Crisis of confidence
President Carter, and Silicon Valley Bank. Also, 7 other things worth knowing today.
Let's talk about the collapse Friday of Silicon Valley Bank … and President Jimmy Carter.
First, the bank. This was the biggest bank failure since the 2008 financial crisis, and after it happened Friday, a lot of very smart people(TM) warned that it might very quickly affect the rest of us.
Just a quick recap:
In the beginning ... well, I'm not going to go back that far, but just know that Silicon Valley Bank was (is?) one of the top 20 U.S. commercial banks. Last week, it announced it had sold a lot of securities at a loss, and it was going to try to raise $2.25 billion to solidify its balance sheet.
The bank's stock plummeted, and many of its shareholders—largely tech companies and venture capital firms—moved quickly to try to get their money out.
Result: a classic bank run—only a 2023 version, in which everyone tries to move instantly/online/all at once—and they share what they’re doing with others online and in chat groups, thus triggering even more depositors to try to get their money.
The FDIC took over SVB in the middle of the day on Friday, putting its $175 billion in customer deposits under government control. (The middle of the day timing, as opposed to “close of business,” tells you just how precarious things looked.)
Next up: calls from some for a government bailout. For depositors, if you can't get your money out of the bank, how do you pay your employees and vendors? (Most important, of course: How do you pay the amazing daily email newsletter writers who run your advertisements?)
Sunday was fun. In the morning, Treasury Secretary Yellen said U.S. taxpayers would not bail out the bank. But then yesterday evening, the Federal Reserve and the Treasury said they’d use emergency measures to ensure that all depositors from both SVB (and another bank, Signature Bank, which closed Sunday), will be made whole.
So … crisis averted? Maybe? I'm not going to pretend that I know for sure, although the federal intervention, which I assume will be super-controversial, does seem like it will probably stem the tide.
And with that, here's my bridge to President Carter. Especially when we talk about bullet point #3 above—the part about the light speed, 2023-style bank run—I kept thinking of three words: "crisis of confidence."
That phrase is probably most associated with a famous speech Carter gave in 1979; something I'd heard about many times but never actually read or watched until yesterday.
It turns out that it’s amazing (video here; transcript here), and almost impossible to imagine today. Carter spends the first quarter of his prime time, Oval Office address quoting Americans who have told him he hasn't been acting like he’s up to the job:
"Mr. President, you are not leading this nation—you're just managing the government."
"Some of your Cabinet members don't seem loyal. There is not enough discipline among your disciples."
"Mr. President, we're in trouble. Talk to us about blood and sweat and tears."
"When we enter the moral equivalent of war, Mr. President, don't issue us BB guns."
It's an incredible display of humility and transparency, but I can also see why it's remembered for having had the opposite effect from what Carter might have hoped. Plus, the president spends roughly half of his remaining time talking gloomily about—well, exactly what I said, the "crisis of confidence."
It is a crisis that strikes at the very heart and soul and spirit of our national will. We can see this crisis in the growing doubt about the meaning of our own lives and in the loss of a unity of purpose for our nation.
The erosion of our confidence in the future is threatening to destroy the social and the political fabric of America.
Looking at this with the benefit of hindsight, it seems to me that Carter identified a legitimate crisis, but that he also inhibited people's confidence in his own leadership simply by being so honest about the other crises of confidence.
(I read Peggy Noonan's column last month in the WSJ about the same speech, so I should credit her conclusion: "It was, in fact, a good speech—brave, original and pertinent to the moment. It failed because he was exactly the man who couldn’t give it, and he gave it at exactly the moment it couldn’t be heard.")
Anyway, I know I'm connecting some unusual dots here, more than 40 years apart. (Fun fact: Carter had 10 full days to work on his speech; 10 days ago now feels like ancient history.)
I suppose the connection is that then, like now, people want to be told that things are going to be OK, and they want to feel like the people telling them that have some idea what the heck they're talking about.
And so: Personally, I think things are going to be OK!
(But I'm still going to be watching like a hawk.)
Thoughts? Predictions? Crises of confidence? Recollections or thoughts about Carter’s speech, or how to express confidence now? Let us know in the comments.
7 other things worth knowing today
The Academy Awards were last night. Everything Everywhere All at Once won seven Oscars including Best Picture. Also, the gift bags some attendees got were valued at $126,000; here’s what’s inside. (The Guardian, Variety)
Stanford University and its law school have apologized to a federal appeals court judge after he was met with vocal resistance from a campus group called OutLaw when he tried to deliver remarks in front of students. (SF Chronicle)
A Michigan woman who bought her grown son four guns, despite the fact that he had been involuntarily committed for mental health treatment and declared legally incapacitated by the state of Michigan, which prohibited him from owning a gun, called the FBI after she became convinced he was serious about killing Michigan Gov. Gretchen Whitmer or other liberal and LGBTQ people. (Freep)
The University of Rhode Island has removed a partial Malcolm X quote from the facade of its main library 30 years after members of the school’s Black Student Leadership Group and others protested that the shortened quote misrepresented the fuller meaning of the civil rights leader’s message. The inscription read, “My alma mater was books, a good library ... I could spend the rest of my life reading, just satisfying my curiosity,” and cut out part about being "out here every day battling the white man." (AP)
Roughly 75% of Americans who moved last year have regrets. Tied for top two: “I wish I moved to a bigger place,” although as I read that now I’m not sure if they mean a bigger house, or a bigger city (20%); and “I miss my old home” (also 20%). (CNBC)
An investigation by the Philadelphia Inquirer connects the astroturf at Veterans Stadium, the Philadelphia Phillies’ former home, and the deaths of six retired MLB players. All of the players died of the aggressive brain cancer glioblastoma before the age of 60; the Inquirer found dangerous “forever chemicals” in the turf, which was produced by Monsanto. (Front Office Sports)
President Biden selected a new design for Air Force One after discarding the one former President Trump chose during his administration. It's a lot closer to the original and current versions than the red, white, and blue design Trump had picked. (The Hill)