Don’t stop there. What happens after they fail? A flight to perceived strength. The top of the market would be the only place where people would feel safe parking their funds. Think Wells Fargo, Goldman, USBank, etc.

Now consider which would be the better buy. Twitter for $40 something billion or bail all these investors out for similar money and own the startup banking business almost entirely. I know what id do if I was sitting on billions looking for capital returns ala Apple.

(Apple could outright buy this market, use the returns from banking to issue monthly/quarterly dividends, and still have hundreds of billions in cash. They could then buy some significant portion of the emerging launch market. Wait a few years to mature. Then declare their checkmate on the global economy. Edit-correction, they’ve done buybacks so they’d have to issue some stocks or raise funds. Point remains.)

Nice try to transform the US government into a VC of last resort. We should be reminded that 90% of startups fail.

"106 Must-Know Startup Statistics for 2023 - Embroker" - https://www.embroker.com/blog/startup-statistics/#:~:text=03....

I didn't say the US should bail the bank out. The USG should act to ensure the depositors of the bank are made whole because otherwise the market would get even more concentrated. The quip about buying the startup banking sector underscores the 'cheapness' of the purchase for any bank or entrant. All the USG need do is act as a matchmaker and maybe some kind of clearing house.

And if it contagions into your own bank and company and you get laid off too?

Funny. It just so happens that the contagion did just that I was was laid off 2 months ago.

I assume your views in this case are consistent with the views you expressed in our prior discussion related to FTX. That is, it would have been your responsibility to do due diligence on the bank and properly ensure that your assets are safeguarded, and if you had failed to take such precautions, then the fault would have been yours and yours only. As a result, you would not whine on HackerNews, nor expect sympathy or compensation. Fair?

> Fair?

For euqity/bond holders of the bank, probably.

For depositors like in this case, a little bit complex. What about possible contagion? Where will the contagion be stopped? Or just let it destroy the world if possible.

> nor expect sympathy or compensation

Maybe compensation like Bernie-Madoff style, remove all the profits of other persons. But this works fine by me because it will probably destroy crypto.

It seems to me it's a decision that trades off the risk of moral hazard for risk of contagion. To me, the rules were crystal clear -- if you have more than $250k in your account, that excess cash should be seen as "at risk".

Workarounds include depositing money in a brokerage account (and buying risk-free t-bills) or spreading it out across multiple bank accounts. Smart and risk-aware people did that, dumb people didn't (or alternatively, through specific rules that Silicon Valley Bank set, were prevented from taking their money elsewhere).

But as always, system tends to take decisions that increase moral hazards as time goes on. Swift and easy solution in the moment, but bad in the long run.

(Probably not productive to bring crypto into this discussion in my view.)

> that excess cash should be seen as "at risk".

Are you willing to loose your job & house because of the contagion?

> (Probably not productive to bring crypto into this discussion in my view.)

You aren't even a bagholder I'm afraid. Bagholder is having a stock that has fallen 90%. You (I think) have nothing and anonymous.

Again, I thought crypto was an !insane! ponzi since when bitcoin was $300 (that's when I studied it a little).

Which contagion though? The average person has between $5-6k in their bank accounts. There was certainly lots of talk on Twitter about this thing spreading -- and it's very possible that it might have -- but it was not a given. The loudest arguments for contagion came from the same people who had the biggest incentives to see SVB "bailed out". Hardly a coincidence. Just look at how vocal otherwise libertarian David Sachs was.

I don't think there is an official definition of bagholder as far as I'm aware.

> Which contagion though?

Many people out of a job on Monday(including me). Many other banks getting a bank run.

You should do therapy on the damage of the hype of crypto. For your own sake.

I felt really stupid and angry after the collapse of FTX as you know, and truthfully, I could probably have used some professional therapy at the time. But at this point, I'm trying to look forward instead, and to me that is likely having an equally good (and positive) effect on my mental health as therapy would have had. Hopefully you can do the same as you search for the next chapter. Best of luck.

> But at this point

It's also the reasons why you had to invest in it in the first place. Not just that it failed.

I only give advice on things I believe & do myself. I did the similar thing with leveraged etfs and know well the why & aftermaths.