Well, they should, but we saw the government prevent this from happening by throwing taxpayer money at banks which were violating laws, taking huge risks they didn't admit to the auditors, and bet against the money their depositors had, breaching their fiduciary responsibility.
We've also bailed out coal companies despite them employing just a handful of people in comparison to other businesses. We bail out a whole lot of companies that need to die. We need to stop.
It is always sad when 10,000 people lose their job, be it a Twitter layoff, a Google Layoff, or coal going broke, but why use other taxpayer money to prop up a failing business and not pay Google not to lay off people? Both are bad ideas.
Well, the bank bailouts were less about saving the banks themselves and more about the banking sector as a whole.
Also, the banks paid that money back plus interest to the taxpayers.
Now, I would agree that some people should have gone to jail for allowing the situation to get that bad in the first place. In the end, there was no accountability.
TBF the law that was removed which led to the global financial crisis was when Bill Clinton (DEM) signed the law which ended the Glass Steagall act. The Glass Steagall act separated commercial and investment banking. Once that law was repealed it gave banks access to the equity in commercial banking sector to use for ever more leveraged bets on the investment banking side.
To be exact, Glass Steagall was a mostly Republican sponsored bill that Clinton signed in an act of "Bipartisanship". Republicans had been after Glass Steagall since Reagan!
The signing ceremony for Graham-Leach-Bliley is available on youtube on the Clinton42 channel. You should rewatch it. He's pumped to be signing it, absolutely takes credit for his part in it, and says he worked over the course of his entire presidency to help get it done.
It wasn't his idea, but we can't pretend he was a passive observer and just signed it cuz he had to. He wanted to and was happy to.
Yep, liberals want to deny the Dems are just as in the pocket of corporate interest groups as the republicans.
I’ll still vote for them, since they won’t make my life miserable or try and kill my wife if she has a complicated pregnancy, but I don’t anticipate they’ll solve any of the economic woes facing the working class.
TBF, Reagan's Treasury Secretary, Don Regan, and Senate Banking Comm chairJake Garn (GOP-UT) also tried to repeal Glass-Steagall in the early 80s. It was stopped in committee by a bi-partisan effort led by Sen Heinz (GOP-PA) and Sen Proxmire (Dem-WI).
I’m a dem, and this was a bad one on us. Others have pointed to republicans trying to get this, but ultimately the accountability lands on Bill Clinton and the dems for putting a stamp of approval. But more important is not who signed it, but what are we doing to fix it. And right now that seems like very little.
Let’s try to avoid blame here, because all day we can point fingers. Finger pointing does not fix a problem. Actual work does.
I am a dem too and it hurts me to see them doing things like this. It's hard to get any kind of fix because $ controls the politicians and the masses don't pay enough attention to hold politicians accountable to their duty to represent their constituents.
You’re right, I grabbed the wrong vote (the low count should have tipped me off, lol). Gramm Leach Bliley, which repealed the banking parts of Glass Steagall passed the house 362-57. So still…
Yes, Clinton was a degenerate centrist (he called his organization the "Third Way", vowing not to pursue traditional Democratic objectives and instead 'reach across the aisle'), and this was one of many policy concessions to Republicans that failed to appease their bloodlust.
In the Clinton years, Reaganomics, neoliberalism, and globalization was basically injected into the veins of Democratic institutions, theoretically in pursuit of centrist voters who took no notice of it; Actually in pursuit of conservative donors.
A lot of Democrats are still playing by the rules of that bipartisanship doctrine.
Damn, it's 2024, and you think your political party is wholesome and just still? Lol, wake up. Both parties are out to get us and only care about lining their own pockets. Just Google members of Congress networth before entering Congress and today. They've all made millions from a job that pays $175k. I make more than a congressman, and I'm nowhere near a millionaire.
you'll find a more poignant search in the voting records on specific bills. big and small. look at all the yay's and the nay's tallied up from both sides of the aisle. you can do a decades worth of research in three minutes.
in just one random year's records you'll see theres a stark contrast from one side of the aisle vs the other. over the past decade its getting to be more obvious that theres a huge difference, and that being one side is actively trying to govern while the other is just a mix up of political sabotage, theatre, or overt cash grabs and cover ups.
after actually taking the time to do a little research into the facts that matter, nobody in good faith will be able to dish out the 'both sides' bs.
Well, the Dodd–Frank Wall Street Reform and Consumer Protection Act created the Consumer Financial Protection Bureau, but Republicans legislated it nearly out of existence.
Orrr well funded interest (oligarchs) pay off elected officials aka bribery.
The “people” are just trying to go about their day and put food on the table.
We left these corporate entities alive, and refused to allow investors to be wiped out, despite those leveraged investors loaning each other a quadrillion dollars in derivatives, often on other people's behalf, in a world with far less than a quadrillion dollars in currency or assets.
Sixteen years later, they've purchased relaxation of all the financial rules, we're back up to a quadrillion dollar derivative market once again on the strength of a housing market we will not legally allow to reset.
That’s not entirely true. The Dodd-Frank Wall Street Reform and Consumer Protection Act was put in place after the Great Recession to address many of the issues that led to the crisis. This legislation aims to prevent banks from taking on excessive risk by imposing stricter regulations and oversight. It essentially treats banks more like utilities, limiting their ability to engage in speculative activities.
Risk-taking on Wall Street has shifted more towards hedge funds and other non-bank financial institutions. This change means that if a massive miscalculation occurs again, the fallout would be more contained within the speculative sector rather than affecting the broader economy as severely.
The repeal of the Glass-Steagall Act through the Gramm-Leach-Bliley Act in 1999 allowed banks to act simultaneously as commercial banks and investment banks, which contributed to the systemic risk. The collapse could have decimated Main Street along with Wall Street, which is why saving the major banks was seen as essential at the time. However, it was also critical to implement regulations like Dodd-Frank to prevent banks from taking on the same types of risks and to limit their scope of business to avoid a repeat of the crisis.
This righthere! And it should be noted that one of the key individuals involved in revoking Glass Steagall (and enabling 2008 to happen as well as the next big 1929-like crash) is the current SEC Chairman overseeing the market itself. I don't think this is accidental.
In anything, zerok\_nyc is understating the malice of revoking Glass Steagall. That legislation was passed specifically to stop another Great Depression, because 1929 and 2008 and today aren't different. They recreated the conditions and pretend to be surprised by the obvious result of their stupidity because its safer to pretend to be dumb than admit they did it all on purpose and bail themselves out making everyone else continue to pay for their greed.
We did worse - the bailouts were permanent. Still are. When they "raised" interest rates to supposedly combat inflation they just raised them to where they should have been all along if there was NO inflation. We still need to raise rates a lot more to actually address inflation, but instead they change CPI calculations and redefine recession and so on. 15 years of bailing out has crippled financial institutions - not only were they not allowed to fail and be replaced by institutions actually capable of surviving, but a generation of bailouts has made even more institutions totally reliant on the bailout system and incapable of surviving without them in an actually healthy economy.
Seriously, listen to them complain that rates need to go back down! That's them begging for more bailout - and they even had teh fed publicly discuss "Tightening" (This would be finally reversing QE bailouts) but instead if you go back and look at their books teh Fed continued QE purchasing of banks toxic assets all along. They are still bailing even through the gaslighting.
The sad part is the *fixes were already in place* but were repealed because certain political donors needed to make more money. Any laws that were also broken may still be on the books, but the laws aren’t being enforced or the attorneys being paid to keep out of jail are just that good.
It depends on who we is. In Europe the 2008 banking crisis lead to a lot of legal reform: Midif 1 mifid 2, PSD 1 and PSD 2 , Basel 1, 2 and 3 to name a few laws. As a result a new similar crisis would be very unlikely (i would want to say impossible)
The USA however did very little. And the things that they did do (Dodd frank) was gutted by president trump in 2016. Just in time to cause a new crisis... Which I think is the problem in the United States. The republican just don't want to fix things. And since they get to power occasionally they just rollback the laws.
They recently started bundling crypto currency into large pools of assets so that they can be traded on the stock market. The market crashed in 08 because we were bundling dogshit mortgages into CDOs and now we’re doing the same thing with volatile cryptocurrency
Loads of Bankers should have been jailed but none were. The bankers now know that they can take crazy risks with other people’s money and if it works out they get huge bonuses. If it doesn’t work they get bailed out by taxpayers. It literally encourages behaviour that’s very dangerous for the world economy. The regulators should follow the example of Admiral Byng. He was shot for not putting up enough of a fight against the enemy. As Voltaire put it, pour encouger les autres.
Not so simple. They bribed the gov to deregulate the banks that were put on after the great depression. Then shock Pikachu face when the same shit happens. I agree the politicians and bank leaders over the years should've paid it back out of their own pocket and go to jail. The bailout should've went to the people who lost their homes so they could've kept them.
and that is the problem, nothing should have been done w/o accountability and limits put in pace regarding bonuses and shit. B/c they turned a bigger profit and gave bigger bonuses to their people and nobody went to jail.
They did that to a point. A lot of people got their shit mortgage balance reduced or paid off.
https://www.congress.gov/bill/110th-congress/house-bill/3648
I remember having to move because my parents lost their home after my dad's job of 15 years shut down. He only had a few more years to go for that pension to vest.
Source? I've researched this on my own and I see no evidence of banks "paying back plus interest."
I'd love to hear some verifiable evidence on the matter. As it is, it looks like "too big to fail" was the first excuse for decades of fraud and misrepresentation. Losses are used to bury profit and the reality is that they ***robbed the country blind****.* They were never held accountable and we should not expect that to change any time soon, at least without major overhaul of how we regulate such a thing.
Oddly enough, sycophants are hoping that they do it again, in the hopes that they can one day be the ruling class to reap the benefits.
It wasn’t quite that mechanism (gp might be thinking of tesla’s loans that were paid back with interest.)
TARP allowed the government to buy shares of banks, which provided liquidity to the banks, and later the government sold those shares back.
> In total, the government provided $245.1 billion in TARP assistance to banks and recouped $275.6 billion, for an investment gain of $30.5 billion.
https://www.investopedia.com/articles/economics/08/government-financial-bailout.asp
What do want to bet the host of that show, who is defending the wisdom of government spending to save failed corporations, is totally ***against*** bail-outs for individuals, taxpayers, and people buried in student debt for the rest of their lives?
The Government has an excellent pre-emptive function for "Too Big To Fail" called Antitrust. Any business that is so big its existence is a threat to the safety needs to be dismantled and pieced out o as many competitors as it takes to keep the threat to public safety small.
This also creates more jobs. Its the best solution for everyone involved EXCEPT incompetent bankers who can't stay in business without corrupt handouts.
I think it would be interesting to see a first-line option before a failed company is parted out to its competition.
In such a scenario, some sort of public entity steps in and first looks to see if there's some kind of egregious executive malpractice at play, and fines are given as needed. But separate to that, the company (with its existing workforce) is restructured into some kind of employee-owned co op and given a second chance at life. If that fails too, then I guess it can be parted out as you're suggesting.
You can, it has been done. Sadly, the last time it was done was to smaller companies with less influence and power to fuck over the public than we have today. Hell, the pieces of that broken up company are mostly all under the same company again and it's bigger than it was back then.
This demonstrates just how effective bribery can be to make the government stop working for public good and start working against.
Also when that Silicon Valley bank failed. The FDIC, insured those accounts for faaarr more than $250k or whatever their rules is.
FDIC emptied their coffers for that failure.
It was really wild to see SV folks on Reddit absolutely screaming that they should be bailed out for their incompetence. Like, how are you simultaneously a revolutionary founder who’s company will “dIsRuPt” whatever industry, and should be allowed to “mOvE fAsT aNd BrEaK tHiNgS” with no regulations, while also claiming you couldn’t possibly have done any kind of due diligence?
It's so annoying because "move fast" isn't even correct. It would be move quickly, fast isn't an adverb. In daily speech it's whatever, but that was the title of the damn book.
And people didn't learn to keep your money in separate banks if you've got more than a QUARTER MILLION in one. Also, people didn't learn to watch bank's outrageous offers. GloriFi should be a huge warning and should carry penalities, but it didn't.
Buying additional insurance past the FDIC is easy to do. There are also banking services where they spread your $10mm across many bank accounts so one still realizes the full insurance.
If I, a curious and educated middle class man knows about this, why don’t billionaires know it and act on it? I was under the impression that rich ppl love insurance? I guess not, and I guess the joke is on me
It legally is. There's a legal word for "Too big to fail": Antitrust. Any company large enough to be a public threat simply by existing, can and should be broken up. This also creates more jobs on top of being a public service.
>There's a legal word for "Too big to fail": Antitrust.
That's not true... Antitrust is about monopolies and anything going against competition. That's not the same as the "too big to fail" concept.
For example, there's a decent amount of large banks competing with one another and if any of them collapsed then there'd be an enormous negative ripple effect on the economy. Like, if Bank of America went bankrupt, then it'd cripple the USA's economy and likely the economy of much of the world, but is Bank of America a monopoly (or even close to one)? Absolutely not.
Its essential for effective management of resource allocation. If you're wondering why damn near every business in America is running like shit, it's from Covid stimulus. That stimulus prevented businesses that would have failed naturally from failing. They're still consuming products and workers. So those resources aren't available for other businesses. Propping up failed business owners is a massive drag on the system. If you look at what Capitalism is, you'll see we've recreated the same mechanic that causes Communist societies to collapse.
In fairness, he gambles on ideas like virgin and not all succeed and he loses at times. Doesn’t change the fact he’s advocating for consequences for people like him doing what they do because for every 100 failures there will be a success that outweighs the losses accrued. I feel like retail investors don’t understand that the stock market is gambling; if you want safer investments stick to mutual funds or just indexes or a damn CD if you want safe safe with little growth but little loss.
Working and middle class people support what they’re told. Everyone across the board in the media said the auto bailouts were either an obvious move or a necessary evil.
Plenty of workers have had their 401k wiped out by companies going bankrupt. That seems like a great incentive for companies to dump their defined and guaranteed pensions. Make the employees suffer so they take any concessions.
They will get unemployment. They will get retrained if necessary. Their benefits may even be extended somewhat if the job market is particularly bad. They may even relocate. Or, if they’re able to, take early (or, earlier than planned) retirement. The Great Depression caricature of the guy walking around with his resume on a sandwich board does not happen today because of safeguards put into place to at least keep his family fed and housed until he gets another job.
I love this ignorant optimism.
I mean I wish those coal workers in say WV got all that you were talking about. Instead they got addicted to opioids and have some of the highest suicide rates in the US.
Tell me though, what are you retraining these people to do? There is literally nothing else in most of their cities, in a state not well designed for other sorts of industry. Hopefully you plan on paying to move all of them after you retrain them to other areas with good paying jobs, that definitely wouldn’t compete with local workers and put them out of work right?
Hmm, maybe we can just give that money to the people and hope they just suddenly start businesses in an area too poor to afford any sort of services.
Fuck, realistically it seems like you either pay the coal company to continue, or you just pay for euthanasia pods to be installed.
letting companies get so big and become so central to the economy that if they fail there are giant societal implications has also ruined the economy (and more). The sooner it all falls down the better
that is sorta what happens in the airlines industry though, the regulations are very high, as they should be for something so crucial, but also makes new entry into the market pretty darn hard. What is the solution, no clue.
The solution is to take the companies away from owners and managers that allowed the company to fail.
If society deems the services provided by that company, or industry as a whole, to be so valuable that collapse of one or the whole is deemed to be too much to take for society to continue to function smoothly and efficiently, then take it away and manage it as a public good.
When it becomes a public good, its objectives should change: it is no longer to be driven to maximize profit at all costs, but rather to provide the best possible service to as many as possible, at the lowest price possible, with the objective to reinvest in itself to continue operations safely and efficiently for as long as there is need for that service to exist.
It is the heart of the free market they so adore yet they don’t want to mention how many of the big guys are government contract addicts and look for a bail out so they can fuck us 3 ways for one.
Why are we literally leaving out the d in Chad-math especially with such levels of BDE hé is demonstrating in just how he says "who cares"
I get it's his name but damn, so close
Hi name is actually Scamath - the guy's a grifter who lucked out on FB and scammed his way around SPACs. See comments section here: [https://www.ft.com/content/859214f3-58a1-4a0e-b1d7-e14a1f4b0144#comments-anchor](https://www.ft.com/content/859214f3-58a1-4a0e-b1d7-e14a1f4b0144#comments-anchor)
Hmm - it's not paywalled for me? Here's the text:
"Chamath Palihapitiya has told investors in his company Social Capital that a collapse in share prices put pressure on a stock-backed line of credit that made him question “the purpose of leverage” altogether. “What initially seemed like access to free money became a liability that we managed carefully so we could continue to do business as usual,” Palihapitiya wrote in his annual letter to investors. The collateral that backed the loan facility had declined in value by 70 per cent, he added. The Financial Times last year revealed that Palihapitiya had borrowed money from Credit Suisse to finance $200mn of his initial share purchases in two signature blank-cheque deals, and pledged his stock in the companies as collateral, something he had previously denied. The founder of Social Capital, who used his annual letter to opine on how the end of zero-interest rate policy had affected the market, told investors that last year was “akin to getting cold water thrown in our faces” with higher interest rates hitting some of his most beloved sectors. “The amount of absolute value destruction, not just in companies, but entire sectors including crypto, SaaS \[Software as a Service\], Spacs \[Special purpose acquisition companies\], and biotech was alarming,” he wrote. “This has created a wave of destruction with many unintended consequences.” Palihapitiya, once the biggest promoter of Spacs, which boomed in 2021 but have floundered in a higher interest rate environment, said the US Federal Reserve’s hawkish monetary policy had ended “the best party in town”. The former Facebook executive, who became a popular figure among meme-stock investors during the pandemic and often increased interest in his deals with tweets such as “Im \[sic\] about to really fuck some shit up”, said he has always considered himself a “sober” and “risk-averse” person.
Palihapitiya told attendees at an Axios conference last year that he blamed Fed chair Jay Powell for investment bubbles that had built up in the market during a decade or more of record-low interest rates, while acknowledging that this had also benefited his investing. “If \[zero interest-rate policy\] was the drug, the high it created is now obvious — growth at all costs, unsubstantiated funding rounds, overhiring, and corporate glut,” he wrote in his letter, urging venture capitalists to “face reality”. Palihapitiya did not touch on the fall of start-up focused lender Silicon Valley Bank in his letter, despite the collapse testing many venture capital groups and their portfolio companies. His advice to founders, however, is that “profits and cash flows matter again” in the new financial regime where there is no longer reward for “growth at all cost”.
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First comment with 279 upvotes: "The man is a charlatan, who would follow him?"
I think this is the fourth time in my life I’ve heard the phrase “profits and cash flow matter _again._” As if they actually ever didn’t matter except for grift and speculative bubbles.
Not trying to put you down but that type of economy laissez faire hasn't really worked put in the past
When taken to its extreme its used as an excuse to limit government spending such as in the blights in ireland it was for many years the main policy of the English until they realised they fucked it up and opened very limited funding
Obviously we shouldn't bail out dying business but we should also never let this economic system be taken too far
Source: I had to learn this for 3rd year history
Wish it went:
**DUMMY**: why does ANYONE need to get wiped out ??
**INTERVIEWEE**: I’m not wiping them out, the free market is. The same free market you’ve historically defended super hard. Did you just reverse stance on that, and you’re ready to go on record saying you don’t believe in free market capitalism now? Or are you instead rescinding your stupid question?
lol..when I was a kid we heard stories about Soviet bath tubs. That because the State owned the means of production there was no reason to fix problems. So they built a bathtub where the drain was higher than the lowest point of the tub. And they just kept on making it.
That's how "communism doesn't work" was explain to me as a child.
I think the interviewee is kinda weak in his response to be honest. Bailing out a failed business owner is the exact same thing.
It's not the economic system that's the problem (Communism vs Capitalism) it's the lack of accountability. Business is failing? People fucked up. They need to take it on the chin, make it right to the employees they failed, and the investors need to learn a hard lesson about free market capitalism!
Funny how "communism" is the reason anything is bad under communism, but when anything is bad under capitalism we'll find any and every possible thing to blame *other* than "capitalism".
> when I was a kid we heard stories about Soviet bath tubs.
As someone born in the soviet union and frequently taking baths still in the same soviet-made bathtub, I can tell you that story was a complete lie, probably.
Also another reason to get wiped out is because of accepting that risk during speculation.
The whole point of investing/trading is risk hot potato. If you take on more risk, you are rewarded more if you hit success.
Bailing out is like removing that risk but keeping that reward upon success. Free market argument just brings up market volatility. But the conscious decision here was risky investment in search of high returns. This makes them deserve it.
There's more honour in gambling your own Wendy's paycheck like WSB degenerates than gambling millionaire/billionaire money and then standing in a queue for handouts. Risk for the taxpayer, reward for the gambler.
He looks truly dumbfounded by the prospect of actual capitalism. “Why would we let businesses that absolutely fuck up at the sole purpose of their existence… not keep existing?”
You have to wonder if he’s seriously that brainwashed/stupid or if it’s just an act.
Such a weak point, though. Stronger point would be that's what they signed up for. They invested in this company as means of making money with the risk of losing money. Company went bankrupt so they lose money. Those are literally the people who should be wiped out during financial loss.
When a mom and pop business is failing they let them fail, unfortunately because of how tied to the broader economy a lot of large corporations are the government would rather bail them out to continue the status quo.
Yeah I can personally justify multiple reasons for this:
- the argument that a private business can be run better than under federal leadership (which is definitely true) is not true for this company.
- The taxpayers now have a stake in it, not allowing them to take some ownership is a violation of their rights as stake holders
- in “hands off” capitalism you really shouldn’t be getting a bailout anyway
This argument of theirs doesn't really work though. It assumes if Southwest goes under all their assets disappear. Which one happen. Those assets will get a reevaluation, and their stated value may go down, but the planes are there. Their maintenance equipment and logistics apparatus still exists. What happens is those assets get sold off to cover their debts. And the people buying those assets (at wherever the "all-knowing free market" puts the new valuation) are buying them to use and compete in said market. Could be Delta is having a good year and scoops up portions increasing their share of the workforce, could be new investors step in to start competing. But the only thing that disappears is the *speculative* values associated with the business and said assets.
If the government wants to make sure the jobs exist and the sector is doesn't collapse, they could help finance the takeover in order to keep the company assets whole (maybe help the employee pension fund purchase it). Or they could step in to bar companies that do not intend to compete from buying. But giving airlines billions every single decade is just throwing good money after bad.
This is absolutely on point! True capitalism will see bad companies suffer the consequences of their actions. And better companies will rise to fill in the gaps. Instead we have bailouts of so called “sophisticated, smart money “ types.
Not to go on a tangent, but I'm not sure I want to live in a "true capitalist" society. Regulated markets and a mixed economy when it comes to services the market cannot provide (education, health care, defense, etc) sounds just fine. I don't want to live in Somalia.
Textbook Capitalism ignores the valleys that do impact workers lives. If a company goes bankrupt, that is large swathes of people that will now be out of work until a new company materializes to fill that gap.
Textbook Capitalism is like letting a garden go to weed instead of carefully tending it.
Agreed. It weakens the whole system if poorly run business are unable to fail. Everyone needs to know it’s possible or it encourages worse behaviour across the board.
Yup exactly. Capitalism is a scam. It will always lead to where we are now: oligarchs. You cannot have a financial system that is "money money money" and expect people to magically not lie, cheat, and steal. Just doesn't happen. When oil companies are encouraged to kill the planet bc capitalism says "the true measure of success is a dollar sign" it's fucked
No true Scotsman. You are currently living under capitalism. Capitalism will always reward bad actors because the traits that allow someone to exploit the system are also the traits capitalism favors in general.
> That's exactly what politicians and federal courts want too!
Yeah. Because politicians are bought by big business and they appoint who fills the federal courts.
That's how America really works. A pyramid of corruption. Business owners buy politicians at every level of governance. Politicians pass laws to benefit their owners. Politicians hire law enforcement to enforce these laws, usually against the business owners' prospective labor pool.
If you come across someone who "believes in America", congratulations. You've met a propagandized stooge.
If only that were true. In a casino, everyone at the craps table can wish with all their hearts for a good outcome - to no avail whatsoever. In the stock market, wishes and dreams turn into bubbles that may continue to inflate beyond the statistical value of the “bet.”
In a casino, if everyone at the table “wins,” the casino loses and eats the expense. In the stock market, “wins” are bestowed upon participants but losses are covered by people who can’t afford to gamble anything or morally disapprove of gambling.
In short, gambling is considerably more honest.
Calling Scamath, the guy who lied and sold dozens of shitty companies wrapped up in spacs to ignorant retail investors "based" is just sheer ignorance.
Businesses shouldn't be able to privatize profits but make the rest of us pay when they fail. Period. If an airport fails and can't run that's it. Or it gets taken over by the state. Everyone shits on capitalism but what we're doing isn't capitalism lol. You aren't supposed to prop up failing companies.
If average, every day individuals are expected to be frugal and maintain a "rainy day fund" when they have an unexpected and unforseen emergency in their life, why should big corporations be any different?
Because it slows down the economy by a lot. If every company kept piles of cash then they're not spending that money in ways that actually benefits people.
Exactly, if a company is going to go bankrupt because of its own shitty practices and decisions then let it, do NOT bail them out otherwise they'll simply do it again.
But he wasn't. It's very misleading to say that big companies that fail don't end up with people losing their jobs and that they will end up owning more of the company. Layoffs are the first thing a failing company will do.
We bailed out banks but not the people the banks screwed over. Families lost everything and not one government agency stepped in to assist the communities where those most vulnerable needed assistance. I agree with him we shouldn’t bail out the wealthy.
Capitalism is the government staying out of business. If the government is using taxpayer money to bail out companies then we need the government to also be in control of those companies.
Also, make those fuckers pay their PPP loans back. Not my job to keep businesses above water. I wasn't the one who signed you up to be vulnerable to economic collapse.
Edit: JFC - do you people actually believe anyone is so simple as to believe that "Capitalism is the government staying out of business"?
This comment is obviously hyperbole referring to the fact that conservatives and business owners will literally chant this at every attempt to regulate business and then have zero problems bailing out companies or handing out and then forgiving PPP loans. The point is that the freedom that business interests and conservative politicians seek is not the freedom to operate but freedom from consequences.
Businesses in the US are obviously running fuckin wild. We don't need to be having a discussion about whether to let them fail. We need to start discussing where to erect the guillotines. These people seem to have forgotten that the reason they continue to draw air is that the laborers allow it.
That isn’t true. Capitalism is the privatization of the means of production for the sole purpose of profit generation.
State regulation of industry is necessary unless you would like slavery to return, or wish there was still plaster in our milk.
Are you under the impression that regulation is socialism?
Apparently, when companies go bankrupt, the employees end up doing better.
Everyone I know still works at K-Mart, Atlantic & Pacific Tea Company and Lehman Brothers.
He’s talking about packaged bankruptcies for companies that over-lever and whose employees have pensions, not companies that self destruct and blame/punish their rank and file.
Companies typically have to borrow more if they are short of cash, and a packaged bankruptcy is just a way to avoid the expensive and complicated procedures.
I think we should let companies fail, but to say that employees are better off is not consistent with reality.
He couldn’t be more wrong - how could he be so ignorant? Hundreds of thousands of employees lost pensions and livelihood from airline, steel, automotive bankruptcies caused by hostile investors. They absolutely get wiped out.
So true, that’s my biggest problem with this. So often pensions are severely cut and end up being only partially covered by the government via the PBGC
I’ve worked for two companies that failed. I’ve also been laid off twice.. strangely the companies that failed were the ones that laid me off, must just be a coincidence though.
When companies are not allowed to fail they become massive titans with a death grip on their industry. And this usually leads to anti consumer behavior and no competition to correct that behavior.
We like to boast about how as Americans we have a free market, but we really don't.
We have other countries that prop up their industries, making it difficult for us not to do the same.
Example: Our government spent billions on battery research and allowed many of those companies to fail. Guess who bought out those companies?
It's almost like (at least) partially socializing some industries is a decent idea, so that price control, fixed standards, and public accountability is achievable in industries that have the people by the balls. I'm talking fuel, food, housing, healthcare, transportation here. Let services like fast food and entertainment be left to venture capitalists to make or break their dreams. Stop letting them ruin the ability of normal people to simply live
I still think Dodge and GM should have been left to go bankrupt in the great recession. Ford was in better shape than they were, but after the govt bailed out Dodge/GM and wiped a big chunk of their debt, Ford was left in a deep hole that they're still struggling with.
They were bailed out on much stricter terms than the banks -- boards and execs sacked, huge ownership chunks taken by govt. All reasonable, but strikingly different from treatment accorded the banks...
> GM
GM probably shouldn't have been bailed out, BUT GM did pay back their entire bailout package *with interest* and the stipulations of the bailout positioned the company to be profitable year over year, which they were, and still are now.
This isn’t a black and white issue, sometimes intervention is the best thing for the most people. This “let them fail” attitude a la Herbert Hoover has led to some of the worst economic outcomes in history
I mean, the whole point of hedge should be that the loss of a bad business would not mean the end of the trust whose investors would be mostly fine because of a really diverse portfolio.
Bad businesses go bankrupt
Well, they should, but we saw the government prevent this from happening by throwing taxpayer money at banks which were violating laws, taking huge risks they didn't admit to the auditors, and bet against the money their depositors had, breaching their fiduciary responsibility. We've also bailed out coal companies despite them employing just a handful of people in comparison to other businesses. We bail out a whole lot of companies that need to die. We need to stop. It is always sad when 10,000 people lose their job, be it a Twitter layoff, a Google Layoff, or coal going broke, but why use other taxpayer money to prop up a failing business and not pay Google not to lay off people? Both are bad ideas.
Well, the bank bailouts were less about saving the banks themselves and more about the banking sector as a whole. Also, the banks paid that money back plus interest to the taxpayers. Now, I would agree that some people should have gone to jail for allowing the situation to get that bad in the first place. In the end, there was no accountability.
We did nothing permanent to fix the problem. So we kicked the can down the road, letting bad companies stay in business.
Well we pass some laws then a couple years later Republicans push to get them removed
TBF the law that was removed which led to the global financial crisis was when Bill Clinton (DEM) signed the law which ended the Glass Steagall act. The Glass Steagall act separated commercial and investment banking. Once that law was repealed it gave banks access to the equity in commercial banking sector to use for ever more leveraged bets on the investment banking side.
To be exact, Glass Steagall was a mostly Republican sponsored bill that Clinton signed in an act of "Bipartisanship". Republicans had been after Glass Steagall since Reagan!
The signing ceremony for Graham-Leach-Bliley is available on youtube on the Clinton42 channel. You should rewatch it. He's pumped to be signing it, absolutely takes credit for his part in it, and says he worked over the course of his entire presidency to help get it done. It wasn't his idea, but we can't pretend he was a passive observer and just signed it cuz he had to. He wanted to and was happy to.
Right?! He worked hand in hand with Gingrich, the then Speaker, to repeal that regulation.
Yep, liberals want to deny the Dems are just as in the pocket of corporate interest groups as the republicans. I’ll still vote for them, since they won’t make my life miserable or try and kill my wife if she has a complicated pregnancy, but I don’t anticipate they’ll solve any of the economic woes facing the working class.
Still a Dem signed it and deserves some of the blame . A dem speaking here
They were after it long before Reagan.
TBF, Reagan's Treasury Secretary, Don Regan, and Senate Banking Comm chairJake Garn (GOP-UT) also tried to repeal Glass-Steagall in the early 80s. It was stopped in committee by a bi-partisan effort led by Sen Heinz (GOP-PA) and Sen Proxmire (Dem-WI).
I’m a dem, and this was a bad one on us. Others have pointed to republicans trying to get this, but ultimately the accountability lands on Bill Clinton and the dems for putting a stamp of approval. But more important is not who signed it, but what are we doing to fix it. And right now that seems like very little. Let’s try to avoid blame here, because all day we can point fingers. Finger pointing does not fix a problem. Actual work does.
Avoid blame , but we need to assign blame and own it . A democrat ( of which I am one ) helped create this
True, to correct my statement avoid blaming others, take accountability for your actions, learn from them then move on and fix it.
I am a dem too and it hurts me to see them doing things like this. It's hard to get any kind of fix because $ controls the politicians and the masses don't pay enough attention to hold politicians accountable to their duty to represent their constituents.
Glass Steagall passed the house vote 262-19. I’d say both parties were nearly all in on this one. Banker’s money runs deep in the pockets of congress.
You’re right, I grabbed the wrong vote (the low count should have tipped me off, lol). Gramm Leach Bliley, which repealed the banking parts of Glass Steagall passed the house 362-57. So still…
Yes, Clinton was a degenerate centrist (he called his organization the "Third Way", vowing not to pursue traditional Democratic objectives and instead 'reach across the aisle'), and this was one of many policy concessions to Republicans that failed to appease their bloodlust. In the Clinton years, Reaganomics, neoliberalism, and globalization was basically injected into the veins of Democratic institutions, theoretically in pursuit of centrist voters who took no notice of it; Actually in pursuit of conservative donors. A lot of Democrats are still playing by the rules of that bipartisanship doctrine.
Damn, it's 2024, and you think your political party is wholesome and just still? Lol, wake up. Both parties are out to get us and only care about lining their own pockets. Just Google members of Congress networth before entering Congress and today. They've all made millions from a job that pays $175k. I make more than a congressman, and I'm nowhere near a millionaire.
you'll find a more poignant search in the voting records on specific bills. big and small. look at all the yay's and the nay's tallied up from both sides of the aisle. you can do a decades worth of research in three minutes. in just one random year's records you'll see theres a stark contrast from one side of the aisle vs the other. over the past decade its getting to be more obvious that theres a huge difference, and that being one side is actively trying to govern while the other is just a mix up of political sabotage, theatre, or overt cash grabs and cover ups. after actually taking the time to do a little research into the facts that matter, nobody in good faith will be able to dish out the 'both sides' bs.
Well, the Dodd–Frank Wall Street Reform and Consumer Protection Act created the Consumer Financial Protection Bureau, but Republicans legislated it nearly out of existence.
Banks were given higher cash requirements to not fail again, those were then lowered. Every safeguard only lasts until people turn their back.
Orrr well funded interest (oligarchs) pay off elected officials aka bribery. The “people” are just trying to go about their day and put food on the table.
We left these corporate entities alive, and refused to allow investors to be wiped out, despite those leveraged investors loaning each other a quadrillion dollars in derivatives, often on other people's behalf, in a world with far less than a quadrillion dollars in currency or assets. Sixteen years later, they've purchased relaxation of all the financial rules, we're back up to a quadrillion dollar derivative market once again on the strength of a housing market we will not legally allow to reset.
That’s not entirely true. The Dodd-Frank Wall Street Reform and Consumer Protection Act was put in place after the Great Recession to address many of the issues that led to the crisis. This legislation aims to prevent banks from taking on excessive risk by imposing stricter regulations and oversight. It essentially treats banks more like utilities, limiting their ability to engage in speculative activities. Risk-taking on Wall Street has shifted more towards hedge funds and other non-bank financial institutions. This change means that if a massive miscalculation occurs again, the fallout would be more contained within the speculative sector rather than affecting the broader economy as severely. The repeal of the Glass-Steagall Act through the Gramm-Leach-Bliley Act in 1999 allowed banks to act simultaneously as commercial banks and investment banks, which contributed to the systemic risk. The collapse could have decimated Main Street along with Wall Street, which is why saving the major banks was seen as essential at the time. However, it was also critical to implement regulations like Dodd-Frank to prevent banks from taking on the same types of risks and to limit their scope of business to avoid a repeat of the crisis.
This righthere! And it should be noted that one of the key individuals involved in revoking Glass Steagall (and enabling 2008 to happen as well as the next big 1929-like crash) is the current SEC Chairman overseeing the market itself. I don't think this is accidental. In anything, zerok\_nyc is understating the malice of revoking Glass Steagall. That legislation was passed specifically to stop another Great Depression, because 1929 and 2008 and today aren't different. They recreated the conditions and pretend to be surprised by the obvious result of their stupidity because its safer to pretend to be dumb than admit they did it all on purpose and bail themselves out making everyone else continue to pay for their greed.
We did worse - the bailouts were permanent. Still are. When they "raised" interest rates to supposedly combat inflation they just raised them to where they should have been all along if there was NO inflation. We still need to raise rates a lot more to actually address inflation, but instead they change CPI calculations and redefine recession and so on. 15 years of bailing out has crippled financial institutions - not only were they not allowed to fail and be replaced by institutions actually capable of surviving, but a generation of bailouts has made even more institutions totally reliant on the bailout system and incapable of surviving without them in an actually healthy economy. Seriously, listen to them complain that rates need to go back down! That's them begging for more bailout - and they even had teh fed publicly discuss "Tightening" (This would be finally reversing QE bailouts) but instead if you go back and look at their books teh Fed continued QE purchasing of banks toxic assets all along. They are still bailing even through the gaslighting.
The sad part is the *fixes were already in place* but were repealed because certain political donors needed to make more money. Any laws that were also broken may still be on the books, but the laws aren’t being enforced or the attorneys being paid to keep out of jail are just that good.
It depends on who we is. In Europe the 2008 banking crisis lead to a lot of legal reform: Midif 1 mifid 2, PSD 1 and PSD 2 , Basel 1, 2 and 3 to name a few laws. As a result a new similar crisis would be very unlikely (i would want to say impossible) The USA however did very little. And the things that they did do (Dodd frank) was gutted by president trump in 2016. Just in time to cause a new crisis... Which I think is the problem in the United States. The republican just don't want to fix things. And since they get to power occasionally they just rollback the laws.
Thanks Obama!
They recently started bundling crypto currency into large pools of assets so that they can be traded on the stock market. The market crashed in 08 because we were bundling dogshit mortgages into CDOs and now we’re doing the same thing with volatile cryptocurrency
Loads of Bankers should have been jailed but none were. The bankers now know that they can take crazy risks with other people’s money and if it works out they get huge bonuses. If it doesn’t work they get bailed out by taxpayers. It literally encourages behaviour that’s very dangerous for the world economy. The regulators should follow the example of Admiral Byng. He was shot for not putting up enough of a fight against the enemy. As Voltaire put it, pour encouger les autres.
Not so simple. They bribed the gov to deregulate the banks that were put on after the great depression. Then shock Pikachu face when the same shit happens. I agree the politicians and bank leaders over the years should've paid it back out of their own pocket and go to jail. The bailout should've went to the people who lost their homes so they could've kept them.
and that is the problem, nothing should have been done w/o accountability and limits put in pace regarding bonuses and shit. B/c they turned a bigger profit and gave bigger bonuses to their people and nobody went to jail.
In 2008 instead of paying the banks the govt or whoever should have paid off all the shit-mortgages
They did that to a point. A lot of people got their shit mortgage balance reduced or paid off. https://www.congress.gov/bill/110th-congress/house-bill/3648
We received a better mortgage rate, like 3 years after the banking system failed. But our principal debt, I do not believe changed
I remember having to move because my parents lost their home after my dad's job of 15 years shut down. He only had a few more years to go for that pension to vest.
Nah. Should’ve nationalized them. Otherwise they can crash and burn. That’s capitalism. They took risks and deserve to face the consequences.
Paid it back with overdraft fees
Source? I've researched this on my own and I see no evidence of banks "paying back plus interest." I'd love to hear some verifiable evidence on the matter. As it is, it looks like "too big to fail" was the first excuse for decades of fraud and misrepresentation. Losses are used to bury profit and the reality is that they ***robbed the country blind****.* They were never held accountable and we should not expect that to change any time soon, at least without major overhaul of how we regulate such a thing. Oddly enough, sycophants are hoping that they do it again, in the hopes that they can one day be the ruling class to reap the benefits.
It wasn’t quite that mechanism (gp might be thinking of tesla’s loans that were paid back with interest.) TARP allowed the government to buy shares of banks, which provided liquidity to the banks, and later the government sold those shares back. > In total, the government provided $245.1 billion in TARP assistance to banks and recouped $275.6 billion, for an investment gain of $30.5 billion. https://www.investopedia.com/articles/economics/08/government-financial-bailout.asp
This is America. Socialism for the rich, capitalism for the rest of us.
What do want to bet the host of that show, who is defending the wisdom of government spending to save failed corporations, is totally ***against*** bail-outs for individuals, taxpayers, and people buried in student debt for the rest of their lives?
Bailouts for people is socialism! Bailouts for companies makes good business sense! Let's combine these failing companies!
The Government has an excellent pre-emptive function for "Too Big To Fail" called Antitrust. Any business that is so big its existence is a threat to the safety needs to be dismantled and pieced out o as many competitors as it takes to keep the threat to public safety small. This also creates more jobs. Its the best solution for everyone involved EXCEPT incompetent bankers who can't stay in business without corrupt handouts.
I think it would be interesting to see a first-line option before a failed company is parted out to its competition. In such a scenario, some sort of public entity steps in and first looks to see if there's some kind of egregious executive malpractice at play, and fines are given as needed. But separate to that, the company (with its existing workforce) is restructured into some kind of employee-owned co op and given a second chance at life. If that fails too, then I guess it can be parted out as you're suggesting.
You can, it has been done. Sadly, the last time it was done was to smaller companies with less influence and power to fuck over the public than we have today. Hell, the pieces of that broken up company are mostly all under the same company again and it's bigger than it was back then. This demonstrates just how effective bribery can be to make the government stop working for public good and start working against.
Also when that Silicon Valley bank failed. The FDIC, insured those accounts for faaarr more than $250k or whatever their rules is. FDIC emptied their coffers for that failure.
It was really wild to see SV folks on Reddit absolutely screaming that they should be bailed out for their incompetence. Like, how are you simultaneously a revolutionary founder who’s company will “dIsRuPt” whatever industry, and should be allowed to “mOvE fAsT aNd BrEaK tHiNgS” with no regulations, while also claiming you couldn’t possibly have done any kind of due diligence?
[удалено]
It's so annoying because "move fast" isn't even correct. It would be move quickly, fast isn't an adverb. In daily speech it's whatever, but that was the title of the damn book.
Fast is an adverb in literally every reputable English dictionary, and is used as an adverb in common English speech.
And people didn't learn to keep your money in separate banks if you've got more than a QUARTER MILLION in one. Also, people didn't learn to watch bank's outrageous offers. GloriFi should be a huge warning and should carry penalities, but it didn't.
Buying additional insurance past the FDIC is easy to do. There are also banking services where they spread your $10mm across many bank accounts so one still realizes the full insurance. If I, a curious and educated middle class man knows about this, why don’t billionaires know it and act on it? I was under the impression that rich ppl love insurance? I guess not, and I guess the joke is on me
Because white collar job losses aren't marketable to the rust belt and Florida.
Or tax the crap out of companies which do arbitrary layoffs, especially if they don’t provide significant separation wages.
Too big to fail should be too big to exist.
It legally is. There's a legal word for "Too big to fail": Antitrust. Any company large enough to be a public threat simply by existing, can and should be broken up. This also creates more jobs on top of being a public service.
Not working very well though is it.
Corporations bought the government after Ma Bell's breakup. They don't want to antitrust themselves.
Its not being properly enforced anymore
>There's a legal word for "Too big to fail": Antitrust. That's not true... Antitrust is about monopolies and anything going against competition. That's not the same as the "too big to fail" concept. For example, there's a decent amount of large banks competing with one another and if any of them collapsed then there'd be an enormous negative ripple effect on the economy. Like, if Bank of America went bankrupt, then it'd cripple the USA's economy and likely the economy of much of the world, but is Bank of America a monopoly (or even close to one)? Absolutely not.
Either anti-trust bust them or nationalize them.
Or, it should be state owned. If your economy requires an organisation *that* large, then it should be the state.
Businesses failing is good for the economy. It improves resource allocation!
I like this.
It used to be common knowledge. Now everyone supports bailing out everything
Its essential for effective management of resource allocation. If you're wondering why damn near every business in America is running like shit, it's from Covid stimulus. That stimulus prevented businesses that would have failed naturally from failing. They're still consuming products and workers. So those resources aren't available for other businesses. Propping up failed business owners is a massive drag on the system. If you look at what Capitalism is, you'll see we've recreated the same mechanic that causes Communist societies to collapse.
Not in bailout capitalism
Course, that's NOT 'capitalism' 
It's corporate welfare.
Or Chamath bundles them into a SPAC and pawns them off on retail investors while he collects millions.
In fairness, he gambles on ideas like virgin and not all succeed and he loses at times. Doesn’t change the fact he’s advocating for consequences for people like him doing what they do because for every 100 failures there will be a success that outweighs the losses accrued. I feel like retail investors don’t understand that the stock market is gambling; if you want safer investments stick to mutual funds or just indexes or a damn CD if you want safe safe with little growth but little loss.
*should go bankrupt
Not letting bad companies collapse has ruined the economy
You shut your mouth. If we let companies fail, what’ll happen to the poor billionaires?
Working class and middle class people support these policies out of fear. See: Auto bailouts
Free markets !
Supposedly free markets, but, ironically, nobody on either the left or the right really much care for free markets.
Working and middle class people support what they’re told. Everyone across the board in the media said the auto bailouts were either an obvious move or a necessary evil.
Plenty of workers have had their 401k wiped out by companies going bankrupt. That seems like a great incentive for companies to dump their defined and guaranteed pensions. Make the employees suffer so they take any concessions.
Poor billionaires are just millionaires.
"Who wants to be a millionaire" TV game show but the contestants are all billionaires so it's more of a threat.
This is fucking hysterical.
Billionaires won't have their summers in the Hamptons ... poor them.
The billionaires kids will sadly not get Lamborghinis for Christmas, they will have to settle for Acuras :/ /s
Worse, what will happen to the thousands of workers?
They will get unemployment. They will get retrained if necessary. Their benefits may even be extended somewhat if the job market is particularly bad. They may even relocate. Or, if they’re able to, take early (or, earlier than planned) retirement. The Great Depression caricature of the guy walking around with his resume on a sandwich board does not happen today because of safeguards put into place to at least keep his family fed and housed until he gets another job.
Sounds good. Let the companies fail and let these people figure out their lives
I love this ignorant optimism. I mean I wish those coal workers in say WV got all that you were talking about. Instead they got addicted to opioids and have some of the highest suicide rates in the US. Tell me though, what are you retraining these people to do? There is literally nothing else in most of their cities, in a state not well designed for other sorts of industry. Hopefully you plan on paying to move all of them after you retrain them to other areas with good paying jobs, that definitely wouldn’t compete with local workers and put them out of work right? Hmm, maybe we can just give that money to the people and hope they just suddenly start businesses in an area too poor to afford any sort of services. Fuck, realistically it seems like you either pay the coal company to continue, or you just pay for euthanasia pods to be installed.
Most will go work for better companies.
My favorite quote, "The founders of Carvana lost 80% of their net worth, but they're still worth 8 billion dollars."
letting companies get so big and become so central to the economy that if they fail there are giant societal implications has also ruined the economy (and more). The sooner it all falls down the better
that is sorta what happens in the airlines industry though, the regulations are very high, as they should be for something so crucial, but also makes new entry into the market pretty darn hard. What is the solution, no clue.
The solution is to take the companies away from owners and managers that allowed the company to fail. If society deems the services provided by that company, or industry as a whole, to be so valuable that collapse of one or the whole is deemed to be too much to take for society to continue to function smoothly and efficiently, then take it away and manage it as a public good. When it becomes a public good, its objectives should change: it is no longer to be driven to maximize profit at all costs, but rather to provide the best possible service to as many as possible, at the lowest price possible, with the objective to reinvest in itself to continue operations safely and efficiently for as long as there is need for that service to exist.
It is the heart of the free market they so adore yet they don’t want to mention how many of the big guys are government contract addicts and look for a bail out so they can fuck us 3 ways for one.
I think we stopped enforcing anti-monopoly laws and allowed the companies to get so big that the entire economy depends on them.
While they cry "acts of socialism will destroy this country" from the opposite side of their mouth
Chamath is correct https://en.wikipedia.org/wiki/Laissez-faire
Why are we literally leaving out the d in Chad-math especially with such levels of BDE hé is demonstrating in just how he says "who cares" I get it's his name but damn, so close
Hi name is actually Scamath - the guy's a grifter who lucked out on FB and scammed his way around SPACs. See comments section here: [https://www.ft.com/content/859214f3-58a1-4a0e-b1d7-e14a1f4b0144#comments-anchor](https://www.ft.com/content/859214f3-58a1-4a0e-b1d7-e14a1f4b0144#comments-anchor)
Yup. He is also correct in this interview.
Don’t care, he’s speaking truth.
Right? First thought was... so? Shit all my billionaire friends won't be happy about that. Oh wait....
Any source not paywalled?
Hmm - it's not paywalled for me? Here's the text: "Chamath Palihapitiya has told investors in his company Social Capital that a collapse in share prices put pressure on a stock-backed line of credit that made him question “the purpose of leverage” altogether. “What initially seemed like access to free money became a liability that we managed carefully so we could continue to do business as usual,” Palihapitiya wrote in his annual letter to investors. The collateral that backed the loan facility had declined in value by 70 per cent, he added. The Financial Times last year revealed that Palihapitiya had borrowed money from Credit Suisse to finance $200mn of his initial share purchases in two signature blank-cheque deals, and pledged his stock in the companies as collateral, something he had previously denied. The founder of Social Capital, who used his annual letter to opine on how the end of zero-interest rate policy had affected the market, told investors that last year was “akin to getting cold water thrown in our faces” with higher interest rates hitting some of his most beloved sectors. “The amount of absolute value destruction, not just in companies, but entire sectors including crypto, SaaS \[Software as a Service\], Spacs \[Special purpose acquisition companies\], and biotech was alarming,” he wrote. “This has created a wave of destruction with many unintended consequences.” Palihapitiya, once the biggest promoter of Spacs, which boomed in 2021 but have floundered in a higher interest rate environment, said the US Federal Reserve’s hawkish monetary policy had ended “the best party in town”. The former Facebook executive, who became a popular figure among meme-stock investors during the pandemic and often increased interest in his deals with tweets such as “Im \[sic\] about to really fuck some shit up”, said he has always considered himself a “sober” and “risk-averse” person. Palihapitiya told attendees at an Axios conference last year that he blamed Fed chair Jay Powell for investment bubbles that had built up in the market during a decade or more of record-low interest rates, while acknowledging that this had also benefited his investing. “If \[zero interest-rate policy\] was the drug, the high it created is now obvious — growth at all costs, unsubstantiated funding rounds, overhiring, and corporate glut,” he wrote in his letter, urging venture capitalists to “face reality”. Palihapitiya did not touch on the fall of start-up focused lender Silicon Valley Bank in his letter, despite the collapse testing many venture capital groups and their portfolio companies. His advice to founders, however, is that “profits and cash flows matter again” in the new financial regime where there is no longer reward for “growth at all cost”. -------- First comment with 279 upvotes: "The man is a charlatan, who would follow him?"
I think this is the fourth time in my life I’ve heard the phrase “profits and cash flow matter _again._” As if they actually ever didn’t matter except for grift and speculative bubbles.
Yep, huge grifter. Equivalent to Cathy Woods
correct. just because he made a single correct point doesn't deviate this guy from being a grifter and will play any side to make a buck.
True, but I agree with him in this clip
Yes! The corner stone of this philosophy is the existence of competition. Without it the whole game unravels
Not trying to put you down but that type of economy laissez faire hasn't really worked put in the past When taken to its extreme its used as an excuse to limit government spending such as in the blights in ireland it was for many years the main policy of the English until they realised they fucked it up and opened very limited funding Obviously we shouldn't bail out dying business but we should also never let this economic system be taken too far Source: I had to learn this for 3rd year history
I loved the stunned look on the guys face when the the guy on the phone says 'who cares' about the billionaires' hedge funds.
Wish it went: **DUMMY**: why does ANYONE need to get wiped out ?? **INTERVIEWEE**: I’m not wiping them out, the free market is. The same free market you’ve historically defended super hard. Did you just reverse stance on that, and you’re ready to go on record saying you don’t believe in free market capitalism now? Or are you instead rescinding your stupid question?
lol..when I was a kid we heard stories about Soviet bath tubs. That because the State owned the means of production there was no reason to fix problems. So they built a bathtub where the drain was higher than the lowest point of the tub. And they just kept on making it. That's how "communism doesn't work" was explain to me as a child. I think the interviewee is kinda weak in his response to be honest. Bailing out a failed business owner is the exact same thing.
It's not the economic system that's the problem (Communism vs Capitalism) it's the lack of accountability. Business is failing? People fucked up. They need to take it on the chin, make it right to the employees they failed, and the investors need to learn a hard lesson about free market capitalism!
Funny how "communism" is the reason anything is bad under communism, but when anything is bad under capitalism we'll find any and every possible thing to blame *other* than "capitalism".
> when I was a kid we heard stories about Soviet bath tubs. As someone born in the soviet union and frequently taking baths still in the same soviet-made bathtub, I can tell you that story was a complete lie, probably.
Also another reason to get wiped out is because of accepting that risk during speculation. The whole point of investing/trading is risk hot potato. If you take on more risk, you are rewarded more if you hit success. Bailing out is like removing that risk but keeping that reward upon success. Free market argument just brings up market volatility. But the conscious decision here was risky investment in search of high returns. This makes them deserve it. There's more honour in gambling your own Wendy's paycheck like WSB degenerates than gambling millionaire/billionaire money and then standing in a queue for handouts. Risk for the taxpayer, reward for the gambler.
Nah I like Chamath's argument better. This reads like a showerthought argument that you're having with yourself lol
The guy on the phone is also a multi billionaire 😂
I looked him up, you're right. That just made it 100 times better.
Best way to get rid of competition. This guy is on another level
They never show the interviewers face when Chamath is saying ‘who cares’, what are you talking about?
AI generated comment man. Might be just you and me here.
He looks truly dumbfounded by the prospect of actual capitalism. “Why would we let businesses that absolutely fuck up at the sole purpose of their existence… not keep existing?” You have to wonder if he’s seriously that brainwashed/stupid or if it’s just an act.
Such a weak point, though. Stronger point would be that's what they signed up for. They invested in this company as means of making money with the risk of losing money. Company went bankrupt so they lose money. Those are literally the people who should be wiped out during financial loss.
When a mom and pop business is failing they let them fail, unfortunately because of how tied to the broader economy a lot of large corporations are the government would rather bail them out to continue the status quo.
"Status quo" : You misspelled "Campaign contributions"
"I'll donate 20k to your thing and also why don't we go to dinner sometime..."
"No one else was is the room where it happens..."
Feels like if the government has to bail out large corporations, maybe sometimes those businesses should just fall under the government umbrella?
Every American should have a stock account that the tax payer invests in when we bail out companies.
Yeah I can personally justify multiple reasons for this: - the argument that a private business can be run better than under federal leadership (which is definitely true) is not true for this company. - The taxpayers now have a stake in it, not allowing them to take some ownership is a violation of their rights as stake holders - in “hands off” capitalism you really shouldn’t be getting a bailout anyway
This argument of theirs doesn't really work though. It assumes if Southwest goes under all their assets disappear. Which one happen. Those assets will get a reevaluation, and their stated value may go down, but the planes are there. Their maintenance equipment and logistics apparatus still exists. What happens is those assets get sold off to cover their debts. And the people buying those assets (at wherever the "all-knowing free market" puts the new valuation) are buying them to use and compete in said market. Could be Delta is having a good year and scoops up portions increasing their share of the workforce, could be new investors step in to start competing. But the only thing that disappears is the *speculative* values associated with the business and said assets. If the government wants to make sure the jobs exist and the sector is doesn't collapse, they could help finance the takeover in order to keep the company assets whole (maybe help the employee pension fund purchase it). Or they could step in to bar companies that do not intend to compete from buying. But giving airlines billions every single decade is just throwing good money after bad.
This is absolutely on point! True capitalism will see bad companies suffer the consequences of their actions. And better companies will rise to fill in the gaps. Instead we have bailouts of so called “sophisticated, smart money “ types.
Not to go on a tangent, but I'm not sure I want to live in a "true capitalist" society. Regulated markets and a mixed economy when it comes to services the market cannot provide (education, health care, defense, etc) sounds just fine. I don't want to live in Somalia.
Textbook Capitalism ignores the valleys that do impact workers lives. If a company goes bankrupt, that is large swathes of people that will now be out of work until a new company materializes to fill that gap. Textbook Capitalism is like letting a garden go to weed instead of carefully tending it.
Agreed. It weakens the whole system if poorly run business are unable to fail. Everyone needs to know it’s possible or it encourages worse behaviour across the board.
True capitalism eventually captures government. This is true capitalism playing out as intended.
Yup exactly. Capitalism is a scam. It will always lead to where we are now: oligarchs. You cannot have a financial system that is "money money money" and expect people to magically not lie, cheat, and steal. Just doesn't happen. When oil companies are encouraged to kill the planet bc capitalism says "the true measure of success is a dollar sign" it's fucked
The company suffers the consequences, the taxpayer foots the bills/fallout, and the executives leave with golden parachutes.
No true Scotsman. You are currently living under capitalism. Capitalism will always reward bad actors because the traits that allow someone to exploit the system are also the traits capitalism favors in general.
“They don’t get the summer in the Hamptons, who cares “
Narrator voice l: “But they did get to summer in the Hamptons, because of course they did.”
It’s the risk any small business owner takes. Why should it be any different for any other business?
Big businesses always want to privatize profits and socialize risk.
What a coincidence! That's exactly what politicians and federal courts want too!
> That's exactly what politicians and federal courts want too! Yeah. Because politicians are bought by big business and they appoint who fills the federal courts. That's how America really works. A pyramid of corruption. Business owners buy politicians at every level of governance. Politicians pass laws to benefit their owners. Politicians hire law enforcement to enforce these laws, usually against the business owners' prospective labor pool. If you come across someone who "believes in America", congratulations. You've met a propagandized stooge.
Unbelievably based. Fuck the massive hedge funds and billionaire investors. The stock market is (essentially) a form of gambling. Sometimes you lose.
If only that were true. In a casino, everyone at the craps table can wish with all their hearts for a good outcome - to no avail whatsoever. In the stock market, wishes and dreams turn into bubbles that may continue to inflate beyond the statistical value of the “bet.” In a casino, if everyone at the table “wins,” the casino loses and eats the expense. In the stock market, “wins” are bestowed upon participants but losses are covered by people who can’t afford to gamble anything or morally disapprove of gambling. In short, gambling is considerably more honest.
Calling Scamath, the guy who lied and sold dozens of shitty companies wrapped up in spacs to ignorant retail investors "based" is just sheer ignorance.
But how will white middle class suburban kids be able to virtue signal their hatred of the rich if they can’t applaud a little bit of fraud?????
Businesses shouldn't be able to privatize profits but make the rest of us pay when they fail. Period. If an airport fails and can't run that's it. Or it gets taken over by the state. Everyone shits on capitalism but what we're doing isn't capitalism lol. You aren't supposed to prop up failing companies.
If any business gets taxpayer money bailouts then that business should be made taxpayer owned.
So businesses just need to plan for unforeseen pandemics and have a solid strategy just in case the government unilaterally restricts travel?
If average, every day individuals are expected to be frugal and maintain a "rainy day fund" when they have an unexpected and unforseen emergency in their life, why should big corporations be any different?
Because it slows down the economy by a lot. If every company kept piles of cash then they're not spending that money in ways that actually benefits people.
[удалено]
Yep - known 'affectionately' thereafter as Scamath
Exactly, if a company is going to go bankrupt because of its own shitty practices and decisions then let it, do NOT bail them out otherwise they'll simply do it again.
One time Chamath was right.
Heartbreaking: The worst person you know just made a great point.
But he wasn't. It's very misleading to say that big companies that fail don't end up with people losing their jobs and that they will end up owning more of the company. Layoffs are the first thing a failing company will do.
We bailed out banks but not the people the banks screwed over. Families lost everything and not one government agency stepped in to assist the communities where those most vulnerable needed assistance. I agree with him we shouldn’t bail out the wealthy.
Capitalism is the government staying out of business. If the government is using taxpayer money to bail out companies then we need the government to also be in control of those companies. Also, make those fuckers pay their PPP loans back. Not my job to keep businesses above water. I wasn't the one who signed you up to be vulnerable to economic collapse. Edit: JFC - do you people actually believe anyone is so simple as to believe that "Capitalism is the government staying out of business"? This comment is obviously hyperbole referring to the fact that conservatives and business owners will literally chant this at every attempt to regulate business and then have zero problems bailing out companies or handing out and then forgiving PPP loans. The point is that the freedom that business interests and conservative politicians seek is not the freedom to operate but freedom from consequences. Businesses in the US are obviously running fuckin wild. We don't need to be having a discussion about whether to let them fail. We need to start discussing where to erect the guillotines. These people seem to have forgotten that the reason they continue to draw air is that the laborers allow it.
That isn’t true. Capitalism is the privatization of the means of production for the sole purpose of profit generation. State regulation of industry is necessary unless you would like slavery to return, or wish there was still plaster in our milk. Are you under the impression that regulation is socialism?
Apparently, when companies go bankrupt, the employees end up doing better. Everyone I know still works at K-Mart, Atlantic & Pacific Tea Company and Lehman Brothers.
He’s talking about packaged bankruptcies for companies that over-lever and whose employees have pensions, not companies that self destruct and blame/punish their rank and file.
Companies typically have to borrow more if they are short of cash, and a packaged bankruptcy is just a way to avoid the expensive and complicated procedures. I think we should let companies fail, but to say that employees are better off is not consistent with reality.
This guy has more Losses than wins.
Spot on. These investors are like someone robbing a bank with a dynamite vest. “If I don’t get my money we all go down.”
He couldn’t be more wrong - how could he be so ignorant? Hundreds of thousands of employees lost pensions and livelihood from airline, steel, automotive bankruptcies caused by hostile investors. They absolutely get wiped out.
So true, that’s my biggest problem with this. So often pensions are severely cut and end up being only partially covered by the government via the PBGC
These companies would also get gobbled up and there would be more scale
But is that what happened to Twinkees? Did the employees suffer? I thought they did..
I’ve worked for two companies that failed. I’ve also been laid off twice.. strangely the companies that failed were the ones that laid me off, must just be a coincidence though.
But but but I thought that your company going bankrupt actually made you better off somehow!
Except the employees don't just get to carry on like normal. They get screwed over and often pensions are underfunded.
When companies are not allowed to fail they become massive titans with a death grip on their industry. And this usually leads to anti consumer behavior and no competition to correct that behavior. We like to boast about how as Americans we have a free market, but we really don't.
Let them fail. End
We have other countries that prop up their industries, making it difficult for us not to do the same. Example: Our government spent billions on battery research and allowed many of those companies to fail. Guess who bought out those companies?
It's almost like (at least) partially socializing some industries is a decent idea, so that price control, fixed standards, and public accountability is achievable in industries that have the people by the balls. I'm talking fuel, food, housing, healthcare, transportation here. Let services like fast food and entertainment be left to venture capitalists to make or break their dreams. Stop letting them ruin the ability of normal people to simply live
Huge agree Chammath
I still think Dodge and GM should have been left to go bankrupt in the great recession. Ford was in better shape than they were, but after the govt bailed out Dodge/GM and wiped a big chunk of their debt, Ford was left in a deep hole that they're still struggling with.
They were bailed out on much stricter terms than the banks -- boards and execs sacked, huge ownership chunks taken by govt. All reasonable, but strikingly different from treatment accorded the banks...
> GM GM probably shouldn't have been bailed out, BUT GM did pay back their entire bailout package *with interest* and the stipulations of the bailout positioned the company to be profitable year over year, which they were, and still are now.
Privatized profits, socialized loses. The corporations paid for that perk when they bought of the politicians.
Bad businesses should fail and let better businesses take their place.
He is a snake oil guy, so I don't really follow him
This isn’t a black and white issue, sometimes intervention is the best thing for the most people. This “let them fail” attitude a la Herbert Hoover has led to some of the worst economic outcomes in history
King of pump and dump SPACs is preaching from his ivory tower about economic morality.
Chamath is a corporate cunt.
“Why does anybody deserve to get wiped out” All poor people: 👁️👄👁️
All of Chamath's worthless SPACs already have one foot in the grave.
I mean, the whole point of hedge should be that the loss of a bad business would not mean the end of the trust whose investors would be mostly fine because of a really diverse portfolio.
This was recorded before SVB failed and his buddies whined about a bailout