Thread by @doctorow

There are no #libertarians in a bank run. No sooner had VCs whipped each other into a terrified Twitter frenzy at the collapse of #SVB - a collapse caused by that frenzy - than the #AynRand-poisoned elites started begging for Uncle Sucker for handouts:

https://twitter.com/EricNewcomer/status/1634300928621793283

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If you'd like an essay-formatted version of this thread to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

pluralistic.net/2023/03/23/sma… 2/

Now, on the one hand, it's easy to dismiss these guys as very, very, very stupid. After all, they played a game of #PrisonersDilemma in which they were allowed to talk to each other as much as they wanted - and they still sold each other out:

newsletter.mollywhite.net/p/the-venture-… 3/

But they have the commonsense to realize that an America where $10k in student debt cancellation and lunches for hungry kids are out of reach, billions to rescue a bank balance sheet overwhelmingly made up the investments of "high net worth" 1%ers wouldn't be popular. 4/

After all, these guys have been crying about incipient guillotinism for years:

bloomberg.com/news/articles/…

Sure, they don't compare small rises in the top marginal tax-rate to #Kristallnacht anymore:

npr.org/sections/allte… 5/

But they are locked and loaded for #TheEvent, feathering elaborate subterranean, antipodean nests in the most luxurious bunkers New Zealand has to offer, against the day that the poors come to eat them:

cnn.com/2020/07/15/bus… 6/

So amid the clamor for socialism-for-the-rich, these billionaires went on the hunt for average joes who could serve as the face of the bailout. Like the "Ohio mom with 4 kids and a husband who works in manufacturing, who owns a small business:"

businessinsider.com/mother-small-s… 7/

She's ex-McKinsey and raised $4m in VC for a $600/month life-planning app; her husband, another McKinsey alum, is a senior manager at a steel company (that is, he "works in manufacturing"). 8/

Clearly, the ex-libertarian 0.01 percenters begging for relief needed to find someone else. 9/

Enter #DavidSacks, a billionaire Paypal mafiosi who waded into the debate with screenshots of an email from a "small, non-profit school" that would miss payroll if the bailout was not forthcoming:

https://twitter.com/DavidSacks/status/1636054055121453057

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Sacks held this up as evidence that SVB's depositors were "more diversified than the media narrative has allowed." Sacks went on to claim that the bailout saved "innocent bystanders" like "teachers" from being "laid off." 11/

What is this small, nonprofit school? Writing in @TheProspect, @lukewgoldstein sleuths it out: the "small, nonprofit school" is North Country School, an upstate New York boarding school where tuition runs $62k/year - more than #Harvard or #Yale:

prospect.org/economy/2023-0… 12/

North Country sounds like a great place to get an education. It's got its own private ski-slope. The local city raised a $7m municipal bond on its behalf. There's a rock-climbing range and horseback riding. 13/

The school emphasizes unstructured, outdoor education, with "farming, wilderness trips...even maple sugaring":

northcountryschool.org 14/

Let's be honest, this is the kind of education a lot of us dream of our kids having. No wonder that the alumna include numerous Rockefellers, and a scion of the Aga Khan family - lineal descendants of the Prophet Muhammad. 15/

As illustrious as the student body is, the trustees are even more gilt-edged. There's a former Jpmorgan managing director, a former Google exec, Austrian nobility, the Welch's grape heir and even JD Salinger's kid. The chair ran a booze delivery company that sold to Uber. 16/

Together, they manage $30m in assets and raise $3m/year in donations, on top of $9m/year in revenues.

As Goldstein points out, it might be a lot to ask of the median small, nonprofit school trustee to investigate the soundness of the school's bank. 17/

But these aren't the median trustees of the median school. They're raising millions from Vanguard and Fidelity and the JM Kaplan Fund. 18/

Perhaps it's not asking too much that high-flying financiers craft a risk management plan for their deposits - or, you know, just have the nous not to stash all their money in a single bank account, diversifying their risk the way that any financial planner would advise them. 19/

According to Sacks, if the FDIC had frozen SVB withdrawals, or imposed a small haircut on depositors with more than $250k in the bank, the "modestly paid workers who tend not to have a lot of savings to fall back on" who worked at the school would have been out in the cold. 20/

But with donors on tap who give $50,000 at a pop, it seems likely that the trustees could have tapped someone for a bridge loan.

It's doubtless true that there are low-waged, precarious workers who would have been out in the cold if the FDIC hadn't stepped in. 21/

But the wealthy "investors" who clamored for the bailout spent the last several years consistently, brutally, loudly calling for an end to covid relief, no student debt cancellation, and cuts to public services. 22/

The idea that they were worried about saving the janitors and receptionists of #SiliconValley strains credulity:

pluralistic.net/2023/03/18/2-b… 23/

You can't be on record calling for tech billionaires to "Sharpen your blades boys 🔪" ahead of mass layoffs and also claim to be a champion of the middle-class:

pluralistic.net/2023/03/21/tec… 24/

As Goldstein writes, "David Sacks couldn’t find a mom-and-pop institution to justify his cockeyed version of reality without turning to a VC colleague’s ultra-rich boarding school." 25/

There might be mom-and-pop institutions on the SVB balance-sheet, but David Sacks evidently doesn't know any of them.

New York State is a good place to be a Silicon Valley banker. 26/

For one thing, the SDNY is an exceptionally nice place to be a bankrupt billionaire, which is why SVB's investors now claim that their headquarters are at 387 Park Ave, 2,951 miles from the Santa Clara HQ the company listed on all its filings:

pluralistic.net/2023/03/18/2-b… 27/

In New York, elite boarding schools get federal rescues, so long as they can claim some nexus with SVB. But, as Goldstein writes, NY city and state schools are in outright financial crisis, with no aid in sight. The State University of New York system is drowning in debt. 28/

NYC schools are about to bring down massive layoffs, having lost $469m out of their budgets:

comptroller.nyc.gov/newsroom/testi… 29/

The FDIC stepped in to rescue SVB, claiming that it wouldn't cost the public anything - instead, the money would come from increases in the entire bank system's insurance premiums. 30/

But as #AdamLevitin writes for @CreditSlips, banks "will pass those premiums through to customers because the market for banking services is less competitive than the market for capital...." 31/

That means "higher costs for increased insurance premiums are likely to flow to the least price-sensitive and most 'sticky' customers: less wealthy individuals"

creditslips.org/creditslips/20… 32/

"So average Joes are going to be facing things like higher account fees or lower APYs, without gaining any benefit. Instead, the benefit of removing the cap would flow entirely to wealthy individuals and businesses. This is one massive, regressive cross-subsidy." 33/

Nothing about this bailout intrinsically protects anyone's job. Yes, if the companies that banked with SVB went under, they'd have fired everyone. 34/

But tech companies are firing everyone *anyway*, 280,000 and counting, in *profitable* companies where they do stock-buybacks big enough to pay every worker's salary for the next quarter-century:

pluralistic.net/2023/03/21/tec… 35/