Kevin Drum 🕸

Here's an odd thing. I asked GPT-4 to write a poem about the Ides of March and it produced one with rhyming couplets. I asked it to try again without rhymes, but it just produced a poem with different rhymes. So I asked it a third time, and then a fourth: I apologize for the ...continue reading "GPT-4 is a little too good at rhyming"

Bethany Mandel, a conservative writer, had a bit of brain freeze on live TV yesterday and was unable to define woke for her interviewer. This gave us lefties a chance to laugh at her, and fair enough. That's life in the arena. I really don't understand why movement conservatives haven't yet figured out a simple, ...continue reading "What is woke?"

Here's a chart that must be driving all the ex-managers of Silicon Valley Bank nuts: One of SVB's problems was a portfolio of long-dated Treasury bonds that was $15 billion underwater. But 10-year Treasurys have fallen by more than 50 basis points since Peter Thiel's run on deposits put SVB into receivership. Their portfolio has ...continue reading "It was necessary to destroy the bank in order to save the bank"

We have good news and bad news today. The good news is that producer-level inflation was negative in February: This doesn't tell us anything about inflation in services, so it's limited good news. Still, good is good. The bad news is that retail sales fell for the sixth straight month: Of course, this is good ...continue reading "Today’s economic news in two handy charts"

It is the Ides of March. If you happen to have any friends named Brutus—or anything else vaguely Latinesque—you might want to stay home today.

It's time for some serious geekery. This post will (once again) address the question of whether the 2018 bank deregulation law had any effect on the collapse of Silicon Valley Bank. Yesterday I looked at SVB's capital ratios and concluded that they were higher than required either with or without the law. If deregulation had ...continue reading "Silicon Valley Bank would have passed every test for liquidity"

It's hummingbird season again, and I have several who buzz around my window these days. The top picture is (I think) a mature Allen's hummingbird, while the bottom picture is a young 'un. I realize that I posted a picture of a hummingbird just about a month ago, but what can I say? I like ...continue reading "Lunchtime Photo"

Well, how about this? Our long national nightmare is finally over.

Today is inflation day, and the BLS reports that CPI moved sort of sideways in February: Headline CPI dropped from January's high reading, but core CPI moved up a bit. This makes three months in a row that core CPI has been creeping upward. (In case you care—which you shouldn't—the year-over year rate that news ...continue reading "CPI in February ticks up, but supercore is still in good shape"

Cheryl Rofer, a retired nuclear chemist who is currently acting as servant to a pair of adorable cats, wants to know why I think artificial intelligence is so great: I keep asking that question and getting no answers. There’s a lot of activity going on in what is called artificial intelligence, but it is more ...continue reading "What’s the point of artificial intelligence?"

Was Silicon Valley Bank in good shape before it was put out of business by a bank run? As of Tuesday, March 7, here's what the rating agencies said about them: These ratings hadn't changed in over a year. Here's what the major stock analysts had to say: Buy! Overweight! Outperform! The analysts who followed ...continue reading "Here’s what everyone thought about Silicon Valley Bank on Tuesday, March 7"

Earlier today I asked if the 2018 bank deregulation bill had any effect on the collapse of Silicon Valley Bank. The consensus in comments was that deregulation allowed SVB to avoid Fed stress tests that might have uncovered its liquidity problems. (As a brief aside, it's common to say that SVB bet on interest rates ...continue reading "SVB and the 2018 bank deregulation: An answer, sort of"

I'm already tired of Silicon Valley Bank, but I have a question: If the 2018 deregulation bill hadn't passed, how precisely would this have affected SVB? And I do mean precisely. Would they have been required to diversify their deposit base? Would they have been required to hold more capital? Would they have been forbidden ...continue reading "A quick question about the 2018 deregulation bill"

A starry-skied memorial for Brad on Highway 62 about 50 miles east of Twentynine Palms.

The Fed and the Treasury Department have announced a plan to make sure that all depositors at Silicon Valley Bank are made whole. Whatever the ultimate cost turns out to be, it will be funded by a levy on banks. Thus, there's no cost to taxpayers. There's a little more to the plan, mostly to ...continue reading "Fed and Treasury announce a plan to save SVB’s depositors"

This is from a recent report written by the Bureau of Justice Statistics: All of this is appalling, but why is crime against bisexual people so astronomically high? Why, for example, are bisexual people 8.7x times more likely to be robbed than straight people? Can someone school me?

The Wall Street Journal explains today how panic about Silicon Valley Bank spread throughout Silicon Valley last week: On Wednesday, the bank announced it had sold a chunk of its holdings at a loss and would sell a slug of stock to raise cash....Slack and WhatsApp groups lit up across the startup scene. ....“For startups, ...continue reading "The chaos agent behind the collapse of Silicon Valley Bank is . . . Slack?"

A lot of people are becoming instant experts this weekend on the subject of deposit insurance, including the question of what to do if you have cash in excess of the $250,000 FDIC limit. There are ways to deal with this, including (obviously) opening multiple bank accounts. But that's not really the answer. The real ...continue reading "FFS, calm down about Silicon Valley Bank"

Relations between Saudi Arabia and Iran have been on a roller coaster for the past four decades. Relations were bad after the Iranian Revolution but improved during the Gulf War. They soured again when Iran began pursuing a nuclear program and then again after an Iranian plot to assassinate the Saudi ambassador to the US ...continue reading "Why did China broker the new agreement between Iran and Saudi Arabia?"

I don't mind saying that I'm a little confused about the collapse of Silicon Valley Bank. Here's some basic financial history: After a huge runup during the tech boom of 2020-21, deposits slowly fell back to earth in 2022, reaching $169 billion in February 2023. Since the start of 2022, SVB has seen withdrawals of ...continue reading "Was SVB management incompetent or just unlucky?"