Luis Garicano 🇪🇺🇺🇦 @lugaricano@respublicae.eu

I am visiting @StanfordGsb and @HooverInst , so I decided to pass by the main Palo Alto branch of #SVB at 9.00am. This is my comment. A quick thread also with my "policy" observations.

🐦🔗: https://n.respublicae.eu/lugaricano/status/1635326218886352897

@HannoLustig Whereas the restaurant owner or small entrepreneur who holds his 1 million in payrolls in some little bank should have known better?
Or is this simply stating that they should never monitor and hence this model is completely broken- all deposits are insured, de facto?

🐦🔗: https://n.respublicae.eu/lugaricano/status/1635292814211960835

@djtorres86 @goncharev Como la pornografía para el juez Potter: conozco un intelectual con influencia global cuando lo veo: Nussbaum, Fukuyama, Chomsky, Zizek, Krugman...
¿En qué área del conocimiento, desde las matemáticas a las humanidades, hay un solo nombre propio imprescindible español?

🐦🔗: https://n.respublicae.eu/lugaricano/status/1635291591807234051

RT @PeterContiBrown: I really don’t buy this argument that depositors with seven- and eight- and nine-figure accounts at these banks can’t be good monitors. On that theory there can be no consumer monitoring, corporate governance, or good grief democracy itself. /1

🐦🔗: https://n.respublicae.eu/lugaricano/status/1635285805924249600

Enough!
This banking model is broken. Stop the cycle of new financial regulations, lobbying to make them ineffective, excessive risk taking, finished by cries of "oh my good this time is different please bail us out"!, and bailouts.
Here is a solution: https://www.imf.org/external/pubs/ft/wp/2012/wp12202.PDF

🐦🔗: https://n.respublicae.eu/lugaricano/status/1635283625834053633

@djtorres86 @goncharev El lector lee anticipando con ganas un párrafo final de contraejemplos apabullantes. Pero no llegan.

A nuestro país le encanta pagar y valorar el fútbol, pero no por el conocimiento. Por eso, no lo genera.

Estoy por leer el primer teorema de Matemáticas con nombre español.

🐦🔗: https://n.respublicae.eu/lugaricano/status/1635278665088110593

Today, post #svb, we are getting effectively a huge new round of QE-for-the-rich-and-connected, and, possibly, a stop in interest rate increases

🐦🔗: https://n.respublicae.eu/lugaricano/status/1635264514060058624

The end of the inflation fight is today?
In the fall of 2020, I wrote (with T. Santos and J. Saa) that if inflation were to return, CBs would not be willing to follow through with tighter mon. pol. because of their fear if causing financial instability. https://cepr.org/voxeu/columns/tackling-inflation-if-it-reappears

🐦🔗: https://n.respublicae.eu/lugaricano/status/1635264506539683851

@fhenriques I am pro- market, not pro business
If you cannot differentiate capitalism from capitalists, you need to read this https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.amazon.com/Saving-Capitalism-Capitalists-Unleashing-Opportunity/dp/0691121281&ved=2ahUKEwiasLz47tj9AhWbLEQIHY6RA4sQFnoECCEQAQ&usg=AOvVaw2Go65Zl98zrtbvrXDluSTu

🐦🔗: https://n.respublicae.eu/lugaricano/status/1635251044929384448

US Treasury trying to hide in technicalities a gigantic subsidy to SVB: treating of collateral at par (buying bonds worth 80 at 100) goes against every risk management principle of the last decades. See thread.
RT @DanielaGabor: forget about SBV liabilities for a second, the real bailout story is the regime-change in the Fed's treatment of collateral:

par value goes against every risk management commandment of the past 30 years.
it turbocharges the monetary p…

🐦🔗: https://n.respublicae.eu/lugaricano/status/1635250373211602944

@ashamedani It is worse. Problem is we act as it were, for the rich. No consequences, all around bailouts.

🐦🔗: https://n.respublicae.eu/lugaricano/status/1635247511094038528

This must stop. The banking system we have created is unstable, probe to cronyism, unequal, fake.
We need to think again: narrow banking is the only solution. See the Chicago Plan https://en.m.wikipedia.org/wiki/Chicago_plan

🐦🔗: https://n.respublicae.eu/lugaricano/status/1635247191345491976

Such a system is politically corrosive, economically extremely inefficient, pure moral hazard. And leads to the most illegitimate form of income inequality: these guys LOBBIED for no regulation, and then come crying about their bad luck. https://www.levernews.com/svb-chief-pressed-lawmakers-to-weaken-bank-risk-regs/

🐦🔗: https://n.respublicae.eu/lugaricano/status/1635247188921188352

We are increasingly moving to a world where all deposits are guaranteed, up to any level.

We need to recognize this and extract the consequences: we have these institutions, banks, making bets with the house money: heads they win, tails we (taxpayer) lose.

🐦🔗: https://n.respublicae.eu/lugaricano/status/1635245442605932545

What should have happened? The law is pretty clear. If you are below 250k, you enjoy deposit insurance. If you have more, you receive a certificate staring with the deposit you had. The FDIC liquidates the assets and figures out how much to pay you. If it can, it makes you whole.

🐦🔗: https://n.respublicae.eu/lugaricano/status/1635244701984129025

@Slibertarian_ Los que tienen menos de 250,000 disfrutan de un seguro de depósitos.

🐦🔗: https://n.respublicae.eu/lugaricano/status/1635244215717474305

If you are rich and sophisticated, the government is always there to rescue you from your mistakes.

Once again, capitalism is only for the poor. For the rich, socialism.
$svb

🐦🔗: https://n.respublicae.eu/lugaricano/status/1635243604716441600

The narrative that Sillicon Valley has been pushing on #SVB is demolished by this graph, which shows enormous moral hazard (entirely unhedged interest rate risk), out of step with any other bank.
RT @AndreasSteno: SVB is/was not like the others because a prudent bank hedges interest rate risks. SVB did not.

Chart from JPAM / Michael Cembalest

🐦🔗: https://n.respublicae.eu/lugaricano/status/1634831794636726273

No further questions, your honor.
RT @AndreasSteno: SVB is/was not like the others because a prudent bank hedges interest rate risks. SVB did not.

Chart from JPAM / Michael Cembalest

🐦🔗: https://n.respublicae.eu/lugaricano/status/1634830203452297217

@BillAckman @mcuban
RT @AndreasSteno: SVB is/was not like the others because a prudent bank hedges interest rate risks. SVB did not.

Chart from JPAM / Michael Cembalest

🐦🔗: https://n.respublicae.eu/lugaricano/status/1634829036932198400