MICROBLOGGING: Was “Move Late But Fast” þe Right Strategy for þe Federal Reserve?; & Oþer Topics...
Summers on SVB; Alloway & Wiesenthal; Switzerland as Federal Reserve member; Ben Thompson overgeneralizes; $25B bank term funding program; lucky Jamie Dimon; the 40-year bond bull run; jump-up in b...
Summers on SVB; Alloway & Wiesenthal; Switzerland as Federal Reserve member; Ben Thompson overgeneralizes; $25B bank term funding program; lucky Jamie Dimon; the 40-year bond bull run; jump-up in bank concentration expected; Bing-AI ChatBot hangs up on me; big job energy; MacBookPro startup errors; are your backups current?
Was “Move Late But Fast” þe Right Strategy for þe Federal Reserve?:
My view, since we started reopening the economy after the plague was that the federal reserve should be very late to raise interest rates, but that when it did start, it should raise interest rates fast. In the early stages of re-opening, the principal danger to guard against was, I thought, cooling off the economy, too soon, and landing back in secular stagnation. And the risks that an inflation spiral might begin or that rapid interest-rate increases later would land us in financial crisis seemed small, and manageable.
Question: Is it time to rethink that judgement of mine?
<https://substack.com/chat/47874/post/f075c9ca-a044-4922-9cb9-69b0fe5aad87>
On Summers on Lessons from SVB; & Oþer Topics...
<https://economics.princeton.edu/events/lawrence-h-summers-on-lessons-from-the-svb-bank-failure/>
Three questions:
The real Coasian failure here is that the great & good of Silicon Valley did not announce a week ago Wednesday that they stood ready to contribute a capital injection to SVB…
Sticky deposits… the world of Elon Musk “GameStonk” & Peter Thiel is a new world, in which “uninsured deposits” have no place, no?
Saturday night, I thought:
the FDIC would give people half their money on Monday
the FDIC would give people certificates on Tuesday
BofA, Wells-Fargo, & JPMC would on Wednesday announce that they would accept the certificates from retail customers at par--in order to get SVB's grateful customers to come and stick, without incurring any legal entanglement with past SVB misdeeds
Is that how it would have worked out? And would that be a better or worse world than the one we are in?
Switzerland as Federal Reserve Member…
Erin Fuchs: Credit Suisse Might Be ‘Too Big to Be Saved,’ Nouriel Roubini Says...
Nonsense! All Switzerland has to do is to incorporate as a bank holding company in Delaware and join the Federal Reserve System…
Alloway and Wiesenthal
talk about the Fed-Treasury accord of the early 1950s without mentioning that the person who negotiated the accord for the treasury William McChesney "Punchbowl" Martin then became chair of the Fed... <https://overcast.fm/+5AWPkzWDw>
Ben Thompson, on Sharp Tech Monday, March 13, 2023:
talks about the run on SVB as marking the completion of the shift of the gestalt of Silicon Valley from win-win high-trust positive sum to "I'm short-term greedy" lose-lose thinking. I really do see what he is talking about. Still, the people I talk to who talked to people at Goldman Sachs trying to do the SVB's equity deal last week really believe they got within 20 minutes of closing, and would have closed, had it not been for Peter Thiel, who in their view played an essential role in turning a small and manageable bank run into a catastrophe…
On support for the depositors of SVB’s, and on the brand new $25B Bank Term Funding Program:
What they have done now is to say “there is no need for you to start a run on the bank that made a big duration-risk bet that has gone south”. And they do not think they can step on congressional prerogatives by saying that the $250,000 FDIC-insured limit is a dead letter. But I do think they should get a letter from Schumer, McConnell, Jeffries, and McCarthy saying that they all support swift legislative action to remove the FDIC insurance cap.
Jamie Dimon is an extremely lucky person...
Jamie Dimon is an extremely lucky person...
End of a 40-Year Bond Bull Run:
For forty years the rule was that there were never significant capital losses on long US Treasury bonds...
Big Jump-Up in Bank Concentration Coming:
It seems to me we are likely to have a big jump up in bank concentration, as people draw the lesson that your uninsured deposits are only safe in too-big-to-fail banks. When keeping more than $250,000 in a not too-big-to-fail bank becomes per se negligence for a CFO, the implications are obvious...
Bing-ChatBot is certain the SVB collapse is fallout from crypto, and does not like being told it is wrong:
BLS Says: Big Job Energy, Weak Labor Earnings Energy…
Brad DeLong The Bureau of Labor Statistics announces:
Payroll employment rises by 311,000 in February; unemployment rate edges up to 3.6% :
Total nonfarm payroll employment rose by 311,000 in February, and the unemployment rate edged up to 3.6 percent. Notable job gains occurred in leisure and hospitality, retail trade, government, and health care. Employment declined in information and in transportation and warehousing... <https://www.bls.gov>
Continued remarkably strong job growth; surprisingly, weak labor, income growth; and so Mr. Market thinks the federal reserve is likely to back off…
Failing to Get Post the Apple Logo on Boot-Up:
Brad DeLong A MacBook Pro that was not running some background processes this morning. And then, when I rebooted it, it would not get past the Apple logo. And then, when I dropped into recovery mode, it said: “there is no user to recover“. At this point near panic sets in, but I called Apple before wiping it and reloading it from back up. And as soon as the Apple person got onto the line it successfully booted. There is strong evidence. These things are already thinking for themselves. Put me down with Baratunde Thurston as adding “and please do not kill all the humans” to LLM model prompts...
Are Your Backups Current?:
Brad DeLong But now it is definitely time to attach the external time machine disk anytime I don’t need all three of the thunderbolt ports for something else...
Back in college, I used to fix things as my work-study job. (I was good at knapping flint, or whatever the technology of the day way.) Even back then, problems usually resolved themselves when I got within a 6-foot radius of them. The thirteenth exception to Murphy's law: Anything that can go wrong will--unless in the presence of somebody who can do something about it.
I attached a Time Machine backup disk to my laptop with velcro and leave it attached at all times. I also recommend an offsite backup system like Backblaze that does an offsite backup. Computers are much reliable than they used to be, but it pays to wear both a belt and suspenders and not rely on good thoughts alone to keep one's pants up.