> Earlier at the same event, CZ [said] the crypto industry “will be fine,” and there was “significant interest” in his proposal for a crypto recovery fund.
Oh hell no. I'd rather let crypto collapse, take the banks down with them, and bail out the banks again, than enable the creation of a second parallel class of wealth-extracting, economy-manipulating parasites.
Nationalizing all banks seems like the worst option of them all. There is no precedent in history of a society built around government owned banks that doesn’t include oppression and failure.
Nationalize, recapitalize, and reprivatize. So that the benefits of government recapitalization don't get captured by the same people who caused the crisis.
> Title 2 above seems to describe a government appointed regulator in case of failure
Receivership is different from nationalisation. It’s aimed at winding down or disposing of the asset on a short timeline. For comparison, we’re FTX in receivership, its assets would be controlled by a third party whose job would be to protect it for users’ benefit.
Well, speculators should not be backstopped at all.
But if you feel there’s no difference between stocks (an enforceable legal claim on the real property and intellectual property of an on going enterprise), housing (real property) and crypto (nothing, literally nothing) then there’s no point in discussing it.
> but anyone speculating in stocks or housing should be backstopped... Why?
Crypto is cauterised. There were inklings of institutionalisation, but the Fed raised rates before that took hold. This means the people and wealth in crypto can vanish without compromising much else, a statement I cannot make about most industries or assets.
I would also venture that most people suggesting we not backstop crypto were also opposed to bailing out banks. But unlike with banks or housing, there is no broader interest in crypto.
Before trying so hard to put your thoughts into the ether, stop for a moment and ask yourself if you can’t find the answer to that question. Is everyone on the fucking planet wrong? Or are you being stupid? Are stocks different from crypto? Why was there a need to bail out mortgage buyers? Did everyone just wake up one day and make a decision or is there detailed reasoning available for your perusal should you choose to look?
Indeed. But that is both from a less globalized and less open times. There have always been people who have recognized social idiocies and questioned why other people follow them blindly. We are not unique in that regard. Where we are unique though, is in living in an era of unprecedented freedom to voice that opinion and call others out (in the west at least).
Which means, errors get caught before compounding too much. It also means knowing that no decision is made with the greater good or lining my pockets mantra solely. It is a combination of both.
Because letting the fake crypto economy go to zero has no tangible effects on the real world, while letting stocks and housing go to zero has very real, very negative effects on people's lives.
I think where we go wrong is in bailing them out, but not nationalizing them afterward. If we're going to make the losses public, then the gains afterwards become public as well. The executives, though, should be prosecuted, or at the very least removed from being executives and board members at any financial or ancillary institution ever again.
But for real. Why not nationalize the failed institutions? It's not as if the incentives can get more perverse than they are now, unless I'm missing something.
Don't shoot the messenger. I didn't say I agreed with the argument.
For example, anyone who is in favor of "smaller government" should support of the "Defund the police" movement. They do not. That should tell you something about the state of critical thinking.
Public healthcare is "communism" but police and the armed forces are somehow not. I've made literally the same argument to someone on here a while back. Here it is: https://news.ycombinator.com/item?id=25503815
I didn't say I agreed. I'm just telling you why it didn't happen.
FWIW the UK and Canada (and maybe other Commonwealth countries) have had successful examples of public-owned companies. The US has no such tradition and is, therefore, culturally resistant to the idea.
Then you're locking failed institutions into an even bigger monopoly. The problem is that they were already "too big to fail" as a result of regulatory capture, revolving doors between government and big banks and bailouts. Just let them fail.
The American government, and several across the pond, literally did (partially) nationalize major banks and the treasury sold those shares back after the crisis, leaving the taxpayer with a pretty decent return. TARP earned a net benefit of 15 billion.
I thought the lesson was to invest in finance industry because if you win you win and if you lose you'll be bailed out using tax funds from people who chose not to play
The development of centralized exchanges into a class of companies equal to the existing financial infrastructure is unlikely to happen. Unlike traditional finance, the use cases for crypto seem to be mainly speculative. You can't pay your rent, buy a car or pay taxes using crypto, so it's unlikely that you'll be very affected by the rise or fall of these exchanges unless you choose to participate yourself.
There are massive black market uses and massive uses for people evading capital controls in the rest of the world.
Crypto can basically function as an extended version of dollarization in countries that have institutionally failed to manage their own currency (think the naira or the Turkish lira).
Are you saying that regular, mainstream banks have enough crypto exposure that they're in actual trouble? If so, any particular ones that you think are at risk of failing?
(Apologies if this is a dumb question. I don't follow crypto news very closely.)
I follow pretty closely and have not seen any evidence or heard any rumors that there are any reputable banks with significant direct exposure. Many of the banks that might fall would be ones whose primary customers are people in the crypto space but really its all shrouded in mystery. VC firms and PE, on the other hand, are probably going to see a lot of bloodshed
My understanding is that banks have invested directly to some extent in the safer end of crypto (Bitcoin) and indirectly on more risky stuff, through funding crypto hedge funds and the like.
> Binance investing private money into firms that are struggling to survive in the short-term
It’s a fake suggestion since the problem currently facing crypto is insolvency, not illiquidity. No amount of money would make FTX a good asset beyond the value of the cash itself.
whatever your opinion of crypto, exchanges have generally been great businesses. lots of small fees add up to significant revenue. Binance generated $20 billion revenue in 2021.
> exchanges have generally been great businesses. lots of small fees add up to significant revenue. Binance generated $20 billion revenue in 2021
Lots of things are good businesses, that doesn’t give a neighbouring trash pile value. Any amount of cash pumped into FTX would be better spent capitalising a new exchange. They’re not only insolvent, but fraudulently so in a very public way.
Ideally, yes. But if we haven't figured out a way around the whole "too big to fail" thing, let's not bail out the fake economy along with the real economy.
As I understand it CZ was referring to an entirely private fund to provide liquidity to projects he felt are worth saving. This is not another gov. supported bailout.
>“To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis. More details to come soon. In the meantime, please contact Binance Labs if you think you qualify,"
Ah, that would be interesting to see. I wonder, where would the money coming from for this fund? Would it be real money, or magic beans money? What does it mean for a financial product to be "otherwise strong" when it is "in a liquidity crisis"?
>What does it mean for a financial product to be "otherwise strong" when it is "in a liquidity crisis"?
As to the rest of it, it is similar to any other speculative investment. If they like the future prospects, they'll assist. A liquidity crisis means there are not enough liquid assets to proceed with business.
You can read this as Binance seeking to eat the lunch of those which are unable to withstand depositors running for the exit. If there's no prospect of future luncheons, there's no bailout. The bit about stemming the hysteria and "we're all in this together" is the magnanimous marketing language you'd expect.
It’s probably worth noting that Roubini has made a career out of making the most dire of dire forecasts and has been mostly wrong. He has even earned the nickname “Dr. Doom” in the press.
But then, even a broken clock is right twice a day!
Here's an article from 2011 illustrating a few of his predictions, including a recession in 2004, 2005, 2006, 2007/2008, 2011, and a collapse of the Chinese economy in 2013
He was right tho. There should have been a recession way before the Lehman and subsequent housing bust. History is repeating itself again with the Covid downturn. The fact that the FED/government came to the "rescue" and pushed the recession into the future is irrelevant. The reasons he was positing recessions were sound and they eventually all came to fruition.
I know being early and/or late is considered being wrong. The fact remains he is calling it like he sees it. A reversion to the mean during a mania is a ballsy thing to predict. If the fundamentals are fucked, it will eventually correct.
It's easy to be "less wrong", or "wrong less often", by not predicting a recession in 2004, 2005, 2006, 2007/2008, 2011 and 2013. Yet it is not any more useful.
Roubini = After receiving a BA in political economics at Bocconi University, Milan and a doctorate in international economics at Harvard University, he became an academic at Yale and a visiting researcher/advisor at the International Monetary Fund (IMF), the Federal Reserve, World Bank, and Bank of Israel.
CZ (Binance CEO) = Zhao attended McGill University in Montreal, Quebec, where he majored in computer science.
I am not into judgements based on education alone... Especially considering the recent developments with the MIT grads at FTX. However, calling Roubini a "pop economist" is really not accurate to the slightest degree.
Long Term Capital Management was ran by Nobel laureates in economics (or its equivalent), it was FTX before FTX was a glimmer in SBF's effective altruism narrative. Academic authorities these days are not worth appealing to.
I don't really understand the comparison of LTCM to FTX. Long Term Capital Management was a hedge fund. Hedge funds entire model are based on leverage and making big bets. Its customers were wealthy accredited investors and institutional investors who well understood this and understood the risks associated with hedge funds. FTX's customers had no such understanding that their deposits were being loaned out and used for making big bets.
Reading up what available publicly on FTX saga, it is clear they do make big bets in cryptos while misusing their funds. We will wait for the FTX book written to know more detail.
In fact this is literally the only path to becoming a pop economist. You collect your prestigious degree and then realize it's a lot easier to sit on cable news and throw out crazy sound bites or write NYT articles about how the internet will never work and we need a bigger housing bubble than to do research.
Ehhh, Paul Krugman is legitimately famous in his own right for his academic contributions. He would be famous even if he wasn't an NYT/Twitter warrior.
He has been incredibly influential in neo-keynesianism. Roubini has nothing like that.
I took his International Macro class in grad school. He was a great teacher and gave possibly the hardest multiple choice test I’ve ever taken for the midterm.
"Economist"? at the very least say what economist it is, why should anyone care if a random economist says anything about anyone, half of them agreeing on anything is probably unheard of in the first place!
Now I am being facetious of course, but hopefully the point was made regarding the title. Most that would be drawn in would be people looking to wage their side on the crypto war using the comments as a battleground, completely ignoring the article.
I recently read his last book and he keeps saying the same things over again and again. He is basically selling fear, spreading Fear, Uncertainty and Doubt.
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[ 3.8 ms ] story [ 155 ms ] threadOh hell no. I'd rather let crypto collapse, take the banks down with them, and bail out the banks again, than enable the creation of a second parallel class of wealth-extracting, economy-manipulating parasites.
Anyone speculating in crypto shouldn't get backstop by government. Wasn't the whole DeFi argument that fiat/government could be bypassed?
Most who are getting fucked by this fiasco are retail who have never touched DeFi.
https://www.federalreservehistory.org/essays/emergency-banki...
Title 2 above seems to describe a government appointed regulator in case of failure.
Receivership is different from nationalisation. It’s aimed at winding down or disposing of the asset on a short timeline. For comparison, we’re FTX in receivership, its assets would be controlled by a third party whose job would be to protect it for users’ benefit.
We can quibble about fiat/currency vs banking, but technically the government owns all money.
Granted, retail and last-mile banking seems a poor fit for government control.
Although from memory Japan offers retail banking services through their postal service? (for historical quirk reasons, see: https://en.m.wikipedia.org/wiki/Japan_Post_Bank )
But if you feel there’s no difference between stocks (an enforceable legal claim on the real property and intellectual property of an on going enterprise), housing (real property) and crypto (nothing, literally nothing) then there’s no point in discussing it.
Crypto is cauterised. There were inklings of institutionalisation, but the Fed raised rates before that took hold. This means the people and wealth in crypto can vanish without compromising much else, a statement I cannot make about most industries or assets.
I would also venture that most people suggesting we not backstop crypto were also opposed to bailing out banks. But unlike with banks or housing, there is no broader interest in crypto.
Which means, errors get caught before compounding too much. It also means knowing that no decision is made with the greater good or lining my pockets mantra solely. It is a combination of both.
But for real. Why not nationalize the failed institutions? It's not as if the incentives can get more perverse than they are now, unless I'm missing something.
(Not even /s, that's the actual argument people make)
For example, anyone who is in favor of "smaller government" should support of the "Defund the police" movement. They do not. That should tell you something about the state of critical thinking.
Public healthcare is "communism" but police and the armed forces are somehow not. I've made literally the same argument to someone on here a while back. Here it is: https://news.ycombinator.com/item?id=25503815
FWIW the UK and Canada (and maybe other Commonwealth countries) have had successful examples of public-owned companies. The US has no such tradition and is, therefore, culturally resistant to the idea.
Referenced The Times article: https://archive.ph/FqRF3
Bonus article with some interesting takes: https://www.coindesk.com/markets/2021/01/24/crypto-long-shor...
Is there anything Inflation can't do?
Crypto can basically function as an extended version of dollarization in countries that have institutionally failed to manage their own currency (think the naira or the Turkish lira).
(Apologies if this is a dumb question. I don't follow crypto news very closely.)
There was a big lobbying push to fool representatives into making the ponzi circus legit.
But then FTX suddenly disappeared below the waves, so I think that's on hold right now.
I don't have any sources that I trust at hand, but a quick Google search shows aggregated data about investment banks and the assets they hold on the crypto economy: https://www.blockdata.tech/blog/general/top-banks-investing-...
For better or for worse, it doesn't seem big enough of an investment to actually bring down traditional banking.
It’s a fake suggestion since the problem currently facing crypto is insolvency, not illiquidity. No amount of money would make FTX a good asset beyond the value of the cash itself.
whatever your opinion of crypto, exchanges have generally been great businesses. lots of small fees add up to significant revenue. Binance generated $20 billion revenue in 2021.
Lots of things are good businesses, that doesn’t give a neighbouring trash pile value. Any amount of cash pumped into FTX would be better spent capitalising a new exchange. They’re not only insolvent, but fraudulently so in a very public way.
This time, please, can we not bail out the bankers?
I get bailing out the banks.
But we can bankrupt the owners, in the case of partnerships, and cancel the shares of public companies.
>“To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis. More details to come soon. In the meantime, please contact Binance Labs if you think you qualify,"
https://twitter.com/cz_binance/status/1592044496174612482
https://markets.businessinsider.com/news/currencies/crypto-n...
>What does it mean for a financial product to be "otherwise strong" when it is "in a liquidity crisis"?
As to the rest of it, it is similar to any other speculative investment. If they like the future prospects, they'll assist. A liquidity crisis means there are not enough liquid assets to proceed with business.
You can read this as Binance seeking to eat the lunch of those which are unable to withstand depositors running for the exit. If there's no prospect of future luncheons, there's no bailout. The bit about stemming the hysteria and "we're all in this together" is the magnanimous marketing language you'd expect.
But then, even a broken clock is right twice a day!
I know he's been saying crypto is a scam for awhile, in addition to calls he made regarding the financial crisis under Bush.
https://www.firstpost.com/world/how-seriously-should-we-take...
More color: https://www.erictyson.com/articles/20081024_1
I know being early and/or late is considered being wrong. The fact remains he is calling it like he sees it. A reversion to the mean during a mania is a ballsy thing to predict. If the fundamentals are fucked, it will eventually correct.
They care when it does.
If the former mattered, then it'd be a much simpler science.
It's the p-value hacking of forecasting.
CZ (Binance CEO) = Zhao attended McGill University in Montreal, Quebec, where he majored in computer science.
I am not into judgements based on education alone... Especially considering the recent developments with the MIT grads at FTX. However, calling Roubini a "pop economist" is really not accurate to the slightest degree.
Nobody thinks Roubini is famous due to his research or academic work.
I fail to see how CZ's academic credentials are at all relevant. I didn't call CZ an academic economist.
He has been incredibly influential in neo-keynesianism. Roubini has nothing like that.
https://www.princeton.edu/~pkrugman/interstellar.pdf
The Theory of Interstellar Trade, in which he develops a theory of trade where differences in time due to relativistic speeds is considered.
Now I am being facetious of course, but hopefully the point was made regarding the title. Most that would be drawn in would be people looking to wage their side on the crypto war using the comments as a battleground, completely ignoring the article.
https://www.mentalfloss.com/article/31666/does-one-bad-apple...
Choose your friends wisely still makes sense in the 21st century.
Binance and CZ would be saints compared to them. He is an economist, he should know. Ergo, he must be an idiot