SVB collapse: Peter Thiel’s role scrutinized as spark of bank run | Hacker News Reader

SVB collapse: Peter Thiel’s role scrutinized as spark of bank run

washingtonexaminer.com

198 pointsMilnerRoute270 comments

What would you do if you were a board member of multiple companies and you found out their bank was financially unsound and couldn't do normal bank stuff?

Would you say nothing and hope nobody else notices? Good luck with that. That just means your companies get screwed.

What if you get away with being silent, nobody else noticed, and the bank gets bigger and fails even more spectacularly later in the year? Wouldn't that be worse? Wouldn't you then be criticized for not speaking up when you knew about the problem?

Would you try to band together with other investors to save the bank? Worth a try, but that means you have to tell other people there is a problem and trust that not a single one of them would start a bank run.

A lot of people have an axe to grind against Peter Thiel but in this case he did the only rational thing. If he had done anything else he would have been blamed too, because some people just don't like him. I haven't seen anyone demonstrate a reasonable alternative for how a rational person would act, knowing what he knew at the time.

SVB was never "unsound." They had plenty of assets to cover all their deposits and plenty of cash to cover normal withdrawals. If not for people like Peter calling for a bank run, SVB would still be in business today.

> They had plenty of assets to cover all their deposits

No, they did not. If they did, then they could have immediately sold all their assets during this bank run, and there would have been no need for the FDIC to step in.

If they could not do that, then, by definition, they did not have enough assets to cover all deposits.

This is conflating liquidity with solvency, the parent appears to be arguing that SVB was solvent (which seems to be true) albeit not liquid.

If I owe you $10, and all I own is a house, and you ask for your $10 back, I may not be able to pay you even though the value of my assets way outweighs the debt owed. Selling a house isn’t instant.

Arguably the only purpose of a bank is that you have access to your money at any time you wish, if they can't honor that, they're not doing a good job to say the least.

That shows a lack of understanding of the true nature of banks because most banks can't withstand a barrage of everyone asking for their money at once. The underlying criticism of Thiel here is that he saw a liquidity problem and made it a solvency problem by encouraging everyone to pull their money immediately. If he didn't do that, there were potentially solutions that could have fixed the bank's liquidity problem without jeopardizing their solvency.

They were already insolvent, the bank run did not cause that. They used accounting tricks to pretend they had more assets than they really did.

I believe the point is the utter craven hypocrisy of ultrarich who savagely denounce government programs that help poor people and ordinary workers, who destroy and tear shit down for their own private profit, and then have the fucking audacity to scream and cry for other people to pay for their own investing mistakes. David O. Sacks I'm looking at you.

Banks are not investing. They are commodities. The share holders and bond holders who were investing were wiped out. Do you want to live in a world where only Bofa/WF/Citi/Chase exist? Because that is what you are advocating for.

> Banks are not investing.

Yes, they are. How do you think they make profits? How do you think this happened to SVB? Their investments were illiquid and they were not able to convert them into cash fast enough to return deposits to their customers.

This is literally the opposite of how banks work. If they keep everyone's money they would never be able to make loans, let alone fractional reserve leveraged loans. They need you to keep your money in an account and not need to access it that often, or at least keep most of the money there.

I guess what the bank needed and what the customers needed were fundamentally at odds then.

There was a run on USD coin due to this fiasco, it didn't have enough liquidity to pay all its customers, and yet people stopped their run on the asset because people figured that there was no way they weren't going to get something like 90+ cents on the dollar within 3 months so it was pointless to sell beyond that point, and because it became pointless to sell beyond that point it meant that the value was probably going to approach $1 so people pumped the price back up.

When I look at something like that, I really wonder if it's really so structurally impossible to make a bank where nobody has an incentive to do a run on you in anything but the most extreme of cases.

Maybe they should change their business model then if they need predatory loans to survive.

First of all, what about SVBs loan business do you consider "predatory"? The alternative business model would to charge customers to hold their deposits. I somehow doubt that would be very popular either.

Any usurious transaction is predatory by definition. Of course people don't want to talk about it. Someone submitted the wikipedia article about usury to HN about 12 hours ago but it got flagged apparently.

So you think banks should instead charge you to hold deposits? Would you use such a bank, if they promised to never engage in 'usury'?

Yes that's one possibility. Furthermore, there are ways to make money that are not usurious.

Why don't you go try to start something like that and tell us how your ideas work out in real life.

The FDIC cited liquidity _and_ solvency when they closed SVB.

I believe the two words have a bit of gray area in between them, but here's how I understand it:

If you issued a $100 invoice that is going through processing and will be paid to you in 30 days, but you owe someone $50 right now, you're illiquid.

If you have $100 long-dated bond that is currently worth $50 on the market, and you owe someone $60 right now, you are actually insolvent. Not just illiquid.

There is no gray area, just trickery. Your scenario is equivalent to saying if I have $70 in assets and $100 liabilities, then I am not insolvent if someone gifts me $30. People will not keep billions of dollars in your bank earning 0% while the rest of the world collects 4-5%.

Alternatively, if I am a bank in March 2023 and I have 70B in cash and 100B in liabilities, can I become solvent by buying these 1.5% yielding treasuries and MBS at market rate of 70 cents on the dollar and say, "don't worry, I'll have $100B in 10 years to pay everyone". Of course not.

These are both equivalent situations.

I wasn't arguing with you at all, you totally misinterpreted my comment. SVB was insolvent due to their long dated bonds.

Sorry.

SVB was insolvent

I mostly agree, but there are cases where someone can have enough assets but it's such a large amount of something that word gets out they have to offload it, and then good luck selling it all at anything but a big discount, then not too long after price does rebound.

That is obviously not a situation that one gets into without making some mistakes, but I think this is distinctly worse, though some are trying to act like it's the same. The actual fair market value of what they held, even removing SVB from the situation entirely, was down a lot. And it was down for very logical and predictable reasons, and will almost certainly never rebound.

That's literally what they did that triggered the FDIC to take over. Assets are not always liquid though. It takes time to prematurely sell 46 billion of bonds, and it comes with a huge cost.

They had the assets. Just that a good portion of them aren't available to be sold immediately

People need to stop repeating this, they had assets to cover most but not all deposits. They used accounting tricks to pretend they had more than they did.

This is False. They had the assets, but they declined in value until they were worth less than liabilities. Insolvency.

The value of their assets was enough to cover deposits. The liquidity of those assets was not.

False

Today maybe, but a year or two from now? They had 40% of deposits locked in for years at a low interest rate. They wouldn't have been able to offer depositors a competitive interest rate over the next couple years without bleeding money. So they'd have to hope that few would withdraw in spite of an objectively inferior service (which in itself would start raising alarm bells at some point).

Maybe a more gradual stream of withdrawals would've allowed them to make up money elsewhere to stay alive, but they demonstrated such horrible incompetence with this entire situation that I don't see that ending well.

Plus this kind of approach requires everyone to coordinate and not freak out, which is not gonna happen.

Then why didn't they borrow it?

People keep screaming "illiquidity not insolvency" as if bankers of all people didn't know what a loan is.

The answer, of course, is that no one was willing to loan them money due to solvency issues

Because that's not how banking works. They aren't allowed to get a loan to cover liquidity obligations. They have to sell assets which takes time. If Peter Thiel starts screaming for everyone to withdraw their money, the bank can't keep up, and the FDIC steps in.

This tweet thread from January https://twitter.com/ragingventures/status/161582608803847373... has some details.

Thiel did not call for a bank run. If he yelled fire, that's because there was fire. For some people, that could be seen as a public service. But of course, since Thiel is hated by the Blue Tribe, he must be painted as evil mastermind killing banks for fun.

That's the same thing.

Nope, someone else would have started a run.

By that logic, all banks are unsound. It's not turtles all the way down, and pretending the guilty party is blameless because "someone else would have done it" is nonsense.

There are steps between do nothing and tell everyone to pull out all their money. It doesn't seem like they spent much effort exploring that middle ground.

Wouldn't reporting this to the FDIC through a private channel probably be a very reasonable first step? At least to me that feels like a good initial reaction to having stability doubts about a bank and I assume someone like Thiel making a report would be treated quite seriously.

You're assuming the FDIC is a person who you can just ring up and have a talk with. This is a large bureaucratic organization that moves at a glacial pace.

Consider that the SEC mishandled five separate inquiries into Madoff as early at 1992.

https://www.theguardian.com/business/2009/sep/02/bernard-mad...

Yea - when doing stuff at the scale of billions of dollars I think a fair amount of caution and care is warranted.

As far as I'm aware these are the people best placed in the government to deal with this issue. The SEC might also be an option (if you were primarily concerned about poor investment choices by the bank) but considering it involves a bank I think alerting the FDIC first and then allowing them to pursue the SEC if they warrant it feels pretty reasonable.

Ok, what are those steps?

From a high level perspective, mitigate the short term risk, understand the problem, and work on a long term solution.

Short term risk can be mitigated by ensuring your companies have enough non-SVB cash on hand to make payroll.

The seriousness of the problem can be better understood by communicating with other involved parties including the bank, the government, investors, and clients.

A long term solution can include investing in the bank, buying assets from the bank, coordinating with other VCs to ensure no one panics and a bank run won't happen.

He made a bad situation worse by jumping straight to pulling all his companies' money and telling everyone else to do the same. He basically dumped water on a grease fire then ran out of the house screaming without ever bothering to look for a fire extinguisher.

> The seriousness of the problem can be better understood by communicating with other involved parties including the bank, the government, investors, and clients.

Doing that would just give everyone else the info they need to start a run on the bank. Then they get their money out and you are left holding the bag and everyone is mad at you for not warning them.

If you know a bank is busted, and you tell other major investors, what do you think they would do? It only takes one person to freak out and the plan is ruined, and then you have your CEOs coming to you asking why the heck a board member who knew their bank was failing didn't help them get their money out.

We know that is true because when the CEO of the bank told major investors about the problem, they started a run on the bank. Do you think they would have reacted differently to the bad news if Peter Thiel had told them about it rather than the CEO of the bank?

There needed to be an adult in the room to coordinate a response that wasn't just everyone panicking. Thiel didn't necessarily need to be that adult himself, but his panicking eliminated the opportunity for anyone else to be that adult. The problem was fundamentally that everyone acted in their own best interest instead of coordinating a response that would have been in everyone's best interest.

> The problem was fundamentally that everyone acted in their own best interest instead of coordinating a response that would have been in everyone's best interest.

Yes, this is a well-known and unsolvable problem of human societies.

We have solved it countless times in countless situations. What do you think the FDIC is for example?

"Short term risk can be mitigated by ensuring your companies have enough non-SVB cash on hand to make payroll."

How do you do that without causing a bank run? Tell all the CFOs "Don't be alarmed, but you need to initiate a small wire transfer from SVB to anywhere else that will cover things like payroll and your electric bill for the next couple months. No big rush, just try to do that in the next 45 minutes. But walk, certainly don't run.".

Effectively, yes. Tell them you are working on a solution to prevent this from growing into a bigger issue, but steps should be taken to mitigate risk if that attempt fails. I don't know why we expect everyone to behave like panicked children in this situation. The reason people panicked is because the messaging from Thiel told them to panic.

Elaborate

> What would you do if you were a board member of multiple companies and you found out their bank was financially unsound and couldn't do normal bank stuff?

Founders Fund has investments in some of the largest internet age companies that exist.

Airbnb, DeepMind, Lyft, Facebook, Flexport, Palantir Technologies, SpaceX, Spotify, Stripe, Wish, Neuralink, Nubank, Twilio.

A call for them to move their money out of SVB meant putting pressure out on a massive percentage of SVB's customers by value.

It's not clear at all from news reports why Founders Fund put the call out. Fast Comapny's article notes that SVB had north of 32B in net assets before the run that Thiel's fund started.

IF FF had the facts wrong, this collapse would demonstrate the effect of a few poeple's outside influence in SV, and should be a warning to the broader industry of the power that these investment vehicles are wielding.

> What would you do if you were a board member of multiple companies and you found out their bank was financially unsound and couldn't do normal bank stuff?

Was there any evidence that they couldn't do "normal bank stuff"? AFAIK SVB still had ample avenues to raise liquidity before the bank run Thiel orchestrated. SVB's stock would have suffered immensely, but their operations and deposits would have been fine as far as I can tell.

> Was there any evidence that they couldn't do "normal bank stuff"?

His fund had problems transferring money and that's why he noticed something was wrong.

Someone else would have had similar problems, and would have noticed, even if Thiel didn't act.

Do you have more information on this? From what I understand, SVB had more than enough cash (yes, cash) on hand to handle any money transfer Thiel's fund could have thrown at it.

Here is one of them from Friday: https://news.yahoo.com/thiel-founders-fund-withdrew-millions...

> On Thursday, as the bank was beginning to unravel, the firm started what’s known as a capital call. That’s a run-of-the-mill activity in the venture capital world, in which a VC firm asks its investors, or limited partners, to send it money in order to make investments in startups — the core function of most VC firms. It began by asking those backers to transfer the funds to accounts at SVB, as it has done for years, the person said.

> But the firm learned that its limited partners were encountering issues using SVB services as they tried to transfer the funds — they weren’t immediately going through as expected, the person said.

So they were having trouble getting money into the bank?

I'd like to understand how all these startups came to use SVB in the first place and what part the VCs played in that. I've seen people here say that they were required to bank exclusively with SVB, did the VCs encourage those terms? The story doesn't look that great if Thiel told them to put the money there before he told them to take it out all at once.

As long as Peter Thiel had nothing to gain by starting a bank run (which, by all logic, seems likely), then he cannot be blamed for talking about the bank's risk and position which ultimately caused a run.

A ton of capital at the ready to offer bridge loans at shark rates or for blood equity for companies panicking and impacted by the same act of gathering those funds out of SVB to crash it seems like motive -- only time will tell.

The apologists here are not surprising

Classic scapegoating. The problem was the bank, not a fund that was acting responsibly.

> Quickly, Founders Fund asked its investors to transfer the money to other banks instead. The fund acted to ensure that startup funding deals that were slated to close in the coming days were not delayed, the person said.

https://www.bloomberg.com/news/articles/2023-03-11/thiel-s-f...

The problem was the community (or lack of). This was *their* bank. These are the titans of Silicon Valley and they couldn't get together in a room and work it out. Instead everyone took to Twitter. To call it a prisoner's dilemma is a straw man because it implies they couldn't have picked up the phone and called each other. It was a failure to have a group of professionals with mutual interests work it out together. It was a failure that an adult didn't step up. There was a moment in which this could have been staved off, but the integrative fabric of the community wasn't strong enough to hold it together. I don't blame anyone individually, but I am taking the note from the postmortem to make sure I'm building closer ties to the people around me I depend on.

It's not a straw man to call this a prisoner's dilemma. The bank went from well respected institution to receivership in approximately 24 hours. 42 billion dollars worth of deposits was taken out of the bank. In the amount of time it would take to coordinate everyone (assuming they would even cooperate), someone else would've beaten you to the punch and removed their money. Every additional person that has made that decision puts you at risk of holding the bag. I do not fault any of the VCs who requested that their portfolio companies pull their money out. They saw the writing on the wall and were trying to protect themselves, the companies they invested in, and their LPs.

It was a modified prisoners dilemma where 100 prisoners are faced with steal or share, and have every possible chance to communicate but just can change their choice after making it. And if just 20 had shared, then everyone wins, even those who chose steal. But the panic and the irresponsible VCs lack of communication with the bank and each other meant that in a heartbeat 85 prisoners had chosen steal, before even looking up at each other or listening to the rules being fully explained, and the remaining 15 where left perplexed that there wasn't even 5 amongst the panicked bunch left to help resolve the situation calmly to everyones benefit.

You can allow as many phone calls as you want but with thousands of players, you're going to get defect every single time you run the experiment.

There's no "steal" here. It's your money, at a bank, and if you're late on the defect button you might not get it back. The rational action is always to defect.

> The rational action is always to defect.

If that was true, then every bank every day would see runs on their holdings. Obviously that doesn't happen, because most traditional banks have larger institutional customers who understand that the market-to-market value on bonds might dip a bit, but that as long as the bank is able to negotiation loans or raise capital to provide needed liquidity then it's not a big issue. You don't see runs on traditional banks like this, because in the traditional banking sector people pick up the phone and talk to each other instead of taking to twitter and screaming doom and destruction because they read a blog post that they didn't understand but which said something about market-to-market insolvent and sounded scary.

Oh, you sweet summer child.

You don't see runs on banks because people believe their money is safe. Full stop. As soon as that belief is broken, a run is guaranteed. This is why we have deposit insurance, and why the fed just effectively made it unlimited. If they hadn't, every small bank in the country would now be experiencing a run, including those in "the traditional banking sector".

What changed late last week is not any fundamental of the economy or banking sector, but people's belief in the safety of banks.

Remember that we know a lot more about what was happening now than they did at the time. At the time they knew that 1. SVB had liquidity issues and were forced to sell underwater bonds. 2. Needed to raise more capital. 3. Transactions were starting to have issues going through.

So it’s like your modified prisoners dilemma, but also, the prisoners don’t know if there is enough for 1 person or 100 people. That changes the calculation.

In your assertion here are you assuming that the bank was solvent and just had a liquidity problem, not a solvency problem?

At the root of the issue was that they where not solvent when bonds where valued at market-to-market, but you don't really care about that when you are intending to hold the bonds to maturity. They where solvent when bonds where valued at maturation rates. The latter valuation is what you traditionally calculate and use in banking, the prior only becomes relevant if there is a run on the bank and you have to liquidate immediately to cover, which is of cause what happened.

The great comedy of the situation is that if everyone had been calm and said "hmm, they need to raise some capital lets see what happens" SVB might have had a bad quarter or two, but they wouldn't have gone bankrupt. They only went down because the startup community reaction to hearing "we need to raise capital to cover day to day liquidity requirements" was to initiate an immediate flash run on the bank, which meant they where forced to sell all those bonds at a discounted market-to-market rate instead of holding them to maturity as was the expectation.

>> but you don't really care about that when you are intending to hold the bonds to maturity. They where solvent when bonds where valued at maturation rates

Actually if you're a bank whose business model is predicated on interest spread between your assets and liabilities you do care. This is particularly true for banks like SVB whose duration of liabilities (deposits) is short because suddenly cost of deposits rises while longer-duration 'held to maturity' assets still generate the same (low) rate of interest. Suddenly the bank is loss-making.

People are talking about mark to market like it's irrelevant but it's actually a very important market signal. It is not just relevant for balance sheet valuation. It is also a signal of future income statement profitability unless duration of assets is well matched with duration of liabilities.

Prisoner's Dilemma:

Two members, A and B, are being driven around Silicon Valley and possesses every modern means of communication with each other. The bank holding their funds will collapse, but only if both of them send a globally accessible message advising everyone in the world to remove their funds from the bank.

I've run some simulations in Python-- the best I can get is for one of the members to learn to refrain from resending the first member's global message 32% of the time. (But be careful with this-- once B accidentally escaped the simulation and shot out a tweet that caused a small ruckus for an investment bank in Omaha.)

You’re assuming homogeneous agents. In other words, no leaders; no whales. The real world doesn’t work like this.

It was a mismanaged crisis, I think on that point we agree.

In theory a restaurant that is over capacity and catches on fire should be able to have everyone exit without death or injury. In practice, people panic and act in their own self interest leading to disaster.

Except often enough in such a situation everyone does exit orderly. People are generally predisposed to cooperate; it's what makes us human. The situations where panic prevails are the exception.

What's the saying... success has many fathers, but failure is an orphan?

> everyone does exit orderly.

this only happens when there's leadership present to which the rest get directed, and the crowd trusts the leadership to act with their interest in mind. E.g., a uniform wearing fire-warden, is often enough.

If there's no such leadership, or they are acting (clearly) not in the interest of the "crowd", you will see panic and a failure to cooperate. This, not cooperation, is what makes humans truly humans.

You also can't yell fire in a crowded theater when there isn't one. You could make the argument that someone did.

You totally can do that, it's not illegal! Schenck v. United States is a pretty odious court case I wouldn't want to be on the censor's side in that one.

https://www.theatlantic.com/national/archive/2012/11/its-tim...

No you could not. LegalEagle did a video on this in the last week talking about that ruling that was overturned and doesn't apply to the vast majority of case law anyway.

yeah I think there are two things that will be interesting here. The real detailed timeline. How much Thiel's cohorts jumped into offer bridge loans or stopgaps to impacted companies for insane rates/equity.

IMHO this feels like a small problem that was turned into a crashed bank by targeted withdraws -- with the goal being blood in the water for the industry so the companies and investors that yanked out could clean up.

> It was a failure to have a group of professionals with mutual interests work it out together. It was a failure that an adult didn't step up.

What exactly do you think they should have done? The issue was that startups would need money in a less attractive environment (rising rates) and so it was just a matter of time before the mismatch between short term deposits and long term bond portfolio would clash.

The gap between assets and liabilities on thu/fri (as i understand it) was single digits. SVB tried to raise capital, but instead long-term customers pulled their deposits and told their portfolios to do the same. Some kind of restructuring and reassurances have prevented runs like this in the past and could have now. Maybe more will come out, but it felt like it was undone by lack of the kind of co-operation you often in local chambers of commerce and rotary clubs. These people were on first name basis with the board and president of the bank for a reason. Where were they?

> It was a failure to have a group of professionals with mutual interests work it out together.

I saw plenty comments to the effect that maybe getting out first and leaving competition in the dust is also ok. For all we know someone could also have picked up a distressed bank, save feds stepping in forcefully.

“To call it a prisoner's dilemma is a straw man because it implies they couldn't have picked up the phone and called each other.”

This is a different age. Even when far weightier things like world war are on the table, they don’t do that anymore.

Khrustchev and Kennedy established a direct line, talked to each other and deescalated the Cuban Missile Crisis.

Biden and Putin did the opposite, since 2020. Just a lot of misunderstanding and escalation, and they have not yet had a direct conversation.

https://youtu.be/0fkKnfk4k40?t=19m25s

There is only one party at fault for Russia's unprovoked murderous attack on their neighbors and the slaughter and rape of its innocents. There is no communique that could have resolved this because Russia believed that it would quickly roll into Kiev and end it. They continue to believe that it will be in their interest to prevail as they believe they will long term. Negotiation is unlikely to change this analysis if the rotting corpses of its own dead isn't sufficiently persuasive.

Outright dismissal of two deadly coups that removed democratically elected presidents in Ukraine and ignoring THOUSANDS of Ukranians killed in Donbas at the hands of Ukrainian government prior to the invasion, tells us everything we need to know about your objectivity here.

The Russians armed separatists and criminals to oppose the democratically elected government of Ukraine installed in 2019 via election not via the conflict in 2014. Ukraine's lawful resistance to criminals attempting to set up their own fiefdom on Ukrainian lands with Russian guns is thin justification for the subsequent invasion.

To put it blandly it doesn't matter whether you think Bush win over Gore was legitimate. Biden was legitimately elected and Washington state has no right to form its own nation. If the Canadians funneled tanks, guns, and soldiers to such folks we would certainly shoot people to stop such a takeover. Such shootings wouldn't provide legitimate cause for the forces of flannel to make a fast break for DC to overturn our entire government.

This is why I am a libertarian. Regular people don’t want to kill each other, but these memes cause their governments to perpetuate violence. Literally everything about these concepts and games is not worth harming millions of people. And if you were in the war zone, you’d want an end to the stupid conflict. But people who aren’t, seem to think nothing of bringing violence and volunteering other people to die for some geopolitical concept justigied by some allegory where countries are anthropomorphosized.

Just to illustrate: when Ukraine and Russia were part of one federation, the same exact piece of land, Crimea changed hands from Russia to Ukraine. But back then they weren’t independent countries and it wasn’t a “matter of territorial integrity”, but just an administrative change involving road signs and local flags etc. so no one killed each other over it. Today, lots of people would support Ukraine and her allies introducing violence to Crimea, a region that has none, in order to “retake” it.

I find this obscene. Humans just want to live peace and security, go to work, date, love, etc. When push comes to shove, this or that flag isn’t such a big deal to regular humans, and historically they have changed a lot so why kill for it? But the current international system is based on Countries with borders that are supposed to be eternal. For this principle, people now are ready to support killing in a never ending war because “what if someone broke into your house and stole…”

Kosovo set a precedent. I would of course like to see Catalonia, Kurdistan get at least some more autonomy after their referendums. I’d like tk see Hong Kong get it too, and HN was sympathetic to those guys because we see just how different China was to HK after 100 years of being a British protectorate.

Well, autonomy isn’t very bad for the host country and the Minsk II agreements gave Ukraine sovereignty and control over all its borders. Why not just accept this diplomatic solution? Ukraine did, but now we learn that both Ukrainian presidents “never intended” to fulfil it. Why? It is maddening to me. The people of Ukraine suffer because of the political class, and I include Putin in that.

The people of Ukraine don't want their country to surrender the lands they live in to the monsters that are torturing and raping their sons and daughters. By and large that whinging is coming entirely from commentators bemoaning the cost of war over coffee at their kitchen tables. Nor do the people of Russia by and large want peace the overwhelming majority support sending their sons and daughters to murder Ukrainians.

You dishonestly frame the prior takeover effected by treachery and threats of mass murder as an administrative change involving road signs and flags. Should a housebreaker invade your home and evict you by threatening to slaughter your family your eviction wouldn't be a peaceful administrative change in ownership just because the violence is threatened instead of realized.

Despite this Crimea wouldn't be on the table had Russia not decided to take the rest of Ukraine. Should Russia wish to protect these folks from war they ought to start talking terms now.

There is nothing dishonest about my framing of the Crimea transfer FROM RUSSIA to Ukraine. I described it accurately but you misunderstood what I said: https://en.m.wikipedia.org/wiki/Transfer_of_Crimea_in_the_So...

I would prefer to get my overview of what “the people of Ukraine want” from actual polls conducted, not what people in the West simply assert. Same with Russia, India, China, etc. And the stats are clear:

1. Ukrainians didn’t want NATO during and after George W Bush pushed for Ukraine to be in NATO. If you care about what Ukrainians want then explain this “open door policy” where you shove countries through the door kicking and screaming https://www.pewresearch.org/global/2010/03/29/ukraine-says-n...

2. The people who live in Eastern and Southern Ukraine are only 56-58% supporting continuing the war. A very far cry from your claim that “Ukraine wants to continue the war”, much less invade Crimea. It is to be expected that the West of Ukraine on the other hand is happy to volunteer the Easterners for more meat grinder. It’s easier when you don’t have to live under daily bombings.

https://news.gallup.com/opinion/gallup/471155/charts-russia-...

3. Crimea shouldn’t be on any tables. We know how Crimea voted — they wanted to be INDEPENDENT of Ukraine, since 1991:

https://en.m.wikipedia.org/wiki/Crimea_in_the_post-Soviet_er...

Somehow people don’t care about Crimea’s sovereignty, only Ukraine’s. But in 2014 they voted again for Independence from Ukraine. That is not surprising! If the OSCE agreed to oversee it, the legitimacy may have been enough to make it happen — like Kosovo. But OSCE refused.

That doesn’t mean Ukraine gets to bomb Crimea, does it?

Of what relevance is it what percentage wanted to join NATO in 2010? NATO expansion didn't force Russia to invade Ukraine. Nor did internal conflict over the disposition of Crimea force Russia to invade. You steadily bring up irrelevant complexities to paper over the simple truth. Russia is solely at fault and only Russia can end it. Until then let the western world continue to support Ukraine until Russia breaks.

I have been answering you point by point, showing you where you're wrong.

If a solid majority of Ukrainians do not want to join NATO in the period 1990-2010, but Bush pushed for it in 2007, then a lot of questions arise:

1) Why does NATO push for Ukraine and Georgia to join NATO?

2) Why did they not welcome Russia as well? Was it more corrupt than Ukraine, or less democratic than Turkey, an existing member?

Most people outside the Western bubble know the real reason. The goal was always to gradually surround Russia with NATO bases. Russia needed to be the enemy. If Russia was part of NATO, then NATO wouldn't have an enemy to defend against. Also then Europe's security would be very strong, and there would be no need for USA's weapons to keep the peace. And the bases USA has around the world would have to be reduced, too.

In doing so, US presidents ignored Russian presidents (including Yeltsin, Putin and Medvedev.) They also ignored everyone's warnings, and even the original architects of the USSR containment strategy:

https://theconversation.com/ukraine-war-follows-decades-of-w...

Clinton ignored 50 top foreign policy experts:

https://www.armscontrol.org/act/1997-06/arms-control-today/o...

Bush ignored pretty much everybody, including his own ambassadors and experts:

https://nonzero.substack.com/p/the-memo-that-failed-to-preve...

I hope this addresses what relevance NATO expansion has. Every expert knew the predictable outcome. They said it for DECADES.

And even today, billions of people around the world think like me ... according to polls:

https://thewire.in/world/more-indians-hold-us-nato-responsib...

https://www.upi.com/Top_News/World-News/2022/06/14/italy-vat...

You can repeat the words "unprovoked and unjustified" many times but that's just a verbatim phrase that you've been taught to repeat, obviously it was provoked. NATO expansion was systematic provocation. As was buzzing airspace. As was the rhetoric and the drone warfare, which worked so well in Nagorno Karabakh against Armenia. And so on.

Obviously if the shoe was on the other foot, USA would do the same. In fact, they did, and does often. The Cuban Missile Crisis is an example.

USA takes far less provocation to attack. Sometimes none. Like in Laos, halfway around the world. No other country does that. You seem to operate on a complete double-standard.

So no, Russia isn't solely at fault. Russia can surely end it, but the consequences will be that Russia will be surrounded in short order by NATO bases, and in a decade or so, nuclear weapons pointed straight at Moscow. Maybe even broken up.

While as a libertarian, I don't have a horse in this race, I can tell you that no country (especially not USA) would ever allow anything close to that to happen. Russia does not want Ukraine to become a NATO member.

Nuclear weapons would have been enough of a detergent for the foreseeable future. Invading increased security not one whit nor was it expected to. It was expected to increase wealth and power at the expense of decreasing security.

In fact invasion has actually done more to advance the cause of NATO than the US could have done. They are already and were always going to be surrounded by enemies due to being surrounded by former vassal states. Russia was never going to be in NATO because it's primarily a defensive alliance vs Russia. Nobody wants to give Russia a vote in an alliance that exists for mutual defense against Russia.

Who gives a fuck what the Indian man on the street thinks? Greater truth isn't decided by surveying as many ignorant people as possible. Shall we next survey Kentucky or London to achieve critical rube mass? Worse India profits greatly from cheap Russian gas. May as well ask farmers about the wisdom of subsidies or johns about whether prostitution ought to be legalized.

This is all more chaff.

This conflict exists so that Russia can trade it's citizens blood for power. Nothing else necessitates it. It serves no other end. It has no other interest.

Every other end is damaged by this war save one.

You go on without end while ignoring this fundamental fact. If you can't address it properly then you may see yourself out of the conversation.

I could give you similar polls for China, too. That is billions of people. Who cares what they think? How about who cares what YOU think! You’re in a media bubble and not seeing any other coverage around the world. You’re being told what to think and say, and all the mainstream media is in total agreement and no dissent is allowed (with the glaring exception of Tucker Carlson’s prime time slot on Fox, which otherwise proves the rule).

Literally everything you’re saying is just parroting CIA / US establishment talking points word for word, just like in every other proxy war against Russia (Afghanistan, Syria).

No there isn’t “just one side” that unilaterally began this conflict. Not even close. And the rest of the world outside the media bubble you’re in realized it. That’s billions of people who realize NATO expansion is responsible. Western leaders too:

There was a war going on in Donbas since 2014 for 8 years before Russia invaded. Russia negotiated Minsk and Minsk II but it was never implemented. USA fomented a revolution in 2014 and Ukraine’s new government was using cluster munitions against civilians in the Donbas as early as 2014:

https://www.hrw.org/news/2014/10/20/ukraine-widespread-use-c...

This wasn’t “unprovoked”. Even in mainstream Western Europe many leaders clearly warned Russia was being provoked:

https://m.youtube.com/watch?v=KqE7UTptgGg

And still say now that it was provoked by NATO:

https://www.upi.com/amp/Top_News/World-News/2022/06/14/italy...

I could go on. I could cite experts and leaders in USA and in Europe all of whom say the war was provoked and there is more than “one side”. They say it was very easy to avoid:

https://m.youtube.com/watch?v=OF5oPNjMZw4

But it won’t make a dent. You won’t care what billions of people think. Or what leaders think. Or what experts think. Because they’re all wrong. You in your media bubble have it right: the causes are super simplistic and only one side is at fault. This is fed to you to justify ANY LEVEL of escalation, up to and including the destruction of the entire world. It’s pretty ridiculous and scary actually. But the US military industrial complex has successfully co-opted most of its mainstream media to make sure only one narrative is allowed in the minds of most people. This has been a phenomenon that already was honed with other issues, such as vaccine hesitancy immediately prior.

We have seen proxy wars happen (in Yemen for instance, an incredibly destructive war), we know how they occur… one side foments a revolution, the other props up the counterrevolutionaries, and both sides funnel weapons to the region for years. One side bombs the country and the other delivers weapons from afar.

No thougutful person thinks there is “one side that attacked in an unprovoked way” and so on. Especially in this case, where Russia is defending its security against being surrounded by a hostile military alliance led by its geopolitical enemy, while USA simply went around the world 3000 miles away to bomb countries to the stone age to prevent, I dunno, communism I guess.

> Russia is defending its security against being surrounded by a hostile military alliance led by its geopolitical enemy

This is nothing but typical authoritarian fear-mongering about being surrounded and under attack. It's not true at all, not even remotely. After the Cold War, European countries reduced their armed forces up to 10x. For example, Germany went from 3800 tanks in 1980s to some 200 today, and the US moved its last tanks out of Europe in 2013. This only began to change in 2014 after Russia invaded Eastern Ukraine. What security was there to defend, if Europe was unilaterally disarming itself? What security are they currently defending by shooting missiles into apartment buildings in Lviv, a thousand kilometers away from Russia? If anything, the arms reduction in Europe was seen as weakness and provoked Russia to attack Ukraine in the first place.

> You won’t care what billions of people think. Or what leaders think. Or what experts think.

Speaking of leaders, the only UN members who buy the entire Russian narrative are Syria and North Korea, while 141 countries out of 193 voted explicitly against it. Take a look at the map, it really does speak for itself: https://en.wikipedia.org/wiki/United_Nations_General_Assembl...

You are rehashing Russian propaganda narrative that has virtually no support in the world except for professional contrarians and other fringe groups. How did you get sucked into this? Youtube videos? Social media influencers?

To hear you (and other “true believers”) tell it, everyone’s a Putin agent. The Pope is a Putin agent. Leaders and people of countries with billions of people. Hundreds of thousands of protestors in Eastern European countries. And even of thousands of protestors in every Western European country. And even here in the US. Republicans. Progressives. Everyone is spouting Russian propaganda when they call for a resumption of diplomatic discussions and negotiated settlement, and blame NATO for instigating this?

https://www.reuters.com/world/us-congress-progressives-withd...

I have a different theory (as does most of the world outside your bubble). You are the one repeating propaganda. Let me count the ways:

1. NATO attacks Yugoslavia, declares Kosovo independent, destroys Libya and turns it into a failed state, you say very little. You keep repeating it’s “purely defensive” and Russia has nothing to fear.

2. CIA fomented a regime change revolution in Ukraine to overthrow the sitting president, helped train and arm far right extremist paramilitary groups, and you say nothing about it. They likely tried to do the same in Kazakhstan and Belarus, too, but were so far unable. (Russian agencies do this as well btw.) The reality is much more complex than your simplistic one dimensional analysis which ignores all these factors.

4. US/UK forces blow up the pipelines sending gas from Russia to Europe, try to pin it on Russia initially (it failed) and you don’t even care that they screwed European industry and economy etc.

5. Nearly ALL the people with actual domain experience have warned Clinton, Bush, etc. that NATO enlargement will likely lead to war with Russia, especially with Ukraine. And that is exactly what they wanted — Ukraine. You think they care deeply about Ukraine? They cared deeply about Afghanistan? NO, they are simply useful for making Russia bleed, “for as hard and as long as possible,” in the words of Brezhinski. They consider you a “useful idiot” and lie to their own public about their covert actions (eg #4). And then later they declassify it but by that time it’s too late to care:

https://www.outlookindia.com/website/story/how-jimmy-carter-...

This is the architects of these proxy wars, all the way up to the US President — wars like Afghanistan in which 2 million civilians died just so we can stick it to the Soviets! But during that war they lied to you and then declassified it — and they have NO REGRETS. Two million dead civilians bro. This is the “collateral damage” you are willing to pay cause you’re not the one paying it right?

Q: When the Soviets justified their intervention by asserting that they intended to fight against a secret involvement of the United States in Afghanistan, people didn't believe them. However, there was a basis of truth. You don't regret anything today?

Brzezinski: Regret what? That secret operation was an excellent idea. It had the effect of drawing the Russians into the Afghan trap and you want me to regret it? The day that the Soviets officially crossed the border, I wrote to President Carter: We now have the opportunity of giving to the USSR its Vietnam war. Indeed, for almost 10 years, Moscow had to carry on a war unsupportable by the government, a conflict that brought about the demoralization and finally the breakup of the Soviet empire.

You dismiss calls for peace talks and valuing human beings’ lives as being “Russian propaganda”. I say you are perpetuating US warmonger propaganda. Would you like to stop carrying water for thr CIA and military industrial complex?

Their track record neafly 100% of the time reveals they were behind making sure conflicts commenced and perpetuated them at the cost of real human lives abroad, while you with your one dimensional moralizing sit here and barely notice it. Laos. Nicaragua. Iraq. Afghanistan. Libya. Syria. This time it’s different, right? Wait until they declassify it in 2030 and by then you’ll just say “oh mistakes were made” and by then it will be ANOTHER war that is “different this time”. That is, if there is no nuclear war by then.

Only Russia, Syria and North Korea support this narrative, while 141 out of 193 UN members have explicitly called this bullshit and demanded Russia to get the fuck out of Ukraine.

It's a simple, yet powerful reminder where Russia stands in the world: 3 vs 141. Even Nazi Germany had more international support.

Read this link: https://unwatch.org/2022-2023-unga-resolutions-on-israel-vs-...

We find that UN had 148 countries vote against Israel to get “the fuck” out of the Golan Heights, and only Israel and USA and Liberia voted against. We also find another resolution by the plenary where 141 countries voted and only Israel and USA voted against.

Now according to your logic, the USA is dead wrong, and Nikki Haley should stop telling the rest of the UN how wrong they are and how Israel is the only democracy in the region, etc etc. But then read the Analysis column of the UN resolution — all the stuff they missed in their procedures:

Ignores the existence of the Syrian Civil War and its security implications for Israel and the civilians of the Golan Heights. Also ignores Syria’s history of shelling Israeli communities, its leader’s calls for a “war of annihilation” against Israel, and Syria’s 1967 aggression that led to its loss of the territory. Also neglects Syria’s sponsorship of the enemies of the peace process, and its support for terrorism. Falsely claims that Israel is oppressing and imposing Israeli citizenship on the Arab population of the Golan Heights.

Now, I am not here to argue the nuances of that particular dispute. My point is simply that pointing to UN resolutions against a country doesn’t exactly accomplish as much as you think it does — and also opens you up to charges of hypocrisy because USA is completely on the other side of that. You as the public receive whatever news coverage is appropriate to condition you to support one or the other position. So do people of other countries. I am not saying they are better informed than you — media in most countries is biased and selectively shows only things from one narrative, year after year — but what I am saying is you don’t have the whole story.

I care about actions and consequences on the ground. Libya is destroyed. NATO destroyed it. UN did not authorize NATO to bomb Yugoslavia, and yet they did. NATO is not a purely defensive alliance. Russia is right to fear it just like USA was right to fear USSR placing missiles on Cuba.

For me, it is more complex picture and guess what — for most of the world outside your bubble it is, too. Every time they poll the entire world, USA comes out as a bigger threat than Russia or China. The rest of the world doesn’t agree with you. You think the country you live in “jusy makes mistakes” and others around the world see it as instigating almost every conflict and it would be better if it stayed out.

You should care about data and facts, instead of cherry-picking some only. Look:

2006: https://amp.theguardian.com/world/2006/jun/15/usa.iran

https://nypost.com/2014/01/05/us-is-the-greatest-threat-to-w...

2013: https://brilliantmaps.com/threat-to-peace/

2021: https://amp.theguardian.com/world/2021/may/05/us-threat-demo...

They poll people around THE ENTIRE WORLD mopsi. How can you see so many people choose USA as the greatest threat to world peace and democracy, and then yawn and say “stop your Russian propaganda”?

India. China. The Pope. Representative samples of billions of people. How can you see all those people blaming NATO for this conflict, and say “well, they’re just wrong and uninformed”?

There is just one conclusion here… you may be the one who has been in a propaganda bubble. You should speak to others around the world outside NATO countries. How often have you done that? To whom?

> My point is simply that pointing to UN resolutions against a country doesn’t exactly accomplish as much as you think it does

Yes it does. When even closest allies, including the whole Europe, vote against the US, then it's a clear sign that the US position does not have any support in the world, the same way Russia has no support for its narrative on Ukraine when only Syria and North Korea embrace it to the full extent.

That analysis you refer to was written by unwatch.org, a lobby group with strong ties to Israel. I see no reason to value their anonymous assessments higher than the opposing view held by the overwhelming majority of United Nations.

No amount of US-centered whataboutism changes the simple fact that Russia is in total international isolation on Ukraine. 3 vs 141 speaks for itself. 141 countries told Russia to get the fuck out in March 2022 and the same number of countries voted again last month to reaffirm that position.

Given that you are a Russian, I understand your denial. Many Germans couldn't bear the burden and shame of Nazi crimes either and made excuses or denied them until their final breath. Since I live in Eastern Europe, I have front row seat and meet such Russians on daily basis. I can show them Russian missiles raining down on apartment blocks hundreds of miles away from the frontline and they'll make all sorts of stupid and even outright childish excuses to deny that Russia is involved in any way. Apparently all such videos and photos are Photoshopped, hundreds of thousands of refugees are all liars and crisis actors, and so forth. Only the Kremlin never lies.

It's pretty amazing to see how even highly educated Russians totally turn off their brains and start rehashing the same old debunked PR narratives when I mention specific keywords. They act almost like chatbots, say a certain keyword and it'll trigger an automatic response. Somehow everyone became experts on Kosovo (even you!) after Russia started raining down artillery shells on Ukrainian cities. Did they, or is it just a spoon-fed coping mechanism?

Look, I will try to be blunt and to the point.

You are attacking a strawman. I do not deny that Russia is attacking civilian infrastructure. I do not deny that its soldiers committed war crimes and atrocities. I condemn Russia’s invasion and I even more condemn them arming “moderate rebels” with names like “Strelkov” and “Motorola” since 2014. So literally everything you are ascribing to me is false and a strawman.

What I am also saying, however, was that Russia is not the sole party involved in this proxy war. NATO systematically created the conditions for it, just like USA and Saudi created the conditions to draw USSR into a war in Afghanistan, and later declassified the extent of their involvement. The US has a history of doing this. The entire world for the last 20 years considers the US to be a threat to world peace and democracy far more than Russia and China. The entire rest of the world outside of NATO blames NATO!

It is you who are ignoring this. It is you who can’t bring yourself to blame NATO. It is you who is consoling yourself and coping hard. Look at what others in this thread say… “the ONLY party to blame is Russia, end of story.” “This is the war of one man Putin, end of story.” “There is no other legitimaye point of view, if you disagree you are spouting Russian propaganda and a monster who enjoys rapes and murder.” This breathless insistence on ENDING THE CONVERSATION immediately and shutting down the discussion should tell you something. When I provide copious links to mainstream and official sources for all my points and the other person says “I don’t want to be confused by this forest of links” that shows you what side is not afraid of facts.

The insistence on a laughably cartoonishly one-dimensional explanation, the verbatim repeat of phrases “vaccine hesitancy”, “Russia hacked the election”, “unjustified and unprovoked war”, etc etc. the complete unwillingness to discuss literally ANYTHING outside of that parroting… normally it would be considered NPCs and zombies. The total crackdown on any dissent — The propaganda on the US side to much of the US public just as much as if not more than on the Russian side. And this is with all the freedom of speech we have and they don’t over there!

I remember when we had the Iraq war and we all had to repeat the bullshit explanation “they attacked us because they hate our freedoms”. When Ron Paul repeated the actual stated reasons of Osama Bin Laden he got booed. The American Public also booed McCain when he said Obama is a good family man and not an A-Rab. Many people in this public are very gullible, and the media makes them so. The Fox viewers believe the 2020 election was stolen. The CNN viewers believe the 2016 election was hacked. They’ll believe whatever their media tells them. If you think Left vs Right is biased, just imagine when they join together into US vs THEM (other country). You hear an extremely selective set of news. Ukraine according to them has been winning since April 2022. Russia has been on the verge of running out of weapons any day now. And Russia blew up its own tanks, trains, pipelines, etc. Well, no… the US / UK did. THEY blocked the peace talks (according to Naftali Bennett who was personally close to an agreement between the two presidents). THEY fomented the revolution in Ukraine in 2014. THEY funded the neo nazi battallions secretly via the CIA since 20-4. THEY told Zelensky to stop making peace agreements. And that is just what we know… if other wars are anything to go by, we will learn in 2030 stuff that will make you regret your support just as much as you regret Vietnam and Iraq and Afghanistan…

Just as an aside, the Taliban in DECEMBER 2001 OFFERED AN UNCONDITIONAL SURRENDER AND USA REFUSED! That is the same group that we later ceded the country to 20 years later after a brutal occupation. Literally can’t make this up. They are the ONLY COUNTRY IN THE WORLD that gets involved around the globe and fucks it up so much. Probably has a lot of psychopathic malicious people who know FULL WELL what will happen and proceed to do it anyway.

My argument isn’t that Russia is good and isn’t really attacking zumraine. It is that Russia, China and USA are all imperialist shithead countries that destroy everything around them in their proxy wars and meddling. But mostly the USA because it has already defeated everyone around it (native americans - gone, mexico - huge swaths of land stolen, etc) so it goes now around the world in search of more fights. China has started to do that in a more clandestine way (intimidating people abroad, locking up Uyghurs). Compared to those two, Russia is in third place of being an imperialist shit. That’s not saying much but the point is you as a US citizen are the one who can’t bear hearing this about YOUR country. Go buy a book like “Rogue State” and read it. You might realize that you’re projecting.

Most regular people don’t want to kill anyone and don’t endorse endless regime change wars. So they might protest and say that sending weapons go Ukraine is gonna get a lot of Ukrainians killed. (Just like when Gulf contries kept sending weapons to Gaza — did that EVER MAKE THE PEOPLE IN GAZA SAFER? No, never. Just perpetuated the conflict by giving them false hope.)

So to support perpetuating yet another “this time is different” war, the proponents of this madness need something stronger, something that will overcome people’s natural resistance to sending more weapons to the region. They start to spout total fictions like “Russia wants to genocide all Ukrainians, restore the Soviet Union, and if we dont stop them they will go and take over all Europe.” Yes those are easily debunked of course, with many independent lines of evidence, and logic. But for some people it doesn’t make a dent. Because if they admit that this is YET ANOTHER PROXY WAR THAT WE COULD HAVE PREVENTED AND CAN EASILY DEESCALATE NOW, then we might just all do that. And then they would be exposed as useful idiots for the military industrial complex, and the war machine that has been destroying countries around the world with zero accountability, and then the next admin says “mistakes were made.”

> NATO systematically created the conditions for it

This is simply not true. All the Russian propaganda memes of the US forcing Eastern Europe into NATO and so forth that you too rehash are demonstrably false.

> The entire rest of the world outside of NATO blames NATO!

It does not. Representatives from 141 countries of the world at the UN condemned Russia for the war, not NATO or anyone else.

> That’s not saying much but the point is you as a US citizen are the one who can’t bear hearing this about YOUR country.

I am not an US citizen and I don't care about the US-centric whataboutism.

> Most regular people don’t want to kill anyone and don’t endorse endless regime change wars

That's certainly not the case in Russia, where the majority of people continue to support the war with Ukraine.

> I am not an US citizen and I don't care about the US-centric whataboutism.

Understood. Well now you know how I felt when you keep saying I’m Russian and ascribing views to me that I don’t have.

> This is simply not true. All the Russian propaganda memes of the US forcing Eastern Europe into NATO and so forth that you too rehash are demonstrably false.

Given all the warnings Clinton and Bush ignored from experts, given the aggression NATO has displayed in Yugoslavia and Libya, the refusal to accept Russia, and given the number of bases and the all-but-stated raison d’etre of NATO to have Russia as a geopolitical enemy, I’m pretty sure Russia would not want this organization to surround it with missiles.

Neither would USA want to be surrounded by its geopolitical foes or have them turning their neighbors against them, much less fomenting a revolution. In fact the Monroe Doctrine long ago claimed THE ENTIRE WESTERN HEMISPHERE as a protectorate of the USA, but meanwhile USA went all around the world seeking to turn Russia’s former allies against it.

I just told you that a solid majority of Ukrainians said NO TO NATO but yet NATO persisted. Bush started this meme of Ukraine in NATO. I shared the poll data and mainstream links with you. DATA AND REALITY SHOULD MATTER MORE than repeating the words “Russian propaganda”.

https://www.pewresearch.org/global/2010/03/29/ukraine-says-n...

https://www.reuters.com/article/us-nato-ukraine-bush-idUSL01...

Explain thei. Reuters is repeating Russian propaganda? American experts and diplomats predicting war are Russian stooges? Billions of people around the world are Russian assets? Or what?

It does not. Representatives from 141 countries of the world at the UN condemned Russia for the war, not NATO or anyone else.

That was never up for a vote. Show me where the UN was asked to vote on whether they condemn NATO for this conflict, or blame NATO or anything of the sort.

They did even more overwhelmingly blame USA for the 20th year in a row for the Cuba embargo and called for USA to lift it. But USA did not. Do you likewise spend as much time on this for the last 20 years? No. Why this double standard with Russia? I have some pretty good guesses.

That's certainly not the case in Russia, where the majority of people continue to support the war with Ukraine.

You’re just proving my point. The majority of regular Russians did not want to go and kill Ukrainians themselves. Their government and mainstream media had to radicalize them over time and tell them lies (eg that it is overrun with Nazis), just like Ukrainian and US people are told lies by their governments too, and very likely your government tells YOU one sided lies too. (Lithuania and Estonia would gleefully get NATO to fight Russia if they could, just as Castro in the Cuban Missile Crisis mindlessly wanted to instigate USA vs USSR even when neither country was going to be that reckless.)

11 million Russians have family in Ukraine. Those are stories of love. It takes a lot of stories of hate and killing for them to turn on each other.

I am saying that all governments are telling people half truths and the media is radicalizing them for years, highlighting only the bad stuff others did, and with an agenda. And media that doesn’t play along is banned!

The majority of US citizens supported the Iraq war the first yeats (as high as 73%). Why? Same reasons. If I asked people back then why we were attacked on 9/11 they’d say Muslims hate us for our freedoms. You think that was their original thought? Do you truly believe “russia hacked the election” and “unprovoked and unjustified” are original thoughts?

But I will give you credit for something… you have actually cared about polling of the Russian public and their support for the war! Good job, yes polls matter. (Someone here said polls of Indians, Chinese and the entire world don’t matter - some kind of metaphor about people drinking sand.)

I give you credit because some people mindlessly still repeat that this is Putin’s war, one man’s war. And the Russian public is given a pass because they say they are just too afraid to say what they think, or polls are unreliable. They have a fantasy that if Putin is killed or removed then everything would be better.

No, Medvedev and Zhirinovsky and others would have been FAR bigger war hawks than Putin, and really anyone at all including Putin’s greatest liberal critics in Russia would have the same reaction (which you say is totally baseless):

In 2008, Burns, then the American ambassador to Moscow, wrote to Secretary of State Condoleezza Rice: “Ukrainian entry into NATO is the brightest of all redlines for the Russian elite (not just Putin). In more than two and a half years of conversations with key Russian players, from knuckle-draggers in the dark recesses of the Kremlin to Putin’s sharpest liberal critics, I have yet to find anyone who views Ukraine in NATO as anything other than a direct challenge to Russian interests.”

So we have two options here:

1) Russians are uniquely bloodthirsty orcs who want Ukrainians to be raped and killed

2) The Russian public believes Ukraine in NATO is an existential threat for their country, believes that their leaders have exhausted all peaceful ways to avert this war, and support the war just as US would have supported a war against Cuba in the Cuban Missile Crisis if USSR pumped it full of weapons.

> That was never up for a vote. Show me where the UN was asked to vote on whether they condemn NATO for this conflict, or blame NATO or anything of the sort.

Exactly. You claim that BILLIONS of people are blaming NATO, yet even Russia hasn't put forward a draft resolution with such allegations, because it would gain no support and would only humiliate Russia further by demonstrating how isolated they are.

> I’m pretty sure Russia would not want this organization to surround it with missiles.

What missiles, where?

I'm not interested in a forest of time wasting links when you can't attend to simple conversation. "I could give you similar polls for China, too. That is billions of people. Who cares what they think? " We established prior that polls are a poor way to determine truth. If sand is a poor way to slake your thirst then pouring more of it down your gullet wont improve your situation.

Let's be real and acknowledge that you are sympathetic to the country of your birth. Where other people see monsters rampaging through Ukraine, raping women and girls, shelling hospitals ,you see excuses. I'm sure after all the footage of the death camps came out some people of German heritage felt ashamed of their countrymen while others focused on making excuses for them.

Stop. Making. Excuses.

You’re the one making excuses for the most warmongering country in the last 100 years, involved in 80% of all the wars in the entire world, with more spent on the military industry than the next 10 countries combined, and maintaining 800 bases around the world while the rest of the world has 30.

The links are to back up everything I am saying with MAINSTREAM SOURCES and quotes from the very people who admitted lied to you and thought of you as a “useful idiot”. If you don’t want to click them, simply don’t. The cognitive dissonance might be too great. The polls show what actual people think who actually live in these countries. The links are all to mainstream and experts. In any other area of life, backing up your points would be normal and praiseworthy. But you are so afraid of challenging the official propaganda narrative, that you won’t open yourself up to more information.

Let’s be clear. I don’t care about countries or flags nearly as much as I care about human beings, their lives, safety, a good economy etc.

I have seen this exact same game play out multiple times in proxy wars between USA and USSR. Countries got razed to the ground. Civilians died. I don’t want that for Ukrainians.

It’s true that I was born in Russia but that is not behind what I am saying. For example, when Russia went to war in Chechnya and razed their capital city TO THE GROUND, I unequivocally condemn Russia. Even though it is “an internal matter” according to the International Community, and Chechnya had “no right” to become independent of Russia, I consider that bullshit. I would much prefer a resolution that has less violence, less wanton destruction. And that typically involves letting the region have more autonomy and yes, even independence. My approach is CONSISTENT.

I have defended Iran, for instance, in the past against such simplistic analysis. I have praised Hezbollah and Iran and Russia for coming to the aid of Syria against rampaging Jihadists with Saudi money and US weaponry. I call things as they are and my commitment is to the truth.

North Korea had an agreement with Clinton, not to develop a nuke. GWB and the Republicans called it expensive “appeasement” and let the deal die on the vine. North Korea got a nuke. Who is better off? Is it more expensive to deal with them now? Yes. Same with Iran and JCPOA. It was foolishness to nix the best DIPLOMATIC solution that placed more inspectors than any country, ever. Now Iran will develop a nuke! Many nukes! And it’s all because of Trump and Bibi Netanyahu.

I am Jewish yet I can criticize Bibi and Trump. I am born in Russia yet I can criticize Russia, condemn their invasion and arming “moderate rebels” in the Donbas, etc. I live in USA and I do the same thing here. MY SIDE IS REGULAR PEOPLE AND MY SOLUTION IS DIPLOMACY. And most of the world outside your bubble agrees with me. Or at the very least 30% of the world does. So your narrative — just like all other sad attempts to coerce others into one official propaganda line — have failed and will fail. You can’t fool all the people all the time:

https://amp.theguardian.com/world/2021/may/05/us-threat-demo...

What diplomatic solution? Will you suggest we give the Russians part of Ukraine which isn't ours to give or shall we threaten the Ukrainians with starving them of help and demand that they capitulate? Either option leaves millions subjugated and subject to "filtration", torture,privation and makes further conflict inevitable. They have specifically laid claim to a much broader territory than merely Ukraine and 150M people live in Independent nations they claim as their vassals. Even if such an agreement were possible and moral there is no reason to believe they should keep it.

https://en.m.wikipedia.org/wiki/Minsk_agreements

Read the the Minsk II agreement — all the provisions are super positive and constructive for everyone involved. It should have been implemented.

Zelensky said never planned to honor it, just like Hamas never planned to honor previous agreements with Israel… went badly for Gaza, and the Gulf states sending weapons to Gaza only made things worse for the actual people living there. Gaza wouldn’t have received sanctions and a blockade if Hamas had actually implemented previous agreements. And same here:

https://youtu.be/Mg4Jmnw3xQg

Zelensky ran on actually implementing peace with Russia and even started to, but the US and NATO and the Ukrainian far right very likely told him to cut it out, or else:

https://www.eurasiareview.com/19092022-is-zelensky-afraid-of...

You’re asking what the US could do? All we had to do is not get in the way. That’s all.

But we blocked all peace agreements. So much for “nothing about Ukraine without Ukraine:

https://m.youtube.com/watch?v=0yma0LxyVVs

https://m.youtube.com/watch?v=JREMEqXSpGA

https://m.youtube.com/watch?v=O10svZJ2Fps

USA and UK did everything possible to make sure Ukraine would NOT make peace with Russia, and also that the European countries wouldn’t either. Including very likely blowing up the Nordstream I and II pipelines dealing a major blow to German industry and European energy in the short term. Swedes know who did it but are keeping mum. No one dares criticize the big daddy in the room.

You are continuing your strategy of throwing chaff. I asked you what diplomatic solution can be put into play now. Neither side is looking for Minsk II at this juncture.

I would highly suggest you watch this informative lecture from an IR professor examining the causes of the current crisis in Ukraine (a lecture, mind you, given nearly a decade ago that accurately projected forward to now, perhaps the one mistake being that the lecturer did not expect Putin to attempt a full-scale invasion of Ukraine).

https://www.youtube.com/watch?v=JrMiSQAGOS4

The tl;dw: the West has pursued a policy since the end of the Cold War to march NATO and the EU to Russia's doorstep. Each time tangible actions or declarations have occurred, Russia has clearly expressed that it views this as an existential threat and that it will not tolerate NATO or the EU on its doorstep. We have ignored these warnings and continued this policy. Ultimately, it is not clear we have any good reason to be doing this for our own strategic interests, especially paired with the rise of China.

Nothing about Russia's neighbors forming a defensive alliance is an attack or justifies a war of aggression. Russia was never endangered by such. Nuclear weapons in and of themselves represent sufficient check on any ambitions. The only way for Russians to end up in piles of blood and meat was to march their own people to their deaths in foreign lands where they could safely be slaughtered without provoking Armageddon. If the Russian people ought to be afraid of anyone they ought to fear their leaders.

NATO was the one who tried to get Russia’s neighbors to all join. Pew polls and others have shown that a solid majority of Ukrainians did NOT want to join NATO. How is habing Yuschenko do it anyway, any different than Yanukovich agreeing to cheap Russian gas and loans? If that makes Yanukovich a stooge of Russia then Yuschenko was a stooge of NATO.

When NATO pushed Russia’s neighbors to join, their populations didn’t want it. Russia wanted to join and NATO rejected them. Why?

NATO has nuclear sharing agreements, and situates their armies next to the Russian border and buzzes their airspace regularly. Why?

Boris Yeltsin opposed NATO expansion, he did everything USA wanted (including “shock therapy”) to the point where his own parliament tried to oust him and USA propped him up. But no matter how much he protested NATO’s expansion, USA told him to go pound sand. This isn’t a Putin thing.

Furthermore don’t forget that NATO isn’t a “purely defensive alliance”. They bombed Serbia without UN approval, and declared Kosovo independent (that set a precedent for what Russia did in, say the Russo-Geogia war, and now in Ukraine).

They also invaded Libya and left it as a failed state with millions of people living under warlords, including terrorists from ISIS and Boko Haram. Why do you not even care? No this organization isn’t “purely defensive”.

No “great power” country, not USA nor China nor Russia, would allow itself to be gradually surrounded with bases and missiles from a hostile military alliance. USA sponsored the Bay of Pigs invasion, and Cuba was perfectly rational to ask USSR to install missiles on Cuba. And Kennedy violated international law by blockading Cuba during the missile crisis. But I totally support what he did, because USA couldn’t have nukes so close to Florida. (Nevermind that USA did the same thing secretly in Turkey, before the Soviets). Rather than engaging in more hypocrisy, they both deescalated and solved things with mutual respect. That’s how it should be now, too.

Where I agree with you is that every country’s public should hold their leaders accountable, rather than blaming the public of the other country.

And I'd highly suggest that you read Mearsheimer's more recent interview with The New Yorker where he reminds us that he's a complete fraud that shouldn't be spoken about anymore.

https://www.newyorker.com/news/q-and-a/john-mearsheimer-on-p...

> Negotiation is unlikely to change this analysis if the rotting corpses of its own dead isn't sufficiently persuasive.

So the only solution you leave us with is open war with a nuclear power.

> There is no communique that could have resolved this because Russia believed that it would quickly roll into Kiev and end it.

There is a common strain of thought that WWII was a "just war" and that nothing could have prevented war with Nazi Germany. This is correct if one starts history in 1938, or even 1933, but ignores the fifteen years between 1933 and the end of World War I, and still the years of WWI and the decades prior.

You are wrong in the same way that folks err that WWII was unavoidable. History exists and we didn't arrive at this moment simply because of the evil of one man.

If we want to avoid an open war with a nuclear power, we have to be willing to negotiate. Putin is rational and has negotiated in the past. How many corpses do you want?

I am not sure what Russian presidents (not just Putin) could have done to stop NATO expansion. They have complained, they have offered to join NATO, they were rebuffed. But Russia's neighbors were PUSHED to join, even if their own citizens didn't want to. Why? Here is a chronology since the 90s:

Boris Yeltsin officially complained and ask NATO not to expand. What was wrong with Boris Yeltsin?

https://www.nytimes.com/1993/10/02/world/yeltsin-opposes-exp...

https://nsarchive.gwu.edu/briefing-book/russia-programs/2021...

He was literally on the cover of Time magazine with an American flag, after USA meddled in Russian elections to prop up the guy who implemented privatization, "shock therapy", and continued to do it even when the Parliament made a vote of no confidence, during the Russian constitutional crisis he actually fired at the Parliament and arrested the Parliament (same as the Peru guy who was ousted recently): https://content.time.com/time/covers/0,16641,19960715,00.htm...

Boris Yeltsin did everything USA wanted to be done to Russia and even so, his complaints about NATO expansion fell on deaf ears.

Then NATO bombed Yugoslavia, showing it's not just a "defensive alliance": https://en.wikipedia.org/wiki/NATO_bombing_of_Yugoslavia and then Yugoslavia fell apart and Kosovo declared independence unilaterally (https://en.wikipedia.org/wiki/Kosovo_independence_precedent)

Putin wanted to join NATO since 2001: the answer was no. Why? https://www.theatlantic.com/politics/archive/2001/08/putin-i...

In 2008, George W Bush pushed for Ukraine and Georgia to join NATO, but not Russia. Never Russia. Why? A solid majority of Ukrainians didn't want to join NATO, but that didn't stop NATO from constantly trying, and even working with Yuschenko to start the process. I thought NATO was "only if you want to join": https://www.pewresearch.org/global/2010/03/29/ukraine-says-n...

Then Yanukovich came in and stopped the NATO membership process (stopping is what polls showed matched what the majority wanted). So NATO then helped Ukraine destroy their own defensive weapon stockpiles, and then offered themselves as the solution... here is their own site admitting it: https://www.nato.int/cps/en/natohq/news_79035.htm?selectedLo...

This isn't just "Putin's war", either. Whether it's Yeltsin, Putin, Medvedev or any other Russian president, the USA told them "sorry, but NATO is expanding"... and we're adding all your neighbors, whether you (and their citizens) want to, or not.

It's not just Ukraine. Obama was pushed to intervene in SYRIA, because "Putin is challenging your leadership" by bombing ISIS: https://www.youtube.com/watch?v=3GaMf1luwKg

Hillary Clinton gained notoriety for pushing for a no-fly zone in Syria... because Putin. And her pushing for this goes back to 2012... so it's not just Ukraine: https://www.theguardian.com/world/2016/oct/25/hillary-clinto...

If you are a warlike people with a history of violence against your neighbors you don't have any right to demand that your neighbors don't join in a defensive alliance for protection against you nor right to join such an alliance. Why would an alliance that virtually exists for defense against Russia give Russia a vote on whether said alliance should react to an attack by Russia.

If Russia wasn't so inclined to invade its neighbors lands, rape their women, and murder their children it wouldn't matter who joined NATO. Nothing about the mere existence of NATO obligates them to commit atrocities. They are murdering their neighbors now because it would be harder to do after they join NATO which is literally what Putin said in more polite terms. He said they must take it now lest they have to fight all of NATO for it tomorrow.

Left by the wayside is admitting that they lost the right to it in the 90s and will never regain their former empire.

You can stop apologizing for a monster any time.

You are a statist who seems to justify war and killing by anthropomorphosizing countries and speaking about entire populations of civilians as “warlike”. You can stop apologizing for governments and war machines anytime. My side is the regular people, regardless of their nationality — the vast vast majority do not want to kill each other. They are conscripted by their governments to fight, while the politicians and media speak about how “we” must, but neither they or their families actually experience the conditions they send others to. And sitting 3000 miles away it’s even easier to find justifications for a war to continue. You have no skin in the game, after all — but most armchair patriots would have a very different attitude about peace agreements if the war was in your city and putting your family in danger.

But let’s apply your own statist logic.

The USA has been quite warlike, ever since the colonists fought the natives for land. The entire western third of the USA is former Mexico, which they simply won in a war of aggression. USA even tried to invade Canada but was rebuffed. USA has already taken all the land from ocean to ocean and subdued all its neighbors, so now it goes around the world in order to “lead” in every conflict. It spends more on its armed forces than the next 20 countries combined. It has 800 military bases around the world while the rest of the world combined has 30.

Just in the last 25 years, the USA has destroyed more countries than Russia by far (Iraq, Afghanistan, Libya etc) and if we go further back, USA used chemical weapons and bombs indiscriminately in multiple countries in south asia etc etc etc.

And NATO is not a “purely defensive” alliance since it bombed Yugoslavia without UN authorization and declared Kosovo independent (much like Russia has done with breakaway republics), invaded Libya and left it a failed state etc.

But now let’s take an exact analogue. So USA sponsored the Bay of Pigs invasion of Cuba (a neighbor) which failed. Cuba asked USSR for protection and help. USA according to you had no right to interfere, when USSR put missiles on Cuba. And yet, Kennedy wouldn’t allow it. He blockaded Cuba and threatened violence and war unless this was undone.

I actually support Kennedy in doing that to protect his country from USSR putting nukes in a neighboring country. (Nevermind that USA had secretly already done the same in Turkey against USSR, which they declassified later.)

The point is that although Kennedy technically violated international law, the important part is that USSR and USA acted like grownups and deescalated, and even began cooperating and cutting nuclear stockpiles together. That’s what dialogue and respect looks like. It’s possible.

Instead, you’re justifying escalating war and killing based on the most childish argument: “but he started it!” This isn’t how conflict resolution should be done by human adults, let alone adults responsible for the fate of entire populations!

You can critique the US, their history, their actions all you like none of that is of any relevance to the present conflict we are discussing. Its chaff you use to hide the fact that your core argument is so bad.

Nothing but mindless aggression and acquisitiveness has provoked this war. There is only one side that has unilaterally begun this conflict and there is only one party that can end it by going home. That is the only thing to talk about–when Russia is going home—and nothing whatsoever to say on it.

Appeasement can't possibly work because a rational actor would then conclude that they can buy back their former empire with blood and negotiate their way out of the very temporary pain of sanctions. It would inevitably lead to war, death, and pain. For someone who proposes it seems to be a student of history, you are uniquely bad at following a simple line of logic or staying on track.

“I am not interested in a forest of time-wasting links to mainstream sources”

“Nothing but what I say has provoked this war. Period.”

“There is only one side that has unilaterally done everything bad. End of story.”

“Only one party can end this. Stop talking about what we can do. This is completely up to Putin.”

“If you disagree with me then you are spewing Putin propaganda. How much are they paying you?”

“Russia is 100% at fault, and it must be 100% defeated to show the world that no one can arm rebels or invade countries or occupy them or bomb people”

“Ok well we may have done that but that was a really long time ago.. and anyway we didn’t try to ANNEX those countries! Look, no one is perfect and we make slight mistakes. But two wrongs don’t make a right”.

“Stop talking about what our country did. NATO had no role in this. Stop using historical facts. What you say has no relevance”

“Russia’s 2022 invasion of Ukraine is completely unjustified and unprovoked! I mean.. unprovoked and unjustified. That’s what I independently personally think and you should agree — end of story!”

“That is the only thing to talk about.”

“And nothing whatsoever to say on it except what I said. Period.”

“End of story.“

“Did I mention period?”

I think it is clear this style of arguing is a bit different than most intellectually honest discourse on HN. Can’t quite put my finger on what the differences are … maybe someone can help me out here?

Sure this could have been prevented, and resolved, in many different ways.

1. The most straightforward way would be for Russia and Ukraine to have implemented the Minsk II Agreements at any time since 2015, when they were introduced. Minsk II says as soon as the Donbas region gets some autonomy and votes for their own representatives, Ukraine would get control over the entire borders of its country, everyone would get amnesty, lay down their arms, and unicorns would frolic around. But for some reason this was considered "bad" and the election kept being postponed:

https://en.wikipedia.org/wiki/Minsk_agreements#Evaluation_an...

As a libertarian, I blame the politicians: https://www.youtube.com/watch?v=Mg4Jmnw3xQg

2. An easy way that the USA could unilaterally prevent this escalation is simply to say that Ukraine would not join NATO. Tulsi Gabbard for instance literally said this in the first days of the war: https://www.youtube.com/watch?v=OF5oPNjMZw4

Until 2009, most of Ukraine was against joining NATO: https://www.kyivpost.com/post/10444

But George W Bush, besides invading Iraq, also for some reason insisted, demanded that Ukraine and Georgia join NATO anyway: https://www.reuters.com/article/us-nato-ukraine-bush/bush-vo...

The following presidents could have simply rolled this back. Not even other NATO countries really wanted what George W Bush was pushing, but it turned into an escalation.

And literally every responsible person was warning about this for decades: https://theconversation.com/ukraine-war-follows-decades-of-w...

https://www.armscontrol.org/act/1997-06/arms-control-today/o...

The problem is these people were just ignored by the decision makers in power: https://www.youtube.com/watch?app=desktop&v=KqE7UTptgGg

I wouldn't say it's "unprovoked". It was not provoked by Ukraine, but certainly by NATO's expansion. A lot of people around the world feel this way, including leaders of billions of people (China, India, the catholic Pope, etc.) https://www.youtube.com/watch?v=oEbVBi1f0e8 and the people themselves

India: https://thewire.in/world/more-indians-hold-us-nato-responsib...

China: https://uscnpm.org/2022/04/19/chinese-public-opinion-war-in-...

3. To be 100% clear, the CIVILIANS of any country are not to blame for any of this. The people of Ukraine are victims in this, just like Iraqis were victims of US invasion and occupation. But I can still blame Saddam Hussein for ousting inspectors and giving the US an excuse to invade. If you think the Russian invasion was "unprovoked", then the invasion on Iraq was even more unprovoked. But both are far more provoked than, say, the US bombing of Laos to the stone age, more than any country has ever been bombed in history. Totally unprovoked "special military operation", completely. There have to be ways to stop this. And it's called respect for human life and having public discussions with leaders instead of bombing their population.

Just my 2 cents.

As the old 'Ukraine just has to have no agency for there to be peace'.

Remember the Minsk II Agreements were based on the predicate that the 'little green men' WEREN'T Russian soldiers. Which even Russia now admits was a lie. How could a framework based on a lie about one side's aggression work to.... prevent future aggression by that lying side?

Wait, what? I think you have a lot confused.

Ukraine implementing the Minsk II agreements is exercising its agency. It's a country, that's party to an agreement. And implementing a peace agreement is a great way to exercise your agency.

In fact, Ukraine's position (and I guess yours, tacitly) is that Donetsk and Luhansk should have no agency, for there to be "peace". Just like Hong Kong, Catalonia, and many others.

I mean, as far back as 2014 Ukraine's army were using cluster munitions in Donbas, the same munitions that were used in Bucha...: https://www.hrw.org/news/2014/10/20/ukraine-widespread-use-c...

Laws define the limits on the agency of particular subsets of nations. Its perfectly boringly normal for a subset of a nation to have zero unilateral agency insofar as to their membership in large groups. London can't choose to be part of France nor the nation of London not even everyone agreed on the matter. Less do they have the right to murder their neighbors to effect such a change.

Well, you were the one who brought up that someone has to have "no agency" for there to be peace, as being obscene. Then you agreed that, actually, subsets of nations should have "no agency".

So for example if Crimea voted in 1991 overwhelmingly (over 95%) to become independent of Ukraine and that vote was not implemented, but a few months later voted 54% to become part of Ukraine, then Crimea should have no agency ever again. So if in 2014 they vote again overwhelmingly to become independent of Ukraine, it's just too bad. The OSCE shouldn't even observe the vote, because that would give it legitimacy as "what the people who live there want". And we can't have that, so therefore let's just claim that it was a disputed vote because of "little green men" somewhere, and that way we don't have to deal with what they want. We can just claim that they secretly all wanted to be part of Ukraine, and everyone changed their minds from 1991 and just overwhelmingly voted against that because they were afraid of what the little green men would do when they learned how they anonymously voted.

https://en.wikipedia.org/wiki/1991_Crimean_sovereignty_refer...

Same with Hong Kong. Catalonia. Basque people. Kurds. And so on. What the people want doesn't matter, that way there can be peace.

So you already seem to agree with the principle that for there to be peace, we have to shut some people up. (Separatists, nationalists, etc.)

I happen to strongly disagree with that principle, but I also don't want violent revolutions. I would want for the UN to somehow allow more self-determination and autonomy, like they did for Kosovo. I know it's a pipe dream since UN is composed of countries, so none of its members want to allow too much secession or autonomy, they looove to maintain power and control within their borders. But if you look at what they do to secessionists, including indeed the Holodomor in Ukraine, I think harming your own people is far more obscene.

But do you agree at least that Ukraine should have a responsibility to its citizens, not to bomb them? Maybe you can agree that the Minsk II agreements to grant them some degree of autonomy WITHIN UKRAINE were more than reasonable, and that everything happening now is far, far worse for everyone than if Ukraine's government simply implemented the Minsk agreements?

If yes, then we have a point of strong agreement.

The Russians honored neither prior agreement with Ukraine. Appeasement would as it already has lead to further demands. Again your neighbors have every right to form a defensive alliance. Such an alliance doesn't provide reason for aggression.

>and they have not yet had a direct conversation

Thank god.

I always find 15:00-15:30 in that Kennedy speech I linked above chilling, because exactly what he warned everyone "above all" is exactly our systematic policy now, and anyone with a different idea is systematically brushed aside. Be it progressives or republicans in congress, or even the Pope himself.

https://www.theguardian.com/us-news/2022/oct/25/democrats-jo...

> a fund that was acting responsibly

You have to consider how these actions will affect the future relationships between banks and both the specific actors but also the startup scene in general. Startups already had a difficult time with traditional banking which is a large factor in why SVB was so successful, because it catered to the market specifically. What bank is now going to look at a startup not be thinking "Do we really want to take on a group of people who will collectively launch a bankrun at the slightest sign of trouble, even if we are geared to handle a bank run?", A run on the bank is never good news, even if the bank stays liquid, and it has a ton of knock-on effects and causes a huge number of headaches for the bank.

In this situation, where you think there might be a bank run and you have a coordinating role with a large number of customers. I think the responsible thing to do would have been to reach out to the bank and talk through all the options that will let everyone stay whole without a bankrun, not to fire up a group chat and scream "The bank is burning to the ground!". It seemed very likely that without the panic SVB could have secured liquidity and then the long term investments would not have posed a risk. I'm not saying their position was optimal or even good, but the panic just does not look to be the best option for the customers nor the most responsible action for those who had major pull in the market.

> > Startups already had a difficult time with traditional banking

I have seen this statement a half-dozen times in the last 3 days.

Can somebody explain in detail what are these hard times that a startup faces at Wells Fargo, BoA, JPMChase etc?

KYC? If Silicon Valley Bank was skipping that then they were against the law

Wires being signaled as suspicious? I doubt it, maybe the startup is new but everybody knows who the Founder's Fund is... or Blackstone or CVC. When they send the big equity raise checks banks look at the recipient but also at the sender.

KYC is a big part of it, yes. SVB wasn't skipping it; the Wells/BoA/Chase-type banks just do not want to do the additional KYC work for completely unknown players, which many startup founders are. It's not just that; certainly if you're going to open a corner convenience store, you probably won't have a lot of trouble getting a business bank account with BoA. But unlike a more traditional small business, tech startups often come with a massive amount of money that they immediately want to put in the bank, which raises flags... which brings me to:

When a bank offers an account to a business, they take on anti-money-laundering and terrorist-funding risk. (That is, if one of their accounts is used for money laundering or funding terrorist activities, the bank is exposed legally to that.) That risk is higher for an unknown small company than a more known quantity. SVB specifically said "we're prepared to take on that risk"; the big banks... not so much.

SVB also has built extensive relationships with a bunch of VCs, and will generally accept one of those VC's vouching for a new small company as a signal in favor of it being legitimate. The BoA's of the world don't do that sort of thing.

(Source: a former colleague in the fintech space explained this to me.)

> > tech startups often come with a massive amount of money that they immediately want to put in the bank

But this is not true, the startup is nothing but an empty box with just a handful of dollars in the account in the very beginning. They are not that different compared with a gas station or a mom&pop shop you mentioned. That is until it gets the first VC investment.

Although there are millions of startups, there are only about 2000 VC funds in the US, for sure the banks look at the sender and even if the check is in the millions they'd know it's legit because of the sender which is known and famous , and it's also known to make wire transactions in the millions to finalize their equity investment

Sure, that all sounds logical, but... it's not actually how it works in practice. ::shrug::

KYC is not a completely standardized process.

There are ways to go above and beyond the standard SSN/database-based approach that can mean the difference between a (compliant!) approval and a "sorry, but our identity provider says you do not exist”.

These are very likely more costly, both in implementation and day to day operation, so banks generally only do that if they are interested in that clientele.

The same goes for fraud prevention (“Sorry, we only accept customers with a Verizon/AT&T/T-Mobile postpaid plan, and if you ever dare to initiate a transfer from a foreign IP while traveling we will immediately close all of your accounts”).

Obviously none of this would have happened had the bank been in a stronger position. But a better outcome was perhaps possible if someone or a group had stepped up, rather than running for the exit as fast as possible.

This ignores the voices crying in the wilderness for months about dangers at the bank.

"The risk for $SIVB is that deposit outflows accelerate at such a pace that it is forced to either raise equity capital and/or sell down its HTM securities portfolio, thus realizing substantial losses. You can bet that $SIVB is praying for a Fed pivot!"

https://twitter.com/RagingVentures/status/161582608803847373...

You can pick any topic, any industry or any company and you'll find someone on the internet calling the doomsday clock on it. Identifying who was right after the fact is not useful, just like how saying the lottery numbers after they've already been broadcast is not useful.

That's true to some extent - I could spin up a few hundred accounts predicting something specific happen on a specific date for the next couple of years (a Russian surrender, Boris Johnson sex scandal, whatever) and claim that I'm Nostradamus when one of them hits gold. But it seems like this account accurately predicted not only that it would happen but also predicted the manner that it would happen, and explained in detail why it would happen. That feels a bit more substantial.

> Identifying who was right after the fact is not useful

Why not? It shows who was actually looking at the numbers and who was not buying on the popular narrative. This is a public company, now looking back, there are a lot of warning signs. Turns out that even a lot of professionals DID know and told us about those warning signs.

Nothing to do with being lucky and no comparison whatsoever with the lottery numbers, they based their assessment on public information available to all of us, not randomly guessing that one day SVB might fail.

This makes no sense at all.

You’re saying that we should ignore detailed analysis that correctly diagnoses issues - for no reason at all?

They're claiming quite broadly that reality is unknowable, ultimately. That's where you end up if you follow their premise. Nobody can know anything with certainty, in other words.

If they had evidence for it at the time then why wouldn't it be useful to identify them after the fact?

I see the point you're trying to make. Conspiracy theorists should be treated as broken clocks. If people have evidence but are simply being ignored then I think it's wise to listen to those people.

Blaming one man for the rottened culture of an entire industry. The people who made the decision to withdraw money from SVB are supposed to be sophisticated. They're certainly well compensated. Yet they acted like bunch of illiterate peasants. The whole episode really demonstrated the disappearance of critical thinking from the American tech industry. This primitive monkey-see monkey-do mindset has come to dominate just about every aspect of it.

if it was your money at SVB on the line - with two or three commas - you would think differently.

Or to put it differently - if you were the person to manage money with couple commas, you would have done the same.

It is classic prisoner's dilemma. The more there are participants - the less likelihood that everyone will act in a coordinated manner for common benefit. Two persons maybe can call each other and agree, but hundreds/thousands? unlikely

A prisoner's dilemma where prisoners are allowed to talk to each other isn't much of a prisoner's dilemma.

it is still prisoner's dilemma, because the fact that you talk is not binding. Anyone can agree on the phone and pull money immediately after call "just to be safe"

talking - means you can lock out everyone in one room and let them collude. This is not the case here, because the list of depositors at SVB is not public and it takes only a few people to start chain reaction of withdrawals

>Or to put it differently - if you were the person to manage money with couple commas, you would have done the same.

No I would have immediately had a private candid conversation with someone at the FDIC who would understand.

All good, but there's no denying that SV is a meme machine.

> Yet they acted like bunch of illiterate peasants.

Anyone who withdrew their money was acting rationally.

There is 0 upside to leaving your money in a bank that is at risk of experiencing a bank run.

Aren't most banks at risk of experiencing a bank run?

In what sense did they act like illiterate peasants? Trying to withdraw funds was the only rational act, as soon as the run started. What possible upside do you have for leaving all your money at risk?

They created the run, forced the fed to step in, and the result is they're all keeping their money. If it's stupid and it works, it's not stupid.

I mean, Peter Thiel has undeniably shaped startup culture for the last two decades, in particular 2008-2014 or so.

Isn't that kinda like blaming the crowd when someone yells "fire!" in a crowded theater? I don't know how much influence Thiel had in this particular failure, but I don't think it's appropriate to completely absolve those that triggered the start of the bank run from blame.

Especially since in the case the theatre was on fire, at least a little bit.

Passive voice in a headline is always a red flag. His role "was scrutinized" by..."journalists and critics." That's true, but it's not news.

Some context: "According to @FastCompany, it was Republican billionaire Peter Thiel who started the #SVB withdrawal frenzy, with little basis. Then it snowballed."

Meanwhile Sacks was crying for an "intervention". Pathetic.

> That same day, Peter Thiel’s Founder Fund advised companies in its portfolio to pull money from the bank, and a host of other venture funds followed suit.

https://www.fastcompany.com/90864027/why-svb-failed-silicon-...

Yes, the Fund which had had issues using the Bank recommended the Fund's Companies stop using the services of the struggling Bank.

Seems to me like this is how business would be conducted, I'm not sure where I would look deeper to understand how this is nefarious?

I read earlier today that Thiel and many other people actually took action after reading a reputable newsletter called The Diff.

Found the reference.

https://twitter.com/byrnehobart/status/1628779894183272452?s...

I leave it to others to judge the validity, but I found Brad DeLong's epithet for Thiel amusing (https://braddelong.substack.com/p/saturday-night-thoughts-on...):

> Even so, SVB knew it had gotten itself into trouble—that it had put too large a share of its assets into long-term Treasuries that it intended to hold-to-maturity, and that while it was notionally hedged against interest-rate duration risk by this hold-to-maturity strategy, that strategy put those assets outside the circle of those available to meet unexpected withdrawals, and so caused liquidity problems. SVB was, I am told by sources who really should know, because they talked to people talking to people doing the deal, that SVB came within twenty minutes of getting enough additional cash to fix likely problems.

> Then chaos monkey Peter Thiel showed up: advising companies to pull their money out of SVB.

Hoping interest rates won’t go up is hardly “notionally hedged”.

Insightful writing but that man needs an editor in a bad way.

> notionally hedged against interest-rate duration risk

WTF does that mean?

Breaking down the full context of the sentence makes it easier to parse

>notionally hedged against

on paper, SVB had protection from...

>...interest-rate duration risk

the danger that rising interest rates would mean it lost money on long term bonds at the historic (low) rate...

>...by this hold-to-maturity strategy,

using a common financial technique that valued the assets in question at their final value, not their current market value...

>that strategy put those assets outside the circle of those available to meet unexpected withdrawals

however, doing so meant those bonds weren't available if they needed immediate cash

Excellent explanation; I think understand the whole situation better thanks to you.

Getting a little more specific, notionally hedged means that Assets (the banks investments, originated loans) > Liabilities (deposits). But as you said, on paper.

The 30Y bond was "declared" to be held-to-maturity, meaning you didn't have to book the paper-losses from the Fed Interest rate hikes / change in interest rates over the past year.

But of course, that ended up not being true, now was it? So it was only 'notionally' hedged, not truly hedged.

Right, if hedging isn't necessary for those bonds then I guess one way of saying it is that they're "notionally hedged". Another is that they weren't hedged.

Be that what it may, declaring some bonds to be "held to maturity" is common practice in banking.

However, for _these_ bonds, and so much of it, to be declared "held to maturity" is a mistake. There's always wiggleroom in how accountants add up the numbers. They messed up on this part.

It means that your bonds having a low interest rate is only a problem if you plan on selling the bonds instead of holding them until maturity.

No? If you hold a 1.5% bond to maturity when the cash rate is 4.5% and projected to rise further you lose money in a very literal sense. Also they had to sell some at loss to just keep going before any gossip of trouble.

You lose earnings. You don’t lose the stake. But when you are forced to sell early, you do lose the stake.

Money is money, lost earnings are just as lossy as lost anything else. You could say they'd lose less if they "wait and hold"-ed, but they couldn't afford that, again, even before any hint of a bank run, and the risk exposure was increasing.

yeah in that regard SVB also lost hundreds of billions on trades it could have made optimally in the market with those funds (looking with hindsight).

Should you look at the opportunity costs for lost potential gains in this scenario -- yeah. Does it "lose money" -- no, not unless you are forced to sell before maturity.

lost earnings are a wish for what could have been, not lost in reality.

When you own a 1.5% 10-year and balance it against a 3% deposit your losses are very real and amount to 15%. If you don't offer 3% deposits you lose clients and your problem just got worse.

I think it's fair to think of "notionally" as "not actually".

Coming within 20 minutes is "too little too late".

When a building is on fire, no one is going to (nor should they) blame you for trying to get to the exit.

Did Peter Thiel cause the bank to fail? No, their mis-management did.

Did Peter Thiel try to safeguard his companies' bank positions? Yes, so they can make payroll and operate.

Who are these people to throw blame, when the building's still smoldering ashes and the smoke hasn't cleared. Maybe he called the CEO and got bad messages. Maybe no one talked to him, so he said, "F it, pull out". No one yet knows all the factors which caused the failure, but let's start with the company itself, not its customers.

> Did Peter Thiel try to safeguard his companies' bank positions? Yes, so they can make payroll and operate.

Seriously, if I was a CEO trying to make payroll right now and I found out a board member knew my bank was screwed and didn't try to help me, I'd be working on a lawsuit.

Thiel did his duty as a board member and investor. He should not be blamed for acting rationally. The bank should be blamed for making a run the only rational choice.

What do Peter Thiel's political party and contribution activity have to do with Silicon Valley Bank's solvency?

Good question.

Who eased the Banking Regulation limits from $50B to $250B, allowing SVB to take Billions during the pandemic and invest them in low interest MBS without hedging them appropriately?

https://www.reuters.com/article/us-usa-trump-dodd-frank/trum...

Is that a friend of Peter Thiel? Someone he's been a vocal political and financial supporter for?

Trump signed a bill passed by both houses of Congress; so the "who" is Trump, roughly 51 senators and roughly 213 representatives.

It's not like Thiel called up Trump and they made this happen over lunch.

Wow, so party line vote? Interesting.

SVB lobbying using McCarthy's chief of staff. Hmmm.

Think Thiel might have made a call? Maybe since he had so much money (of his investees) in it? Wasn't he recommending SVB?

Just asking questions.

> Wow, so party line vote? Interesting.

I don't know. I didn't look up the vote. My point was that it wasn't only Trump and instead involved hundreds of others.

I have many reasons to dislike Thiel but being first in line for a bank run is not one of them.

SVB would likely have had a run eventually given that the increased withdrawal/desposit ratios of a cooling VC market would have eventually forced them to lower interest on customer deposits very low compared to other banks (because they had a lot of underperforming assets in their books in their HTM portfolio), at which point a lot of deposits would have been moved elsewhere naturally, forcing the sale of non-HTM securities and probably eventually forcing the sale of HTM securities at a loss (triggering insolvency).

One of the first quotes of this article points to Dave Troy's "research" which as far as I can tell is lizard-theory without the lizards. A catchy tweet concludes it in https://twitter.com/davetroy/status/1634871362744651776?s=20 but the thread is some sort of "don't read what they say, their actual secret motive is XYZ and to overthrow the government!".

Dave Troy is very well researched, and is totally on the money in almost everything he says. Lumping him in with right wing conspiracy theorists is a mistake.

It is possible for a normally-reasonable person to have a moment of panic and say something foolish.

Even if that were what was happening here, would you describe "saying something foolish but being otherwise reasonable" as "lizard theory without the lizards"? If you thought someone was generally well researched, but was incorrect in one instance, would you call their research "research"?

There are probably thousands of VCs and even more startups who had accounts with SVB. You are telling me, Peter Thiel saw this before anyone else did?

This indictment only shows how good Peter Thiel is at his job.

Everyone saw the same quarterly report saying that they (SVB) took a $1.8b hit and needed to raise capital via a stock offering. Peter Thiel decided to move his funds elsewhere. Does that make him the bad guy?

It was always going to be someone who noticed that SVB's idiotic investments had put a hole in its balance sheets, and that it was largely funded with hot money that would depart when that hole was noticed.

Blaming Thiel for being that someone is just saying he was more alert than anyone else.

Yelling fire when there is in fact a fire is not a crime. What is this?

Bank runs are self-fulfilling prophecies. So it's not a crime, but it very possibly could be the cause.

SVB was screwed.

They bought at the tippy-top of the bond market and didn’t bother to hedge interest rate risk. The unreported losses were huge.

It was just a matter of time before they bled deposits, were forced to sell and mark to market. Eventually people would notice and a panic bank run would happen.

This actually could have occurred as early as Jan when others started to discuss the problems and predicted the bank failure.

What about forcefully yelling fire inches away from a minuscule fire, thus literally fanning the flames and putting it on the path to becoming a bonfire?

This seems more like blowing on a tiny ember and yelling fire at the same time.

Just like Zhao blew on a tiny ember at FTX.

No. Nice try. Cute. But not at all.

1) FTX held assets, not deposits that are understood to be fractional reserve.

2) FTX used the majority of those assets to buy bullshit.

3) The bullshit dropped in value by 80% (before Zhao yelled fire).

4) Everyone who gave FTX any money lost almost everything, on top of the equity investors getting wiped out completely.

5) SVB had something like 20% of assets held in long-term treasuries that "only" lost 25% of value - in a world where it's understood this is how things work and there's regulations in place and, even still, no depositor is losing money...

Which snowflake started the avalanche?

How much can one blame Peter Thiel when he turned out to be right? The economy would be a lot more robust with this kind of repeated stress testing. I don't buy all the narratives about "SVB was solvent, just had a timing issue" what kind of argument is that? Timing is everything and time is money.

That said, I agree that it makes sense to investigate everyone's involvement to uncover any ulterior motives or shady dealings.

Blaming somebody for saving his money?

I really doubt that Mr. Thiel's role was intentional. He was probably just being a good steward of his portfolio's accounts and his spidy sense was going off.

I don't think it was like, "Hey, I know what, I've seen A Wonderful Life. Let's see if we can do a modern day version of a bank run. Everyone, get your money out of there."

His actions might have been the spark. But the tinder was there and it would have sparked by any other person (of similar influence) taking notice. The bank is at fault for this, not any depositor.

The washingtonexaminer is not known for its fair and balance reporting.

This is what's odd here. TWE is a conservative outlet that you'd think would align with Thiel. Possibly this reflects the fault lines that are developing on the right?

How about Reuters?

https://www.reuters.com/article/us-usa-trump-dodd-frank/trum...

It's objectively hilarious that the top VCs put on their "banking expert" hats and misdiagnosed SVB's public statements so badly that they created a run on their own bank.

Let's be honest, very few of the VCs calling their founders telling them to pull their accounts had any clue about what "held-to-maturity" vs "available for sell" meant in the context of SVB's investment portfolio, or had any real knowledge about what the actual issue was within the bank. They were just hearing rumors/reading tweets that the bank was going to collapse and taking it at face value without any diligence.

They made the calls, retweeted the tweets, and then read the explainers on substack the following day to figure out what was actually happening. It was pure herd panic behavior and should make a great case study some day.

This is a classic prisoner's dilemma and has been studied to death already. Pulling your money out is rational behavior as soon as there is any risk that you won't be able to in the future - yes, even if that behavior is what causes it.

The subtext of your comment is that it would have been smarter to leave money in the bank. That's not how the world works.

There's an interesting discussion around how social institutions can coordinate mutual non-defection (hint: it probably looks a lot like the recently announced "government guarantees deposits"). But "lol dumb VCs" just shows lack of understanding.

It may be rational to withdraw money from the bank (which raises risk for everyone), but it would be superrational [1] to buy 10-year bonds from the bank (which lowers risk for everyone). Yes it is dumb for VCs to not understand this basic principle.

[1] https://en.wikipedia.org/wiki/Superrationality

This little round of prisoner's dilemma had thousands of participants. It would be irrational to assume all the other players are superrational.

Explain how burning the system your community depends on to the ground when it wouldn't have burned otherwise is "rational"

Because there is no “community” in this situation, just individual actors in a life and death situation, running for the exits

The bank provided many benefits unique to the startup/VC community, otherwise people would not have stashed dumb amounts of uninsured cash there. Those benefits are now gone.

Since you bring up game theory, the optimal strategy is to defect (withdraw your money) SECRETLY so that the bank has the highest chance of survival and your venture debt loans, relationships, etc all survive. Instead, some VCs PUBLICLY/LOUDLY withdrew their money and created a panic, which doomed the bank to a massive bank run.

You're wrong: https://news.ycombinator.com/item?id=35103411

And how poorly does it reflect on the SV venture capital community that they couldn't muster that kind of cooperation?

> Let's be honest, very few of the VCs calling their founders telling them to pull their accounts had any clue about what "held-to-maturity" vs "available for sell" meant in the context of SVB's investment portfolio

Uh, the fact that they knew what it meant was why they freaked out. They knew the bank was not liquid.

Plus you don't need to be a finance professor to know that if a bank is having trouble doing normal bank stuff like processing transactions, something is wrong. And a lot of people were going to notice that in the next few days. If it wasn't Thiel it would have been someone else the next day realizing that the bank was screwed.

Don't blame people for starting a bank run. Blame the bank for making a run the rational thing to do for anyone who cares about their money.

No bank is infinitely liquid. Processing transactions at the volume that happened during the run is the opposite of "normal bank stuff." Neither of those points make any sense, and they reinforce the point the original poster was making. If you think that a bank is in trouble because they can't handle a huge percentage of their depositors pulling out their money, you don't understand how banks work.

The bank was having trouble processing routine transactions for Thiel's fund. That is definitely normal bank stuff. The bank was illiquid to the extent that it was impacting day to day operations.

The events are described here: https://news.yahoo.com/thiel-founders-fund-withdrew-millions...

It’s fun to call elite people foolish and sometimes they are, but your picture of what was going on at SVB is not accurate.

SVB was not guaranteed to collapse, but their marginal solvency relied on depositor behavior that was already changing. They had complementary problems on both sides of the business and were getting squeezed by it. Nobody can know how long they would have lasted without last week’s run, but things were looking dicey and they easily could have failed to satisfy withdrawals even if there was no public knowledge of their situation. The publicity and run just resolved the genuine underlying tension that was already there.

There has been some unsourced reporting from insiders saying there were only about 20 minutes away from raising the required capital necessary before the VCs rang the alarm on Twitter.

SVB mismanaged the situation by announcing the raise before it was happening, maybe in the name of transparency, but that doesn't mean they didn't have a workable plan for patching the situation. What they (and no bank anywhere) had a plan for was a massive coordinated bank run within a single day.

>It's objectively hilarious that the top VCs put on their "banking expert" hats and misdiagnosed SVB's public statements so badly that they created a run on their own bank.

I appreciated another comment that shared the same sentiment, but said something along the lines of, "Tech companies DDOS'd their own bank".

> misdiagnosed SVB's public statements

What's misdiagnosed? That SVB is holding half its assets in 1.5% long term HTM bonds in a 4.5% interest rate environment?

That should only be a concern for investors, not depositors. The HTM lockup is only a concern for depositors if they all start trying to withdraw at once...which is exactly what happened due to the VC-fueled panic.

The depositors were all trying to withdraw all at once, because the depositors were startups that are spending money, but aren't getting any new funding injections or revenue.

That normal behavior triggered the insolvency.

> That normal behavior triggered the insolvency.

Its not normal to have 42 billion withdraw in a day, net. That's 20% of total assets. If your hypothesis is correct, then all of the companies using SVB would have spend all their money in just over a business week.

They were insolvent before that 42 billion was withdrawn. The bank run only started after they announced their insolvency.

SVB sold all of its liquid securities to finance regular customer withdrawals, and came up short. It announced that it's going to be borrowing money, selling more shares, and that it's going to mark down it's long-term assets.

The bank run started after that announcement.

If they were insolvent before the 42 billion was withdrawn, how did the people withdraw the 42 billion?

Insolvency means that they owed 220 billion, while owning 200 billion worth of assets.

SVB had enough cash-on-hand, and could borrow money against their assets in order to serve 42 billion dollars worth of withdrawals.

Their balance sheet still had a huge hole, from the moment that they marked-to-market their long-term treasuries. Which was before those 42 billion dollars were withdrawn.

I'm being very specific here, they had ~175b in deposits. There assets may or may not have been more or less than deposits, that is immaterial. They were insolvent because they did not have enough cash/credit/liquid capital to cover the predicted withdrawals. That is the why they are insolvent.

Long term, yes, the asset state would have been a problem, and would(should) have been marked up as a ~25% loss on the bonds that were being hammered by inflation.

but at no point would that have been a big issue for the stability of the bank. It would have hammered their share price, but not deposits. It probably would have required a change of management, but again, not fatal.

The issue here is that "asset insolvent" is rarely described like that, it normally at the point where you declare bankruptcy because no-one will buy you out because you liabilities are way more than your income.

HOW do you have hundreds of portfolio companies with uninsured millions in a bank. Please can some venture capital expert explain? Tell me it's not just hubris.

Can't speak for everyone. But a train of thought I've heard from founders for years (when I've suggested moving their huge pile of investment money into something other than a bank account) goes something like this:

We are not a portfolio management company. We aren't here to manage investments, we are here to build something of value: our startup. The money that is invested in us is best spent on _us_. They view us as a good investment, and we view ourselves as the best possible return on our time and money. We are all on in our venture and our outcome is either 0 or 1, we are going to be the 1, so every dollar we get is best invested in ourselves and not [X]. No other investment will yield the same return as our outcome if the promises we've made to ourselves and our investors hold true.

So they park their money in a bank account, use that to calculate runway, and treat that runway as an ongoing investment in their startup. The bank losing their runway wasn't really a substantial risk compared to the other existential risks a startup faces on a daily basis - at least not until last week.

My understanding is that when people refer to deposits being insured in America they are nearly always referring to the FIDC insuring $250k on deposits (not for values greater than that amount, and not for stocks etc).

Is it common practice for other banks to insure deposits more than what SVB? I keep hearing the 'how could they not have insured X% of their accounts'. That question adds to the hysteria if most banks wouldn't hold insurance if they had those clients. There isn't a lot of reporting separating whether SVB was underinsured or whether the only difference is that other banks have a lot of individual depositors vs catering for businesses.

Might be a basic question from a STEM nerd with not a lot of finance background, but what are "insured" millions held in? Special class of corporate accounts?

The bank (every single bank) pays the FDIC a fee on every insured bank account. The FDIC puts all that money into a bucket and pays out from it whenever a bank fails. They also have a line of credit with the Federal Reserve that they can draw on if the bucket isn't large enough.

So the FDIC pays out everybody up to $250k, closes the bank, liquidates the assets, and then pays out the balances above $250k until they run out of money.

Sweep accounts, is one answer I’ve seen floating around

Some other suggestions here, for personal account holders who are fortunate enough to have that much cash: https://archive.ph/tyCy5

"Don't withdraw your money or you stand to lose all of the non-FDIC insured money you don't withdraw" is an absurd stance. If tomorrow I realized that, if I were too late to the withdraw party my account would turn into a $250k IOU from the FDIC, I'd absolutely move my money to another account.

The bank was belly up - placing the blame on the people who expected their bank accounts to be liquid doesn't seem like the correct take. When you put your money in a bank, you expect to be able to pull that money out at any time for any reason. One of those reasons is suspecting the bank is incapable of surviving you withdrawing your money.

Why wouldn't they? What's the worst case scenario? SVB blows up, the Fed halts hiking rates because of the fear they injected to the financial system, and they finally see the light at the end of the tunnel of rate hikes, because their entire grift is based on 0% interest rates. Sounds like a win-win to me.

Can’t wait for the day there isn’t this hive mind surrounding VCs and the tech elite at large. Bank runs, mass layoffs, etc. All of them are just copying what others are doing.

The tech industry sure has knocked their standing in other people's eyes down a ton this last little while.

These are the people who eat financial sheets and reports for their breakfast, lunch and dinner.

Do you seriously think they don't understand such basic financial assets?

Why do you say misdiagnosed in light of the scale of unrealised losses at SVB vs its equity?

5 days too late to the thread. But it is refreshing to see Sanity still prevails on HN. No more politics and ideals over rational. As they were during the past 5 years. Top 4 upvoted comments were defending Peter Thiel.

Yes it's all his fault for the bank refusing to hedge interest rate risk. Damn that Peter Thiel.

Theil will probably appreciate that his crime was that he was the first to stop clapping.

This narrative was taking form over the weekend, and it's intended to edge him out of funding or participating in the '24 election. It doesn't need to be true, it just has to stick.

Warrens latest article about the 2018 rollbacks and how that allowed banks to prioritise short term profits is pretty good - it outlines how we tried to pass laws to avoid another 2008 crisis and then some of these were rolled back. We need to undo that rollback.

I like to imagine it going down like Margin Call, with Thiel at the head of the table "this is, ur ur, this is, ur ur, it". Maybe with an "overdetermined" thrown in there.

If anyone hasn't seen Margin Call, give it a watch. Fantastic movie.

Yelling fire in a crowded theater is in fact the right thing, if the theater is on fire.

I wonder if Peter had shorted SVB

I wonder if the SVB CEO sold shares 2 weeks ago

Hopefully.

so let's get this straight: VCs/startups are bad because they didn't scrutinize the bank's finances before putting money in it (how many businesses actually do this for their bank?). and they were somehow supposed to know that the bank was dodgy months or years before it actually became dodgy.

and they're also bad because one VC looked into the bank's finances, noticed a real problem, told people about it, and those people did the rational thing and pulled their money out.

Managing that risk is what the customer CFOs were supposed to do. Your average retiree or semi wealthy person knows the FDIC limits and manages their portfolio around them.

This is not a new risk for businesses in any industry and financial services exist to help manage that risk for companies with cash on hand.

I would instead ask why the SVB customers didn’t manage this risk. Others on HN said that banking with SVB was a requirement placed by many VC companies, which does tie the customer’s hands.

Are you really expected to spread out all your day-to-day business cash around tons of different accounts just to stay under the FDIC limit? How is that meant to work, logistically?

Let's say you're a company with like 50 well-paid devs, they make 200 grand each on average, so monthly payroll for them is 50 x 200,000 / 12 = ~830,000, so you'd need accounts with four different banks to stay under the FDIC limit just to manage payroll for engineering. What about everything else?

Blame the messenger. Media is going crazy about this with no fundamentals at all. SVB was already doomed at least a year ago when they bought HTM assets.

Ask HN: Is there an easy way to know a bank's level of insured vs un-insured deposits?

It's in their bank filings, so reporters can and do dig it up. For SVB, it was 96% uninsured

https://www.semafor.com/article/03/11/2023/hedge-funds-offer...

To add to that, does it matter? The government is backing all deposits so does that mean bank runs are a thing of the past now?

The bank was nearly fully capitalized with low risk investments. Everyone would have gotten their money back anyways, it would have just taken 5-10 years.

Imagine what would happen if startups could not access their capital? By the time funds were available for withdrawal, the businesses would be dead. The regulators then have to track every funder to every dollar to return money. It would take a decade for this to happen.

At the same time, these startups all had a CFO whose job was to manage that financial risk. What if they had a late payment from customers or a supply chain delay, or were simply locked out of their accounts due to a cyber event or unavailability of a key employee? Did they have any contingencies like line of credit or instruments outside SVB? They took other risk reductions like insuring their office space, etc.

In addition every offering and statement from SVB shows >$250k is not insured but they treated it like nothing bad could ever happen there. Even your average retiree knows their life savings in a bank is only covered to FDIC limits.

This risk for businesses with cash is not new. Financial services like sweep accounts, negotiable instruments, etc. existed for decades. Is it just that SV entrepreneurs are too smart or not smart enough to manage these risks? Or was it the VC firms that forced their hand by requiring them to bank at SVB (noted as a VC funding requirement by others on HN).

The companies can sell their invoices or ownership of their deposits on the market, or use it as collateral for recovery. The CFOs job was to manage financial risk. They failed at this and their companies are at risk because of it. The FDIC takeover means they have unfettered access to at least $250K as of today, so it’s not quite as bad. And the FDIC will unwind SVB’s current assets through their insurance trust or by finding a buyer. The SVB stock and bond holders will lose, the depositors will lose much less.

But it makes you wonder how long the C-suite knew this liquidity issue given they had no risk manager for most of last year (also noted in other HN articles).

Getting your money back in 5 years at current rates means getting back 80 cents on the dollar.

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