Is This The End Of Biden Era: The Collapse of SVB - Policy Makers' Peril - Populist Backlash?

"After the collapses of Silicon Valley Bank and Signature Bank, the Biden administration and regulators are trying to strike a balance that has eluded policy makers in the past: stabilizing the financial system without stirring popular backlash for bailing out banks.

President Biden emphasized Monday that executives of both banks would lose their jobs after the firms were taken over by the Federal Deposit Insurance Corp. Depositors will get all of their money back, but investors won't be protected. Administration officials also have avoided calling on big banks to help solve the problem by purchasing smaller rivals, as the U.S. did in 2008.

Those moves were informed, in part, by the experiences of the Federal Reserve, the Bush administration and the Obama administration during the 2007-09 financial crisis. Washington supported hundreds of banks and other financial institutions with federal money, and many senior executives at those banks kept their jobs. In addition, investors were saved from absolute losses while some of the biggest banks bought rivals and grew bigger.

Bailouts during the last crisis proved unpopular, especially when layoffs mounted and millions of households suffered under the weight of mortgage foreclosures. Politicians from both parties, including Sen. Elizabeth Warren, a Democrat, and former President Donald Trump, a Republican, accused the government of protecting elites while others suffered.

Mr. Biden has sought to cast his response to the latest panic as an effort to protect the little guy and the economy, while ensuring that people at the center of the crisis bear the brunt of losses.

Still, there are almost always trade-offs for policy makers when they try to strike a balance between doing what is popular in a crisis and what they believe is needed to stabilize markets. The administration's decision to guarantee that all depositors get their money back is one example of these trade-offs.

Many of the depositors being extended special protection from losses are tech companies and wealthy Silicon Valley investors who have accounts far exceeding the usual $250,000-per-depositor cap for FDIC insurance.

For example, Roku Inc., the streaming company founded by billionaire Anthony Wood, was one of SVB's largest depositors, with $487 million parked there, according to its filings.

The Biden administration faced a risk that firms with money deposited at SVB wouldn't be able to meet their payrolls and would lay off workers if they didn't have access to all of their funds. The administration was also concerned that depositors at other banks would pull their money if they saw that SVB's depositors lost their funds during the FDIC takeover, propagating a wider panic.

Now that the FDIC has assured depositors in SVB and Signature that they will get all of their money back, it will be hard not to extend that guarantee to everyone, a potentially costly proposition, said Thomas Hoenig, who was vice chairman of the FDIC from 2012 to 2018 after serving as president of the Federal Reserve Bank of Kansas City.

"If you bail out some of these depositors, you are going to have a hard time explaining yourself if you don't bail out others," he said. "That train has left the station."

Deposits in the banking system totaled $17.6 trillion as of March 1, three quarters of the value of all of their assets, according to the Fed.

FDIC deposit insurance is covered by fees assessed to banks. Those fees could go up if the cost of insuring deposits rises.

It is hard to know whether taxpayers will be affected until the scope of bank losses becomes clear.

Bank bailouts from 2008 proved less costly than initially expected. The $700 billion disbursed through the Troubled Asset Relief Program resulted in $31 billion of losses, according to Congressional Budget Office estimates.

On the other hand, 96% of $793 billion in 2020 federal Paycheck Protection Program loans have been forgiven, according to a committee set up to monitor the program.

Politicians and their backers are already blaming each other for the bank failures and the government's response.

"Organizations that can't manage risk should be allowed to fail, and taxpayers should not be forced to bailout the well-connected and wealthy," said David McIntosh, president of the Club for Growth, which supports Republicans.

Democrats have blamed Trump administration programs that rolled back bank regulatory policies enacted after the 2008 financial crisis.

"Silicon Valley Bank's collapse is the predictable and direct outcome of a furious 2018 effort by bank lobbyists to evade basic oversight, transparency and financial stability in favor of profit," said Rep. Pramila Jayapal (D., Wash.), chair of the Congressional Progressive Caucus." [1]

 

The administration's decision to ensure that all depositors get their money back protects against losses of the wealthy, who put money into these banks getting higher rewards for higher risks. It is precisely such rich people who are mainly to blame for the catastrophe of these banks. Poor Biden, he might not be helped by that horrible train ride through Ukraine. US voters are not known for their tolerance for moral turpitude among the wealthiest and their patrons in the state apparatus.

 

1. The Collapse of SVB: Policy Makers' Peril: Populist Backlash --- Biden tries to cast bank closures as effort to punish executives while protecting economy
Hilsenrath, Jon.  Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 15 Mar 2023: A.5.

Saudo Arabijos princas išbando neprisijungimo politiką

„RIJADAS, Saudo Arabija – iš naftos bumo gavusi daug grynųjų pinigų, Saudo Arabijos sosto įpėdinis princas Mohammedas bin Salmanas imasi užsienio politikos ir verslo žingsnių, kurie tikrina, ar galima nestoti į vieną pusę JAV ir Rusijos bei Kinijos konkurencijose.

 

Praėjusią savaitę su Kinijos pagalba sudarytas susitarimas atnaujinti diplomatinius santykius su Saudo Arabijos varžovu Iranu pademonstravo gudrų 37 metų faktinio valdovo pragmatiškumą, kurio sprendimų priėmimas praeityje buvo kritikuojamas, kaip nepastovus. Šis susitarimas atšaldytų įtampą visoje Persijos įlankoje ir priartintų Saudo Arabiją prie didžiausios prekybos partnerės Kinijos, neatstumiant jos svarbiausios saugumo partnerės Vašingtone, kur pareigūnai teigė vertinantys susitarimą teigiamai.

 

Kaip ir Indija, Turkija ir Jungtiniai Arabų Emyratai, Saudo Arabija yra vidutinio dydžio galia, ieškanti pranašumų, nes JAV vadovaujamai pasaulio tvarkai meta iššūkį įvykiai Ukrainoje ir ryžtingesnė Kinijos užsienio politika, teigia kai kurie analitikai. Saudo Arabijos lyderiai taip pat ketina panaudoti aukštas naftos kainas, kad finansuotų šalies ambicijas tapti pasaulinio verslo žaidėju su klestinčia ne naftos ekonomika.

 

Tuo tikslu princas Mohammedas paskelbė apie naują Saudo Arabijos nacionalinę aviakompaniją po to, kai „The Wall Street Journal“ paskelbė, kad karalystės nepriklausomas turto fondas užbaigia sandorį dėl 35 mlrd. dolerių amerikietiškų lėktuvų pirkimo, sukuriant dešimtis tūkstančių darbo vietų JAV.

 

Saudo Arabijos patarėjai teigė, kad „Boeing“ susitarimu iš dalies siekiama sustiprinti karalystės statusą Vašingtone. Tai parodė, kad Rijadas ir toliau palaiko draugiškas sąlygas su Vašingtonu, net ir po to, kai Saudo Arabijos vadovaujama Naftą eksportuojančių šalių organizacija ir jos Rusijos vadovaujamos sąjungininkės spalio mėnesį sutiko sumažinti naftos gavybą prieš Vašingtono norą, todėl Baltieji rūmai apkaltino Rijadą, kad jis lygiuojasi į Maskvą.

 

Didėjanti Saudo Arabijos pasaulinė įtaka ir noras atremti JAV interesus pagrinde yra tvirta finansinė padėtis, kurią sukuria augančios naftos kainos. Karalystės ekonomika plėtėsi vienu sparčiausių tempų pasaulyje, nes JAV, Europa ir daugelis besivystančių šalių susiduria su augančia infliacija ir nuosmukiu.

 

Viską lemia princo Mohammedo įsitikinimas, kad Saudo Arabija turėtų turėti didesnę įtaką pasaulinėje arenoje, atitinkančią jos, kaip 20 galių grupės narės, statusą.

 

„Tai labai svarbi Saudo Arabijos ideologija“, – sakė Kolumbijos universiteto vyresnioji mokslo darbuotoja Karen Young.

 

Rijadas jau seniai mano, kad didžiausia grėsmė saugumui kyla iš Teherano ir jo remiamų ginkluotų grupuočių kaimyninėse šalyse. Šį pavojų sustiprino bepiločių orlaivių ir raketų smūgiai prieš Saudo Arabijos naftos telkinius 2019 m., laikinai nutraukę 5% pasaulio energijos tiekimo, bet nesulaukę jokio atviro karinio atsako iš JAV.

 

Ši ataka sustiprino princo Mohammedo įsitikinimą, kad Saudo Arabija nebegali tikėtis saugumo garantijų iš JAV, kad apsaugotų jo ekonomikos plėtros planus, sosto įpėdinis princas suprato, kad jam reikia ieškoti papildomų partnerių rytuose, sakė Saudo Arabijos pareigūnai.

 

Pastaraisiais metais Kinija padėjo Saudo Arabijai sukurti savo balistines raketas, konsultavo dėl branduolinės programos ir pradėjo investuoti į princo Mohammedo projektus, tokius kaip Neom – futuristinis naujas miestas. Kinija taip pat pasiūlė Saudo Arabijos pareigūnams sukurti vietinę gynybos gamybos pramonę, o Rusija pasirašė branduolinio bendradarbiavimo susitarimą su karalyste.

 

Naujas Saudo Arabijos požiūris į užsienio reikalus, kuris dešimtmečius tvirtai palaikė JAV politiką ir nebuvo linkęs į dramatiškus pokyčius, pradėjo formuotis anksti, kai princas Mohammedas greitai atėjo į valdžią. Jis įsikišo į Jemeno pilietinį karą, tada prisijungė prie kaimynų, blokuojančių Katarą, o stipriai spaustas Libano ministras pirmininkas atsistatydino.

 

Šie žingsniai sulaukė tarptautinės kritikos, tačiau būtent 2018 metais princui Mohammedui artimų žmonių įvykdytas Saudo Arabijos žurnalisto Jamalo Khashoggi nužudymas paskatino ilgesnį sosto įpėdinio princo diplomatinės izoliacijos laikotarpį. Tai iš esmės baigėsi praėjusių metų liepą, kai Saudo Arabijoje apsilankė prezidentas Bidenas, kuris kampanijos metu pažadėjo laikyti karalystę, kaip pariją. Vasario mėnesį Senato respublikonų lyderis Mitchas McConnellas ir dar du GOP įstatymų leidėjai lankėsi karalystėje susitikti su sosto įpėdiniu.

 

Įvykiai Ukrainoje suteikė Saudo Arabijai galimybę apginti savo interesus pasaulyje, kuriame JAV nėra neginčijama supervalstybė, sakydami, kad jie gali palaikyti Ukrainą ir dirbti su Rusija OPEC+.

 

Saudo Arabijos pareigūnai sakė, kad sosto įpėdinis princas sakė tikintis, kad žaisdama didžiąsias galias vieną prieš kitą, Saudo Arabija galiausiai gali spausti Vašingtoną, kad šis sutiktų su jo reikalavimais suteikti geresnę prieigą prie JAV ginklų ir branduolinių technologijų." [1]

 

Princas įrodė, kad jei nesi skuduras, į kurį gali valytis kojas kiekvienas praeivis, tai gali gauti to, ko tau reikia. Europos Sąjungos, didžiųjų Europos valstybių ir Lietuvos vadovai šiuo metu yra tokie skudurai. Todėl taip greitai kilimėlis ištraukiamas iš po mūsų kojų. 

1.  1. World News: Saudi Prince Tests Nonaligned Policy
Kalin, Stephen; Said, Summer.  Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 15 Mar 2023: A.9.

Saudi Prince Tests Nonaligned Policy

 

"RIYADH, Saudi Arabia -- Flush with cash from an oil boom, Saudi Crown Prince Mohammed bin Salman is making foreign-policy and business moves that test whether it is possible not to take sides in the rivalries between the U.S. and Russia and China.

Last week's China-brokered agreement to renew diplomatic relations with Saudi Arabia's rival Iran demonstrated a shrewd pragmatism from the 37-year-old de facto ruler, whose decision making has been criticized in the past as erratic. The deal would cool tensions across the Persian Gulf and bring Saudi Arabia closer to its biggest trading partner, China, without alienating its top security partner in Washington, where officials said they saw the detente as positive.

Like India, Turkey and the United Arab Emirates, Saudi Arabia is a midsize power looking for advantages as the U.S.-led world order is challenged by events in Ukraine and China's more-assertive foreign policy, some analysts said. Saudi leaders are also intent on using high oil prices to fund the country's ambitions of becoming a global business player with a thriving non-oil economy.

To that end, Prince Mohammed announced a new Saudi national airline after The Wall Street Journal reported that the kingdom's sovereign-wealth fund was closing a deal for $35 billion in commercial aircraft from Boeing Co., a boost for a major American manufacturer that would create tens of thousands of jobs in the U.S.

Saudi advisers said the Boeing deal is aimed partly at boosting the kingdom's status in Washington. It showed that Riyadh remains on friendly terms with Washington, even after the Saudi-led Organization of the Petroleum Exporting Countries and its Russia-led allies agreed to an oil-production cut in October against Washington's wishes, leading the White House to accuse Riyadh of aligning with Moscow.

Underpinning Saudi Arabia's growing global influence and willingness to buck U.S. interests is a strong financial position generated by buoyant oil prices. The kingdom's economy has expanded at one of the fastest rates globally, as the U.S., Europe and many developing economies are facing rising inflation and recessions.

Driving it all is the belief espoused by Prince Mohammed that Saudi Arabia should have greater clout on the world stage, befitting its status as a Group of 20 power.

"It's very much a Saudi-first ideology," said Karen Young, a senior research scholar at Columbia University.

Riyadh has long regarded its biggest security threat as coming from Tehran and the armed groups it supports in neighboring countries. That danger was reinforced by drone-and-missile strikes against Saudi oil sites in 2019, which temporarily knocked out 5% of global energy supplies but drew no overt military response from the U.S.

The attack galvanized Prince Mohammed's belief that Saudi Arabia could no longer count on security guarantees from the U.S. To safeguard his economic-development plans, the crown prince realized he needed to look east for additional partners, Saudi officials said.

In recent years, China has helped Saudi Arabia build its own ballistic missiles, consulted on a nuclear program and begun investing in Prince Mohammed's projects, such as Neom, a futuristic new city. China has also pitched to Saudi officials on setting up a local defense-manufacturing industry, while Russia has signed a nuclear cooperation deal with the kingdom.

Saudi Arabia's new approach to foreign affairs, which for decades had been firmly supportive of U.S. policy and disinclined to dramatic shifts, began to take shape early on in Prince Mohammed's rapid rise to power. He intervened in Yemen's civil war, then joined neighbors in blockading Qatar and strong-armed Lebanon's prime minister into resigning.

Those moves drew international criticism, but it was the 2018 murder of Saudi journalist Jamal Khashoggi by men close to Prince Mohammed that precipitated an extended period of diplomatic isolation for the crown prince. That largely ended last July with the visit to Saudi Arabia by President Biden, who had pledged on the campaign trail to treat the kingdom as a pariah. In February, Senate Republican leader Mitch McConnell and two other GOP lawmakers visited the kingdom to meet the crown prince.

The events in Ukraine has provided the Saudis with what they see as an opportunity to assert their own interests in a world where the U.S. isn't the undisputed superpower, saying they can support Ukraine and work with Russia in OPEC+.

In private, Saudi officials said, the crown prince has said he expects that by playing major powers against each other, Saudi Arabia can eventually pressure Washington to concede to its demands for better access to U.S. weapons and nuclear technology." [1]

 

Prince proved that if you're not a rag that every passer-by can use to wipe their feet, you can get what you need. The leaders of the European Union, major European states and Lithuania are currently such rags. That's why the rug is pulled out from under our feet so quickly.

 

1. World News: Saudi Prince Tests Nonaligned Policy
Kalin, Stephen; Said, Summer.  Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 15 Mar 2023: A.9.