedge their risk with other instruments. Are you arguing that the Treasury should decide who can buy them and who can't? What are you a communist now?



Biden didn't raise interest rates; the Fed did - after years of expanding its balance sheet and having near zero interest. In fact your MAGA King argued for negative interest rates, and the Fed balance sheet nearly doubled while he was in office. So when you wake up tomorrow morning and you're trying to decide which blend of coffee you want to perk up a bit, I suggest you pour yourself a nice big cup of shut the fuck up.



This is not your own insight here; you're copy/pasting random shit you've read.

See, other banks have rich customers, too. You think JP Morgan doesn't have rich customers? So explain that - if you can. I doubt it. That requires knowledge beyond copy/pasting.



Discount as in, how fucken stupid can you be to load up in long-term bonds at a time when your deposits exploded over a 1-2 year period due to the pandemic? How is Biden responsible for 2 or 3 banks' dumbassery?



Yeah that's what happens when we allow S&L banks to be investment banks. In the 1930s the Democratic congress proposed a fix, which protected our financial system against instability for almost 75 years. That was called Glass-Steagall. We need to get back to that. Dodd-Frank ain't enough. As we can clearly see, Dodd-Frank has been broken, hacked. And it will be in the future. Glass-Steagall worked because it understood that the finance sector is greedy and needs to be controlled. Every goddamned "centrist" Democrat since 1984 has been trying to convince him or herself that we can go light-touch regulation on banks. They are fucking delusional. We cannot. Bankers and investors need to be dominated.



You first, MAGAtard.

Yeah that's what happens when we allow S&L banks to be investment banks.

SVB was a bank, not an S&L. Idiot.

In the 1930s the Democratic congress proposed a fix, which protected our financial system against instability for almost 75 years. That was called Glass-Steagall.

What did SVB do that would have been prevented under Glass-Steagall?
Be specific.

 

[Toddsterpatriot]

In other words, it wasn't a real bank, but it was posing as one. Biden's responsible for that how? Whatever happened to personal responsibility? Oh that only applies to black people on welfare - never mind.

Banks with large business deposits aren't real? LOL!

 

[Papageorgio]

I’m sure glad Obama kept his promise of putting down the hammer on those bankers, and making them pay for their screwing over the working Americans.

 

[80zephyr]

The first is trickle-down economics.

What's that?

They claim that their wealth trickles down to everyone else as they invest it and create jobs.

Wealthy people don't invest money and create jobs?

Can you prove it?

Of course they don't invest. They keep their billions in a mattress.

Lol.

 

[multivita-man]

Yeah that's what happens when we allow S&L banks to be investment banks.

SVB was a bank, not an S&L. Idiot.

It was a commercial "bank" that had a unique clientele, most of which exceeded the FDIC insurance limits. It wasn't a normal bank. Biden's fault how?

In the 1930s the Democratic congress proposed a fix, which protected our financial system against instability for almost 75 years. That was called Glass-Steagall.

What did SVB do that would have been prevented under Glass-Steagall?
Be specific.

I wasn't referring to SVB specifically; SVB was doomed due to SVB's incompetence, not the conflict of interest between the investment and ordinary savings/lending side of household banking.

 

[multivita-man]

Banks with large business deposits aren't real? LOL!

Where is SVB today?

 

[Toddsterpatriot]

It was a commercial "bank" that had a unique clientele, most of which exceeded the FDIC insurance limits. It wasn't a normal bank. Biden's fault how?



I wasn't referring to SVB specifically; SVB was doomed due to SVB's incompetence, not the conflict of interest between the investment and ordinary savings/lending side of household banking.

It was a commercial "bank" that had a unique clientele, most of which exceeded the FDIC insurance limits. It wasn't a normal bank. Biden's fault how?

Not an S&L or an investment bank? Weird.

 

[Toddsterpatriot]

MAGAtard gave Jay Powell the suggestion for negative interest rates. Powell told him to get fucked. Yet you're banging on Biden for loose monetary conditions. Maybe it's MAGA that should go get fucked by their own hypocrisy.



I bet you're hairless.

Biden told Powell to shrink the sheet, when it was $7.4 trillion, and Powell said fuck it, I'm gonna increase it to $8.9 trillion? And Biden was so upset about the increase, he nominated him
for a second term?

Damn that independent Fed. Poor Biden was powerless to influence it.

 

[Toddsterpatriot]

Where is SVB today?

It got flushed down the Biden hole.

So, was it really a fake bank?

 

[multivita-man]

It was a commercial "bank" that had a unique clientele, most of which exceeded the FDIC insurance limits. It wasn't a normal bank. Biden's fault how?

Not an S&L or an investment bank? Weird.

It might as well have been an investment bank - it took stupid risks that most other banks didn't take.

 

[multivita-man]

Biden told Powell to shrink the sheet, when it was $7.4 trillion, and Powell said fuck it, I'm gonna increase it to $8.9 trillion? And Biden was so upset about the increase, he nominated him
for a second term?

Yeah, team transitory and all that.

The balance sheet under Biden has been coming down and it's a drop in the bucket compared to the expansion he inherited. I'll repeat: the balance sheet doubled under MAGA King and MAGA King wanted negative interest rates. No matter what you say about Biden, that is MAGA's legacy. Fiscal insanity.

Damn that independent Fed. Poor Biden was powerless to influence it.

The previous president threatened to fire/demote the Fed chair if he didn't lower interest rates to zero (or below). Take your talk of independence and shove it up your ass.

 

[multivita-man]

It got flushed down the Biden hole.

So, was it really a fake bank?

Yes, because real banks survive. In this day and age of stress tests and FDIC insurance, how fucking bad of a bank do you have to be to have a 1931-style run? Pretty fucken bad. In other words, not a real bank.

 

[Toddsterpatriot]

It might as well have been an investment bank - it took stupid risks that most other banks didn't take.

Loans and Treasuries. Just like Goldman. LOL!