Brownstone Institute
Where Is Occupy Silicon Valley?
From the Brownstone Institute
Bank failures tend to come in waves, and we are experiencing at least a mini-wave now.
Banks fail for three basic reasons: 1. Credit transformation: deterioration in borrower creditworthiness, usually due to an adverse economic shock (e.g., a real estate bust). 2. Maturity transformation: borrowing short, lending long, and then getting hammered when interest rates rise. 3. Liquidity transformation combined with an exogenous liquidity shock, a la Diamond-Dybvig, where idiosyncratic depositor needs for cash lead to withdrawals that exceed liquid assets and therefore trigger fire sales of illiquid assets.
The two most notable failures of late–Silicon Valley Bank and Silvergate–are examples of 2 and 3 respectively.
In some respects, SVB is the most astounding. Not because a bank failed in the old-fashioned way, but because it was funded primarily by the deposits of supposed financial sophisticates–and because of the disgusting policy response of the Treasury and the Fed.
SVB took in oodles of cash, especially in the past couple of years. The cashcade was so immense that SVB could not find enough traditional banking business (loans) to soak it up, so they bought lots of Treasuries. And long duration Treasuries to boot.
And then Powell and the Fed applied the boot, jacking up rates. Bonds have cratered in the last year, and took SVB’s balance sheet with it.
Again, an old story. And hardly a harbinger of systemic risk–unless such reckless maturity mismatches are systemic.
SVB was the Banker to the Silicon Valley Stars, notably VCs and tech firms. These firms are the ones that deposited immense sums in exchange for a pittance of return. Case in point, Roku, put almost $500 million–yes, you read that right, 9 figures led with a 5–into SVB!!!
I mean: what the eff? Was the Treasurer a moron? For who other than a moron would hold that much in cash in a single institution? (Roku claims its devices “make your home a smarter.” Maybe they should have hired a smarter treasurer and CFO, or replaced them with one of its devices). Hell, why is a company holding that much in cash period?
A few of these alleged masters of the universe (like Palantir) saw the writing on the wall and yanked their deposits: deposits fell by a quarter on Friday alone, sealing the bank’s doom. Those who were slow to run howled to the high heavens over the weekend that if there was not a bailout there would be a holocaust in the tech sector.
Even though the systemic risk posed by SVB’s failure is nil (or if not, then every bank is systemically important), the Treasury Department and the Fed responded to these howls and guaranteed all the deposits–even though the FDIC’s formal deposit insurance limit is $250,000. You know, .05 percent of Roku’s deposit.
When evaluating this, one cannot ignore the reality that the Democratic Party is completely beholden to Silicon Valley. This is beyond scandalous.
Occupy Silicon Valley, anyone?
Treasury Secretary Janet Yellen insulted our intelligence by assuring us this is not a bailout. Well, it’s not a taxpayer bailout, strictly speaking, because the Treasury is not providing the backstop. Instead, it is being funded by a “special assessment” on solvent banks. Which are owned and funded by people who also pay taxes. And such an “assessment” is a tax in everything but name–because it is a contribution by private entities compelled by the government.
The policy implications of this are disastrous. The whole problem with such bailouts is moral hazard. What is to stop banks from engaging in such reckless behavior as SVB did if they can obtain seemingly unlimited funding from those who know that they will be bailed out if things go pear-shaped?
And the regulatory failure here demonstrates that bank regulation–despite the supposed “reforms” of Frankendodd–can’t even catch or constrain the oldest bet-the-bank strategy in the book. Free banking–no deposit insurance, no bailing out of depositors–couldn’t do worse, and would likely do better.
No, the failure of SVB is not the scandal here. The scandal is the political response to it. This reveals yet again how captured the government is. This time not by Wall Street, but by tech companies and oligarchs that are currently the primary source of Democratic political funding.
A couple of weeks ago the Silvergate story looked juicy, but SVB has put it in the shade. Silvergate also grew dramatically, but on the back of crypto rather than SV tech. It became the main banker for many crypto firms and entrepreneurs. The crypto meltdown did not affect Silvergate directly, but it did crush its depositors, the aforesaid crypto firms and entrepreneurs. They withdrew a lot of funding, and an old-fashioned liquidity mismatch did it in.
In traditional banks, deposit funding is “sticky.” Banks that rely on wholesale funding (“hot money”) are more vulnerable to runs. Silvergate’s funding was not traditional sticky deposit funding, nor was it hot money per se. It was money that was pretty cool as long as crypto was cool, and became hot once crypto melted down.
A run started, but the run was precipitated by a liquidity shock. Simple story, really.
Silvergate’s failure was not a scandal. SVB’s failure per se was not a scandal (except to the extent that our vaunted banking regulators failed to prevent the most prosaic type of failure).
Again–the scandal is the politically tainted response that will have baleful consequences in the future, as the response virtually guarantees that there will be more SVBs in the future.
Author
From the Brownstone Institute
We all have a different starting place and journey but each of us has the following in common. We’ve realized that official sources, the ones we’ve trusted in the past, are not going to make any sense of the above for us. We have to seek out alternatives and put the story together ourselves. And this we must do because the only other choice is to accept that all of the above consists of a random series of disconnected and pointless events, which is surely not true.
The last few years can be tracked at two levels: the physical reality around us and the realm of the intellectual, mental, and psychological.
The first level has presented a chaotic narrative of the previously unthinkable. A killer virus that turned out to be what many people said it was in February 2020: a bad flu with a known demographic risk best treated with known therapeutics. But that template and the ensuing campaign of fear and emergency rule gave rise to astonishing changes in our lives.
Social functioning was wholly upended as schools, businesses, churches, and travel were ended by force. The entire population of the world was told to mask up, despite vast evidence that doing so achieved nothing in terms of stopping a respiratory virus.
That was followed by a breathtaking propaganda campaign for a shot that failed to live up to its promise. The cure for the disease itself caused tremendous damage to health including death, a subject about which everyone cared intensely before the shot and then strangely forgot about after.
Protests against the goings-on were met with media smears, shutdowns, and even the cancellation of bank accounts. However, and simultaneously, other forms of protest were encouraged, insofar as they were motivated by a more proper political agenda against structural injustices in the old system of law and order. That was a strange confluence of events, to say the least.
In the midst of this, which was wild enough, came new forms of surveillance, censorship, corporate consolidation, an explosion of government spending and power, rampant and global inflation, and hot wars from long-running border conflicts in two crucial regions.
The old Declarations of rules on the Internet put free speech as a first principle. Today, the hosting website of the most famous one, signed by Amnesty International and the ACLU, is gone, almost as if it never existed. In 2022, it came to be replaced by a White House Declaration on the Future of the Internet, that extols stakeholder control as the central principle.
All the while, once-trusted sources of information – media, academia, think tanks – have steadfastly refused to report and respond in truthful ways, leading to a further loss of public trust not just in government and politics but also in everything else, including corporate tech and all the higher order sectors of the culture.
Also part of this has been a political crisis in many nations, including the use of sketchy election strategies justified by epidemiologic emergency: the only safe way to vote (said the CDC) is absentee via the mails. Here we find one of many overlapping parallels to a scenario hardly ever imagined: infectious disease deployed as a cover for political manipulation.
Crucially and ominously, all of these mind-blowing developments took place in roughly similar ways the world over, and with the same language and model. Everywhere people were told “We are all in this together,” and that social distancing, masking, and vaxxing was the correct way out. Media was also censored everywhere, while anti-lockdown protestors (or even those who simply wanted to worship together in peace) were treated not as dissidents to be tolerated but irresponsible spreaders of disease.
Can we really pretend that all of this is normal, much less justified? The exhortation we receive daily is that we can and must.
Really? At what point did you realize that you had to start thinking for yourself?
We all have a different starting place and journey but each of us has the following in common. We’ve realized that official sources, the ones we’ve trusted in the past, are not going to make any sense of the above for us. We have to seek out alternatives and put the story together ourselves. And this we must do because the only other choice is to accept that all of the above consists of a random series of disconnected and pointless events, which is surely not true.
That leads to the second layer of comprehension; the intellectual, mental, and psychological. Here is where we find the real drama and incalculable difficulties.
At the dawn of lockdowns, what appeared to be a primitive public health error seemed to be taking place. It seemed like some scientists at the top, who gained an implausible amount of influence over government policy, had forgotten about natural immunity and were under the impression that it was good for health to stay home, be personally isolated, avoid exercise, and eat only takeout food. Surely such preposterous advice would be revealed soon as the nonsense it was.
How in the world could they be so stupid? How did they gain so much influence, not just nationally but all over the world? Did the whole of humanity suddenly forget about all known science in every field from virology to economics to psychology?
As time went on, more and more anomalies appeared that made that judgment seem naïve. As it turns out, what was actually taking place had something to do with a move on the part of security and intelligence services. It was they who were given rule-making authority on March 13, 2020, and that’s why so much of what we needed to know was and is considered classified.
There were early initial reports that the virus itself might have been leaked from a US-backed lab in Wuhan, which introduces the entire subject of the US bioweapons program. This is a very deep rabbit hole itself, thoroughly exposed in Robert F. Kennedy, Jr.’s The Wuhan Cover-Up. There was a reason that topic was censored: it was all true. And as it turns out, the vaccine itself was able to bypass the normal approval process by slipping through under the cover of emergency. In effect, it came pre-approved by the military.
As the evidence continues to roll in, more and more rabbit holes appear, thousands of them. Each has a name: Pharma, CCP, WHO, Big Tech, Big Media, CBDCs, WEF, Deep State, Great Reset, Censorship, FTX, CISA, EVs, Climate Change, DEI, BlackRock, and many more besides. Each of these subject areas has threads or thousands of them, each connecting to more and to each other. At this point, it is simply not possible for a single person to follow it all.
To those of us who have been steeped in following the revelations day by day, and trying to keep up with putting them together into a coherent model of what happened to us, and what is still going on, the ominous reality is that the traditional understanding of rights, liberties, law, business, media, and science were dramatically overthrown in the course of just a few months and years.
Nothing operates today as it did in 2019. It’s not just that functioning broke. It was broken and then replaced. And the surreptitious coup d’état with no shots fired is still ongoing, even if that is not the headline.
Of this fact, many of us today are certain. But how common is this knowledge? Is it a vague intuition held by many members of the public or is it known in more detail? There are no reliable polls. We are left to guess. If any of us in 2019 believed we had our finger on the pulse of the national mood or public opinion generally, we certainly do not anymore.
Nor do we have access to the inner workings of government at the highest levels, much less the conversations going on among the winners of our age, the well-connected ruling elites who seemed to have gamed the entire system for their own benefit.
It’s so much easier to regard the whole thing as a giant confusion or accident on grounds that only cranks and crazies believe in conspiracy theories. The trouble with that outlook is that it posits something even more implausible; that something this gigantic, far-reaching, and dramatic could have happened with no real intentionality or purpose or that it all fell together as a huge accident.
Brownstone Institute has published more than 2,000 articles and 10 books exploring all over the above topics. Other venues and friends are out there helping us with this research and discovery, issue by issue. Even so, a great deal of responsibility falls on this one institution, the main work of which is providing support for dissident and displaced voices, which is implausible since it was only founded three years ago. We are deeply grateful for our supporters and would welcome you to join them.
As for the intellectuals we once revered for their curiosity and wisdom, most seem to have gone into hiding, either unable to adapt to the new realities or just unwilling to risk their careers by exploring hard topics. It’s understandable but still tragic. Most are happy to pretend like nothing happened or celebrate the change as nothing but progress. As for journalists, the New York Times publishes daily commentaries dismissing the Constitution as a dated anachronism that has to go and no one thinks much about it.
There is a lot to sort out. So much has changed so quickly. No sooner than the dust seems to be settling from one upheaval, there is another and then another. Keeping up with it all causes a level of psychological brain scramble on a scale we’ve never previously experienced.
It’s easier to wait for the historians to tell the next generation what happened. But maybe, just maybe, by stepping up and telling the story as we see it in real time, we can make a difference in stopping this madness and restoring some sane and normal freedom back to the world.
Author
From the Brownstone Institute
According to Birx, she intentionally buried the more draconian elements of the lockdowns in text at the end of long documents, theorizing (correctly apparently) that most reporters or readers would just “skim” the document and would not focus on how extreme and unprecedented these mandates actually were.
Most Americans will remember Dr. Deborah Birx as the “scarf lady” who served on the White House’s Covid Response Team beginning in February 2020.
According to a recently-released (but little-seen) 24-minute mini-documentary, it was Birx – even more so than Anthony Fauci – who was responsible for government “guidelines,” almost all of which proved to be unnecessary and disastrous for the country.
According to the documentary, the guidelines ran counter to President Trump’s initial comments on Covid, but ultimately “toppled the White House (and Trump) without a shot being fired.”
The mini-documentary (“It Wasn’t Fauci: How the Deep State Really Played Trump”) was produced by Good Kid Productions. Not surprisingly, the scathing 24-minute video has received relatively few views on YouTube (only 46,500 since it was published 40 days ago on Feb. 26).
I learned of the documentary from a colleague at Brownstone Institute, who added his opinion that “Birx (is) far more culpable than Fauci in the Covid disaster…Well worth the time to see the damage an utter non-scientist, CIA-connected, bureaucrat can do to make sure things are maximally bad.”
I agree; the significant role played by Birx in the catastrophic national response to Covid has not received nearly enough attention.
Brought in from out of Nowhere…
From the video presentation, viewers learn that Birx was added to the White House’s Coronavirus Task Force as its coordinator in latter February 2020.
Birx worked closely with Task Force chairman Vice President Mike Pence, a man one suspects will not be treated well by future historians.
According to the documentary, “career bureaucrats” like Birx somehow seized control of the executive branch of government and were able to issue orders to mayors and governors which effectively “shut down the country.”
These bureaucrats were often incompetent in their prior jobs as was Birx, who’d previously served as a scientist (ha!) in the Army before leading the government’s effort to “fight AIDS in Africa” (via the PEPFAR Program).
When Birx was installed as coordinator of Covid Response she simply rehashed her own playbook for fighting AIDS in Africa, say the filmmakers.
The three tenets of this response were:
- “Treat every case of this virus as a killer.”
- “Focus on children,” who, the public was told, were being infected and hospitalized in large numbers and were a main conduit for spreading the virus.
- “Get to zero cases as soon as possible.” (The “Zero Covid” goal).
The documentary primarily uses quotes from Scott Atlas, the White House Task Force’s one skeptic, to show that all three tenets were false.
Argued Atlas: Covid was not a killer – or a genuine mortality risk – to “99.95 percent” of the population. Children had virtually zero risk of death or hospitalization from Covid. And there was no way to get to “zero cases.”
Atlas Didn’t Shrug, but was Ignored…
Furthermore, the documentary convincingly illustrates how the views of Atlas were ignored and how, at some point, his ability to speak to the press was curtailed or eliminated.
For example, when Atlas organized a meeting for President Trump with Covid-response skeptics (including the authors of the Great Barrington Declaration) this meeting was schedule to last only five minutes.
The documentary also presents a report from the inspector general of the Department of State that was highly critical of Birx’s management style with the African “AIDS relief” program she headed.
Among other claims, the report said she was “dictatorial” in her dealings with subordinates and often “issued threats” to those who disagreed with her approach.
Shockingly, this highly-critical report was published just a month before she was appointed medical coordinator of the Coronavirus Task Force.
A particularly distressing sound bite from Birx lets viewers hear her opinion on how controversial “guidance” might be implemented with little pushback.
According to Birx, she intentionally buried the more draconian elements of the lockdowns in text at the end of long documents, theorizing (correctly apparently) that most reporters or readers would just “skim” the document and would not focus on how extreme and unprecedented these mandates actually were.
The documentary points out that Birx’s prescriptions and those of President Trump were often in complete conflict.
Birx, according to the documentary, once pointed this out to Vice President Pence, who told her to keep doing what she believed.
Indeed, the Vice President gave Birx full use of Air Force 2 so she could more easily travel across the country, spreading her lockdown message to governors, mayors, and other influencers.
Several Covid skeptic writers, including Jeffrey Tucker of Brownstone Institute, have noted that President Trump himself went from an opponent of draconian lockdowns to an avid supporter of these responses in a period of just one or two days (the pivotal change happened on or around March 10th, 2020, according to Tucker).
Whoever or whatever caused this change in position, it does not seem to be a coincidence that this about-face happened shortly after Birx – a former military officer – was named to an important position on the Task Force.
(Personally, I don’t give Anthony Fauci a pass as I’ve always figured he’s a “dark master” at manipulating members of the science/medical/government complex to achieve his own desired results.)
This documentary highlights the crucial role played by Deborah Birx and, more generally, how unknown bureaucrats can make decisions that turn the world upside-down.
That is, most Americans probably think presidents are in charge, but, often, they’re really not. These real rulers of society, one suspects, would include members of the so-called Deep State, who have no doubt installed sycophants like Fauci and Birx in positions of power.
I definitely recommend this 24-minute video.
A Sample of Reader Comments…
I also enjoyed the Reader Comments that followed this video. The first comment is from my Brownstone colleague who brought this documentary to my attention:
“… As I said, things can change over the period of 20 years but in the case of Birx/Fauci, I do not believe so. I have never seen people entrenched in the bureaucracy change.”
Other comments from the people who have viewed the mini-documentary on YouTube:
“Pence needs to be held accountable.”
“What does Debbie’s bank account look like?”
“(The) final assessment of President Trump at the 23:30 mark is, while painful, accurate. He got rolled.”
“This is very hard to find on YouTube. You can literally search the title and it doesn’t come up.”
“Excellent summary, hope this goes viral. Lots of lessons to learn for future generations.”
“Eye opening. Great reporting.”
Post from One Month Ago…
“37 likes after 3 years of the most controversial and divisive action in recent history. How can this be?”
“Oh never mind. YouTube hid it from the public for years.”
“Probably hasn’t been taken down yet for that reason, relatively low views.”
“Thanks for this! Sounds like everyone below President Trump was on a power trip and I didn’t think it was possible to despise Pence more than I already do.”
“…the backing of CDC, legacy media, WHO and government schools, business folding in fear are ALL responsible. Accountability for every person and agency is paramount!”
“Should be noted that her work on AIDS in Africa was just as useless and damaging.”
“First, any mature, adult woman who speaks with that much vocal fry should be immediately suspect. And the glee with which she recounts her role at undermining POTUS is remarkable and repulsive. This woman should NEVER be allowed to operate the levers of power again.”
Republished from the author’s Substack
Author
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