Gongol.com Archives: March 2023

Brian Gongol

March 12, 2023

Business and Finance Good luck, depositors

Things are rarely as bad as they seem, but they can get much worse much faster than you imagine. It's a prudent guideline to keep in mind, whether you're unexpectedly stuck in a pandemic or staring down the barrel of a bank collapse. ■ As a matter of prudence, it makes sense to maintain a cheerful outlook while simultaneously observing the Scout Motto: Be prepared. Unfortunately, though, material wealth and social esteem don't always flow in those directions, which is why a small universe of tech-bros, "founders", venture capitalists, and associated folks rack up high audience counts while boasting about themselves through social media. ■ One, for example, has taken to Twitter to announce that he was alerted to panic about Silicon Valley Bank "in one chat with 200+ tech founders". Putting aside how self-important and nauseating that supposed chat certainly must be, it's quite the extraordinary act to implicate one's self in initiating a bank run based upon a rumor mill of dodgy legal status. ■ No banking-related panic is good for society. But perhaps it's also worth observing that narrowly-focused priesthoods can easily get themselves into trouble when they overestimate their capacities. (And make no mistake: There are lots of priesthoods that have nothing to do with religion.) ■ Having one high-demand skill (like coding) or landing some hits in a high-risk market (like venture capital) isn't the same as having high general intelligence. Unfortunately, social reinforcement mechanisms tend to tell successful people otherwise, which is why it's easy to find "angel investors" type-screaming "You're uninformed!" at online passersby and "venture capitalists" trying to cram for "Banking 101". ■ When things go bad in banking, they can go bad in a hurry. That's self-evidently why the FDIC is taking extreme measures. But the consequences will go far beyond deposit insurance limits and also should certainly involve some moral reassessment of people who have made bad choices out of hubris. ■ It's a bad idea for any considerable number of people to choose heroes based upon their willingness to trumpet their own victories and take credit for skill when dealing in matters where luck can and often does prevail. In the words of Benjamin Franklin: "As pride increases, fortune declines." ■ Luck isn't everything, but those who mistake their good luck for a superabundance of personal skill are unlikely to be prepared for those moments when luck turns south. And that can happen much faster than people can imagine.

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