The blame game is underway. Banks are failing, they say, because it’s all Trump’s fault. Banks are failing because it’s all Biden’s fault. But here’s the truth: Banks are failing because, among other things such as the bank’s own bad risk management, politicians are greedy. Their greed and profligacy could wipe out a swath of tech innovation in the frenzy following the implosion of Silicon Valley Bank (SVB).
Donald Trump spent like he was playing with house money. But he unleashed the economy that more than made up for it — until COVID. Then Joe Biden came to office and said hold my beer.
You can’t do much about the balance sheets of a first-tier bank that finances Silicon Valley start-ups, but you surely can do something about politicians who hastened that bank’s free fall into receivership.
"The State of the Union is STRONG." – Joe pic.twitter.com/2lQ6PQXWL5
— Victoria Taft, The Adult in the Room, FITF Squad (@VictoriaTaft) March 13, 2023
The Fauci-induced Black Swan event known as COVID-19 left us on our heels. Then Biden made things worse by leaving billions in materiel and America’s prestige and sacrifice on the flats of Bagram Air Base. And then he did the same thing to the American taxpayers. He forsook billions, maybe trillions, in lost productivity and prosperity by smothering our domestic energy business. That dunder-headed move immediately enriched and empowered Vladimir Putin and his oil oligarchs. Vlad was swimming in money. Putin adjudged that Biden was so dumb that he may as well pick off the rest of Ukraine to get the old USSR back together. But then Putin picked up the phone and called Beijing, and now Xi and Vlad are best buds. Nixon is rolling over in his grave. And Joe Biden is now Volodymyr Zelenskyy’s bagman. We’re spending billions to hold up the most corrupt nation in the world. Ask Victoria Nuland and the Bidens how corrupt it is. They’d know.
Related: The Biden Economy Is Falling Apart, Everything, Everywhere, All at Once
Or ask Treasury Secretary Janet Yellen. In the days leading up to the SVB failure, she was Oprah in Kyiv, giving away more of our money. And you get a new dacha! And you get a new dacha!
SOME INTERESTING FACTS: U.S. Secretary of the Treasury Janet Yellen was in Kiev waging war against Russia on February 27, instead of paying attention to one of her primary responsibilities — the US banking system. https://t.co/i1DY8B7MBH
— Steve Hanke (@steve_hanke) March 13, 2023
Biden spent trillions for his global warming legislation to enrich all of his political cronies and NGOs who would do his party’s bidding for government money. The name of that bill mocked the American people to their faces. They called it the “inflation reduction act.” They were laughing at us.
These politicians knew the trillions in new expenditures would be like a millstone around the necks of the individuals who pay the bills around here. These greedy politicians (Democrats in this case) knew it would in fact trigger more inflation. And it did.
What came next? The Fed’s Jerome Powell had to rejigger interest rates to make money more expensive to tamp down demand. That, naturally, made everything more expensive for everyone. People who drive and wanted to buy a house and start their American Dream were back-burnered. The expensive money crowded out capital for other uses. And that more expensive money raised the cost of government, which put a greater burden on the little guy. It raised the cost of debt service on the U.S. debt. Within a few short years, by 2029, debt service will eclipse the amount we spend on our military.
Powell sat before the Senate Banking Committee the other day to make the case for higher interest rates and, when asked about the impact on industry of all the interest rate increases, said it was no big deal. Then he demanded they raise the debt ceiling so politicians can spend more.
Summary of Jerome Powell's testimony today before the Senate Banking committee. 🔥 pic.twitter.com/cVSWZnOFLZ
— Wall Street Silver (@WallStreetSilv) March 8, 2023
Who says these people can’t walk and chew gum at the same time?
Silicon Valley venture capitalists on the All In podcast found several reasons for the run on Silicon Valley Bank, and chief among them was a combo of its risk-balancing and higher interest rates.
Chamath Palihapitiya said before this “debacle,” he told leaders of companies in his portfolio they needed to have money to last them until mid-2025. Yes, 2025. “And yet some, some groups of VCs [venture capitalists] and others who just didn’t get that memo and just kept spending like nothing had changed,” he said during the special episode on the bank failure. He continued, “and that caused a mismatch” and was “really the spark that lit the fuse.” Palihapitiya also blamed the “lack of governance at some of these companies” on the boards that were “just not doing their jobs…and doing the hard work of holding these folks accountable.”
How's it going? pic.twitter.com/8YdvW6O7kr
— Victoria Taft, The Adult in the Room, FITF Squad (@VictoriaTaft) March 13, 2023
In addition, Palihapitiya said, “the impact of rising rates…in the last year and a half at SVB, they were so desirous of profits that they basically had a duration mismatch,” which is just another way to say Dave Ramsey’s epigram: they had “more month than money.”
“Somewhere along the line,” Palihapitiya said, “the risk folks at SVB made a large miscalculation.” And higher interest rates made everything go south faster.
Recommended: West Coast, Messed Coast™: The Left’s Unconstitutional Assault on Guns
Podcast co-host and investor David Sacks said a lot of people in Silicon Valley didn’t stop spending and their bank didn’t stop loaning. You are right on track if you think that sounds a bit like the old “liar loans” of the 2008 Wall Street investment bank catastrophe.
Much has been said of the bank’s wokeness and lavish spending on Leftist causes. I wonder which political party got the largesse of the bank’s board members? Where’s Rep. Roh Khana now?
And here we are. Yet another black swan event that I’ve told my kids to prepare for at least once a decade now. Why, they ask? Because of politicians’ greed and Wall Street head cases, I tell them.
That isn’t a dark cloud over the Democrats; that’s a flock of black swans waiting to alight again on the American people. Honk! Honk!
Blame for this generational cataclysm will be apportioned by the history writers in the thrall of the global Left. But if you know what’s good for you and this country, you’ll stay clear-eyed and start ordering your lawmakers to stop being so damned greedy.
Join the conversation as a VIP Member