'WINING CLASS': HOW DEMOCRATS JUST SOLD OUT AMERICANS FOR SILICON VALLEY BILLIONAIRES AND CHARDONNAY
Then Vice-President now President Joe Biden meeting with construction workers and signing hardhats in New York City, June 10, 2010. Photo Credit: JB Nicholas.
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Billionaires got bailed out, the working class got sold out.
That's what happened over the weekend when Pres. Joe Biden bailed out Silicon Valley Tech Titans' favorite pet bank on Sunday after the bank failed on Friday.
The law for ordinary Americans is that the Federal Government insures up to $250,000 of bank deposits. That means if you put $1 million into one bank account and that bank fails you only get back $250,000. That's how the banking system works for ordinary people.
What happened over the weekend, without specific Congressional approval, was the Biden administration decided to cover any and all deposits over $250,000 for a select group of billionaires it favors-including California wine producers. In other words, all of Vice President Kamala Harris's rich Silicon Valley pals.
The end result: taxpayers paying billions to billionaires who rule the Internet like Dutch Patroons once dominated New York real estate.
Here's how it happened. Silicon Valley Bank was holding billions in US Treasury Bonds. The bonds backed billions of dollars of deposits titans of technology put into the bank. To stimulate the economy after the Wuhan virus pandemic, the Federal Bank lowered interest rates. That triggered inflation, which led to rising prices. To counteract inflation, the Federal Bank increased interest rates.
Increasing interest rates lowers the value of treasury bonds banks hold. The higher interest rates rise, the less the bonds are worth. Before the Federal Bank increased interest rates again, the Silicon Valley Bank sold a bunch of bonds. The bank lost money in the sale. A lot of money. When the bank announced a second round of sales, venture capital firms panicked and advised clients to take their money out of the bank.
The bank's stock cratered by more than 60%, according to filings by bank regulators in California. Depositors pulled more than $42 billion in cash out of the Silicon Valley Bank on Thursday alone, CNN reported. By the end of the day, it had a negative cash balance of about $958 million. Regulators closed it mid-morning Friday.
“SVB’s condition deteriorated so quickly that it couldn’t last just five more hours,” wrote Better Markets CEO Dennis M. Kelleher. “That’s because its depositors were withdrawing their money so fast that the bank was insolvent, and an intraday closure was unavoidable due to a classic bank run.”
The collapse of the Silicon Valley Bank pointed to other problems, including shaky-if not shady-Crypto banks.
Meanwhile, Tech Titans and venture Capitalists like Bill Ackman went begging for a Federal bailout.
Rep. Ro Khanna (D), representing the 17th Congressional District including San Francisco, was their mouthpiece. Silicon Valley Bank was once headquartered in his district. "All depositors must be protected," Rep. Khanna told CBS’ Face the Nation Sunday morning. All meant all, he emphasized, especially all so-called "high networth individuals" with deposits exceeding $250,000.
If the Biden Administration did not concede to the Tech Titans' demands, there was going to be a run on regional banks, Khanna threatened. Not only that, Khanna claimed, the Tech Titans were special people. They deserved special federal protection. They were "climate startups. These are startups that are helping cure cancer," and so-on, and so forth, Khanna said.
They're also swindlers like Theranos scammer Elizabeth Holmes, 11 years in federal prison, and Craigslist's Craig Newmark-Digital Age pimp-turned-Liberal philanthropist.
Rep. Khanna even claimed that if the Biden Administration didn't bail out the Silicon Valley billionaires Americans might not have any California Chardonnay to sip this summer.
"These are companies in the wine industry," Khanna pleaded.
This is what we're dealing with here folks: Californians' holding the American treasury hostage for wine.
Even the Conservative Wall Street Journal newspaper was appalled. It published an opinion by Vivek Ramaswamy calling out "fear-mongering about bank runs. This is a simple case of bad risk management."
The last time a bunch of American banks failed was in 2008-09.
In response, Pres. George W. Bush orchestrated a massive Federal bailout of the banks. It also led to reforms that make most banks more resilient than they were. Those reforms, most professional money men believe, are enough to protect the banking system as a whole from any collateral damage unleashed by the collapse of the Silicon Valley Bank.
“The system is as well-capitalized and liquid as it has ever been,” Moody’s chief economist Mark Zandi explained to CNN on Sat. “The banks that are now in trouble are much too small to be a meaningful threat to the broader system.”
The official position of the United States all weekend long was no bail out.
"We're not going to do that again," Treasury Secretary Janet Yellen told Face The Nation Sunday morning.
It only took an afternoon to change that. The Biden Administration folded to the billionaires’ pressure and issued a news release Sunday evening announcing a bailout of the Silicon Valley Bank, as well a another Tech industry bank, "in a manner that fully protects all depositors."
In an amazing feat of Orwellian Economics, it even claimed the bailout's cost wouldn't "be borne by the taxpayer." This from the Government that hid the true cost of the 2008 bailout-estimates range as high as several trillion dollars.
The 2008 bank bailout unleashed a tidal wave of popular rage so big its ripples are still being felt today. No 2008 bailout, no Occupy Wall Street, no Bernie Sanders, maybe even no Donald Trump and his clones. So it'll be interesting to see how this federal bank bailout shakes up the status quo-if at all.
Maybe, this time, the 1% will silence dissent on the social media platforms they control. This time, after all, they are the status quo.
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Environmental protester dressed as a polar bear makes her voice heard during the second anniversary of Occupy Wall Street , New York, New York, Sept. 17, 2012. Photo Credit: JB Nicholas.