Tag Archives: markets

“Banking System is Safe”

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That’s what President Joe Biden (D) claims after the Silicon Valley Bank collapse.

Americans can rest assured that our banking system is safe. Your deposits are safe. Let me also assure you that we will not stop at this. We will do whatever is needed.

But that’s true only if regulators do their job and enforce the rules in place—as they chose not to do in the runup to SVB’s failure—and if risks are well-known and left to the responsibility of the risk-takers in a free market rather than laid off to us taxpayers to make those taking the risks whole.

That last just transfers the risks to us and leaves the risk-takers entirely free of risk. That last, also, is what concerns Senator Tim Scott (R, SC), even though Biden claims that taxpayers won’t cover the losses. Yes, we will. SVB doesn’t have enough book value, even were its liquidation not done at fire sale prices, to cover the billions of investor—venture capitalists, startups, bond holdings, and on and on—losses that will occur. Scott’s concerns:

We just heard recently that they’re going to really have the greatest form of corporate cronyism that we’ve seen in a very long time. They’re going to insure all the deposits, even the ones over the $250,000 limit, which means that the most sophisticated investors are now going to have the insulation of the federal government. That is problematic. It sends a very negative statement to the marketplace….

Scott’s concerns are well-founded. Here’s what Treasury Secretary Janet Yellen, Fed Chairman Jerome Powell, and FDIC Chairman Martin Gruenberg said in their Sunday joint statement

Today we are taking decisive actions to protect the US economy…providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.

That bailout is destructive of our banking system and of our economy at large.

I’ll have more on that last tomorrow.

Counterproductive

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The government of the People’s Republic of China now claims, at the end of its three-year Wuhan Virus shutdown, to be open for foreign business. A broad range of folks running American businesses actually are taking that government’s blandishments seriously.

Many companies that are increasing their commitments to China are consumer-facing. They still view China’s enormous market as a promising long-term bet, even if sales took a hit during the zero-Covid era.

This is, at best, counterproductive.

Any product’s technology, consumer-oriented or not, can be dual-used for military or intelligence collection purposes, and in the PRC, it will be—not only to the detriment of PRC citizens, but to our detriment and that of our friends and allies.

More than that, American investment, any sort of doing business, inside the PRC works to the benefit of the PRC’s economy.

No American company should be doing any sort of business with or within an enemy nation.

Full stop.

Lobbyists

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In particular, lobbyists representing the interests of the People’s Republic of China and companies domiciled there.

It turns out that the multinational retail and tech conglomerate Alibaba—headquartered in Hangzhou, Zhejiang, PRC—has lobbied, and donated lots of money to, American politicians, to the tune of $2.5 million just last year.

And this, via Voice of America:

Public information shows that Mercury, a lobbying firm, lobbied the White House repeatedly on behalf of Alibaba on technology policy issues, access to US capital markets, issues related to e-commerce, and small- and medium-sized enterprise export promotion.

That brings me to my beef about lobbyists and the White House. It’s one thing (however questionable or legitimate) for lobbyists to jawbone White House officials on behalf of companies, whether foreign or domestic. It should be unacceptable for lobbyists to jawbone White House officials on behalf of foreign governments—which in the case of the PRC, includes all businesses domiciled there, since all of those businesses are arms of the PRC’s intelligence community under that nation’s 2017 national intelligence law.

Foreign governments, in particular the PRC government, already have professional, talented, and perfectly suited lobbyists to White House officials: those governments’ Ambassadors and ambassadorial staff personnel. No one else should be lobbying.

Caveat Emptor

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In a Wall Street Journal editorial centered on the rule-making moves by the Biden administration’s Consumer Financial Protection Bureau and Federal Trade Commission to cap or to outright ban so-called junk fees, there’s this tidbit offered in all seriousness by the FTC’s Lina Khan (the WSJ didn’t directly attribute this to her, but she’s the FTC’s Chair, so the tidbit wasn’t offered without her prior permission):

Consumers who select and travel to dealerships based on an advertised offer, only to learn late in the process (if at all) that the advertised offer does not apply, have often spent hours trying to purchase a car[.]

This, of course, is nonsense. Every car maker in the US, from “ordinary” car makers and dealers to luxury car makers and dealers, offer on their Web sites options to “build your car” for every model on offer, and the build options present every option available to the model along with the effect of option’s inclusion or removal on the car’s final price. Consumers who select and travel to dealerships, even if the selection is originally based on an advertised offer, will have already built their going-in preferred model and have their eyes wide-open to counteroffers and to other options offered or no longer available—together with their costs and savings identified during those discussions.

These proposed rules are nothing more than Government attempting to dictate to businesses how they must operate and to us average Americans what we will be permitted to buy. And that’s not just the exampled car-buying, it’s how this government wants to control how we do our banking, our investing, how we and our businesses in general operate in an economy.

Maybe it’s not caveat emptor. Maybe it’s cave imperium that we should operate under.

Idiocy

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The Washington Post published an op-ed about the cost of eggs, and how they’re really cheap, and both WaPo and the writer were serious. Why eggs are cheaper than you think goes the headline. Then, with a straight face,

If you look at old cookbooks, you will notice that the authors seem to view eggs and chicken as almost a luxury good. My 1950 “Betty Crocker’s Picture Cook book” contains recipes for making mock chicken dishes—out of veal. Go back further and the 1896 Fannie Farmer cookbook sternly informs readers that, “eggs, even at twenty-five cents per dozen, should not be freely used by the strict economist.”

The writer then went on in great length about how much incomes have risen in those 125 and more years since, the time committed to cooking has decreased in those 125 and more years since, and on and on.

All true, too.

However.

We don’t live those 125 and more years ago; we live today, and we’ll live tomorrow. Yesterday is gone. And as even the writer of this WaPo op-ed admits:

…the price of eggs has spiked so much—from $1.79 in December 2021, to $4.25 a year later….

That price spiked far higher—over $11 the dozen—in some places. That’s today’s money for today’s eggs. The real world is today, not yesterday. Regardless of those old timey prices, we’re still paying today’s inflated prices for our eggs, and for all of our food, for which eggs are only a stand-in in this context.

This is the idiocy of the Left.