rlucas

This piece is very much not sourced from payment rails transaction data. It's big demographic and macro data and the sources are all nicely cited

"Licit" in English usage also carries the weight of its connotation in church ("canon") law, wherein it can refer to acts that are considered not only to have occurred spiritually ("valid") according to the law, but have been done in conformity with the process laid out in the law.

For example, canon law asserts that certain sacraments such as marriage or baptism can be conducted validly but illicitly, such that the marriage is still considered to have occurred, but it wasn't done the "right way." In contrast, there are some things that, if done illicitly, aren't valid either. (In this case I think it's because there's a notion that there's a supernatural/spiritual aspect to certain acts that transcends whether they're done licitly, whereas certain other acts are purely creations of human law and therefore if not done licitly are void ab initio.)

Sorry, I meant Jesse Livermore's "Confessions of a Stock Market Operator," worth a read to anyone interested in the history of this stuff.

I don't think that's a true etymology of "bucket shop," which per my recollection of Livermore was just an off-track-betting parlor for ticker symbols, but where nobody actually bought the shares (bundled or otherwise). Strictly a retail swindle, having nothing directly to do with the risk/maturity bundling work you are criticizing above.

I think bdcravens is suggesting not that the law itself was intentionally a half-measure, but that the state apparatus is slow-walking the reform measures in a sort of malicious compliance with the law, in order that the governmental machinery of prohibition and its constituents (employees and vendors) are perceived as continued necessities.

That is very, very much in line with observed behaviors here in Washington state. We had a very strange marijuana legalization process, because it was almost precisely contemporaneous with another popular initiative that dismantled the state-owned liquor regulatory apparatus (it used to be state-franchised liquor stores were the only liquor retailers; Costco and the grocery interests funded a repeal of that and voters were generally quite in favor). The liquor regulator was basically renamed from "Liquor Control Board" to "Licensing of Cannabis Board" (or such) and the machinery was kept around. Extremely odd -- but probably greased the skids for the state to actually adopt the liberalized marijuana policy (instead of slow-rolling it and exaggerating its harms) because it was a new budget and jobs program for the to-be-canned employees.

Presently in Seattle, we have a very similar thing going on with the implementation of mental health and homeless service response for 911 calls for things like high guy in the street or passed out guy in doorway. The politicians are meeting their promise of standing up a small team to go to those calls, but, the police union is insisting that an armed officer go with the mental health responder every time. This malicious compliance protects existing budgets and jobs, and makes the new program destined to fail, because by definition it will always be less economical (due to duplicative efforts).

Short form: never underestimate the bureaucratic/union self-preservation instinct.

A caution on the source; "The College Fix" is a rage-bait blog for one side of the tiresome U.S. culture war. As a result, expect sensational framing.

54% of SVB’s loan book was loans “to” VCs and PEs, but they weren’t loans based upon the funds’ portfolio holdings. They were Capital Call lines, based on the power of the VC to demand that its LPs make good on capital commitments.

(Yes, the fund portfolio holdings were pledged as additional collateral here but that’s secondary. The only thing that could make the CCLOC outstandings get marked down is if the well-heeled institutions and individuals who’ve committed to VC funds stop making their capital calls.)

Even SVB is not crazy enough to lever up against VC portfolio marks.

... though it may well be relevant that they might have felt great pressure to /retain/ customer deposits in a world of competitive yields.

It's not nearly that simple, though. You are ignoring capital requirements. For things like Treasuries, you don't need any capital % against it. ($100 in deposit -> $100 in Treasuries, if you borrow at 1 and lend at 4 you made a 3% spread on $100). But for risky things that might yield much more, you might need to reserve far more, meaning you need to fund part of it with equity. ($100 in deposit but with a 50% capital requirement means you can -> buy $100 of high-yield stuff, but you need to use $50 of your equity to do so)

There's other epicycles to this too. For example, a bank can just "buy" deposits through a correspondent bank (a bank-for-banks). So the direct connection between your kind of borrowing and kind of lending, particularly when its consumer / credit card stuff, can be tenuous. In SVB's case, though, all of the stuff happened in a tight echo chamber ecosystem -- SVB got deposits from tech cos, who got money from VCs, who were working off of capital call LOCs from SVB. So your observation is germane.

See also, thermohaline circulation. A major factor in the global climate is the flow of water pulled north along the Atlantic's surface due to the sinking of denser, saltier water.

Not going to be an issue with your average desalination plant, but certainly proves the point that water masses can behave differently in big, non-trivial ways due to their salinity.

BC has a lot of cred with some of us "been around since web 1.0" folks, to be clear

There is a large set of infrequently encountered (for most) but often highly important and/or time-sensitive things that having a traditional bank you can walk into makes much easier.

Consider: medallion signature guarantee, initiating an arbitrarily large sized wire to an arbitrary recipient, cashing a physical check where the payee and indorsement doesn't match automatic remote-deposit scrutiny, cashing a particularly large cashier's check, getting cash above an ATM withdrawal limit (even from another bank or in another country, in some cases), working around a stated policy, etc.

Online-only, mobile-only, and neo-banks basically say "eh" to these corner-case services. But a branch manager, even if they may not personally recognize you, will have surprising leeway and willingness to solve problems if they look at the CRM and see you're a longtime customer in good standing with some modicum of deposit / activity over time. Not so for a rando.

It's been very worth my while to forego a couple % in interest income for the annual "need an institution to help me fix this today" tax.

(But yeah, keep the corpus in something that will pay you.)

++

A giant amount of social quandaries melt away when you realize:

"Good guys" and "Bad guys" is not a matter of identity, it's a matter of activity.

You aren't a "Good guy" because of who you are, but because of what you do.

There are vanishingly few people who as a matter of identity are reliably and permanently one way or another.

Effectively, yes. It's a subsidy to individuals of moderate means, particularly those who have spent decades maxing out their holdings.

If you think that's regressive and absurd, wait until you hear about the mortgage interest deduction, 1031 exchanges, depletion allowances, accelerated depreciation, ....

This is misleading to those who read "plain English" meanings and not familiar with jargon. Banks call "Capital" or "Equity" the unencumbered safe assets like cash they hold.

Banks do have strict Capital requirements.

The "reserve" requirement going to zero is different.

++ COLLATE "C" is your friend, particularly if you find yourself using a GUID or other text-y PK field.

I got a similar response when I tried to return an electronics item a couple years back. The guy (totally over his head) walked through an algorithm and 10 minutes into it, basically said "because you're a good customer we'll overnight you a new one, don't bother sending the old one back." The implication was subtly different from when they don't bother with a return on a low-margin bulky item (for which shipping would negate any margin) -- the idea here was that I was getting some kind of extra juice for being a spender.

Weirdly reminiscent of the sci fi plot element in Sawyer, “The Terminal Experiment.”

I also had intermittency on 2021-11-27 between 1-2 PM PT. Would work one minute, not the next, retry and it works. Feels round-robin-y kind of Heisenbug.

Just ask yourself, what productive use of USD reliably yields 8.88% plus a spread for the intermediary? (For regulated boring banks, net interest margin historically is around 3%.)

Banks doing C&I lending to modest risk (but still not "rated bond issuer") companies are charging mid-single-digit rates. Those banks are generally paying depositors way under 1%.

There do exist loan portfolios legitimately producing these kind of yields, but they are not trivial to produce. Actively managed and monitored specialized portfolios -- where you would really want to diligence the track record and underwriting/origination methodology of the lender.

Don't get me wrong: dislocations do happen and arbitrages do open up, sometimes for far longer than you might think. But fundamentally, if this is non-Ponzi finance, someone must be using those funds for a productive enterprise that yields enough to cover the cost of capital. What is that in stablecoin lending??

(Source: I am an investor and former operator in specialty lending company, having sourced/raised capital in > 100 debt and equity deals.)

There are an awful lot of businesses that charge huge margins and use that extra cash flow, plus their scale, to essentially fence out new entrants by a mix of sales/marketing, channel spiffery/bribery, and regulatory capture.

It's often a fairly "bad for you"/"predatory" product, too, but the problem is that it's very hard to create a new entrant doing it the "good for you" way, because all that extra margin the bad guys make can be used to squeeze you out of the market. Legacy industry examples would include whole life insurance, title insurance, payday lending, and whatever it was that "Dun & Bradstreet Credibility Corp" was selling (not the historical D&B) a few years back.

I consider it enough of a pattern of "bad money chases out good" that I identify it regularly among pitches I receive.

A meta-comment here: Beware the advice you might glean here. Often, surveying HN for the consensus provides a signal; more often, skimming the cream of the commentary provides a better signal. Here, a lot will be misleading, particularly to the kind of founder who would otherwise be inclined to seek some direction from HN commentary.

Here's my best try as an antidote:

Remember that as a technical founder, unlike almost any other kind of knowledge-worker, you have a non-zero chance of generating $1 B in equity value for yourself in every new company you start. But for a company to do so, it will require getting enormously lucky and getting you strapped in for years of extremely intense work along with your team (and likely, investors & board). You should never bail because of mere problems with product-market fit or current sales traction, because those things can change dramatically and swiftly. You should always bail if your faith in, and interest in working with, the people around you goes to zero. When you do bail, go graciously and negotiate some kind of spiff on the way out, but don't belabor it. Your mental energy is far, far better spent preparing for the next big thing, and you are getting the better end of the bargain, for you have now denuded yourself of the albatross of a team you won't succeed with.

Staff please update title — importantly the reported upon study indicates no effect of legislation mandating hi-viz, not the wearing of it.

For example, perhaps everyone who would obey such a law is already wearing high viz.

That is orthogonal to the point of the article.

The state can demand, using their guns, that you pay them in the coin of their realm.

At that point, you need to come up with those coins, or face their guns.

You can have your BTC be decentralized and seizure-resistant at that point, but that will not stop the Leviathan from jailing or killing you. The "guns" of the article are the actual guns of the IRS.

> the coronavirus effect on the economy has just demonstrated that economic growth is fundamentally not impacted much by around 1/3 of all jobs. The labor product and consumption activity of that 33.3% just doesn’t matter.

If you're right about that we're into revolution territory. If COVID reveals that we've built an economy that not only doesn't care, but doesn't even register the existence of 1/3 of the population, the body politic may have had a poison dose.

Are you suggesting that the Fed was strictly a price-taker and so de minimus that it had no price effect? In which case, why did the Fed get involved?

Clearly. But it's not as if demanding equity rights along side a debt financing is unprecedented. Certainly, it is a damn sight more precedented than the Fed buying corporate bonds!

You have a point here, however:

Step 1: Use scale-derived lower WACC and an army of lawyers as cudgels to destroy independent retail and grocery in exurban and rural communities.

Step 2: "You can't get rid of us because without any other retail or grocery there'll be a food desert here!"

Can grant you that using accounting definitions, jjoonathan is literally correct: the [accounting] profit goes to sociaty (the Fed) here and the debt liability is on the private balance sheet (Walmart).

However, GP is making a point I might take the liberty of rewording as, "privatize the profits and benefits, socialize the risks and costs."

The reworded version is certainly true in economic (not accounting) terms. The profits and benefits accrue to the private side (Walmart) through a lower cost of capital and hence a higher profit margin. The risks and costs are borne by society (the Fed) through the credit risk and the infinitesimal debasement of the currency.

Put another way, in an information-theoretic view of markets and money: stopping the yields from going up would make it more difficult for investors reliably to gauge how safe it is to lend money during a time of economic stress.

It's also not a scaling function (reduce everyone's cost of borrowing by 10%, say). There's a floor so you get a clipping effect.

The Fed's intervention is like the CD mastering Loudness Wars.