Spread & Containment
Passing The Buck On The SVB Bank-Run
Passing The Buck On The SVB Bank-Run
Authored by Greg Orman via RealClearPolitics.com,
Over the last 72 hours, the demise of Silicon Valley…

Authored by Greg Orman via RealClearPolitics.com,
Over the last 72 hours, the demise of Silicon Valley Bank has been dissected in the media. What went wrong seems perfectly clear. SVB had a deluge of short-term deposits coming into the bank during the pandemic. Almost 90% of those deposits exceeded the FDIC’s insurance limits of $250,000. The bank invested those deposits in billions of dollars of low-rate, long-term debt issued by the federal government and government agencies. When rising interest rates eroded the value of those investments, their depositors, fearing SVB would fail, pulled their deposits out of the bank. Unable to meet the demand for cash, the bank closed its doors. It was a classic run on the bank.
Over the past four decades, bank failures have been largely driven by making bad credit decisions – generally loans to failing companies or investments in mis-rated mortgage securities. The SVB failure highlighted a risk in the banking the system that has largely been dormant over that period. Interest rate risk, the risk that fluctuating interest rates might cause financial stress on a bank as it did at SVB, hasn’t led to anything approximating a crisis since the 1980s.
As a result, some want to lay the blame for SVB at the feet of the Federal Reserve. They’re using this crisis to criticize the speed of rate increases. While the Fed has acted more quickly during this tightening cycle than in previous ones, banks have endured multiple tightening cycles during that four decades without a major interest rate-induced bank failure. Indeed, no other major bank seems to be overwhelmed by these recent rate increases. They all clearly took the Federal Reserve at its word when it said loudly and repeatedly that it was planning to raise interest rates.
In 1991, I wrote my senior thesis, “The Effects of Asset Size on the Level of Interest Rate Risk in Commercial Banks.” While that may seem like a particularly dull topic to fixate on for a semester, at the time it was timely. On Sept. 19, 1990, Charles Keating, the former CEO of Arizona-based Lincoln Savings and Loan Association, appeared on the front page of the New York Times in handcuffs. Keating was the poster child of financial mismanagement in the savings & loan crisis, having spent company money lavishly on personal luxuries. That crisis eventually cost U.S. taxpayers over $130 billion and almost ended the political career of a first-term United States senator, John McCain, who was one of five senators who intervened with regulators on behalf of Lincoln Savings. S&L executives went to jail. One-third of all thrifts failed. And, yes, shareholders, bondholders, and even some depositors lost billions of dollars.
Financial fraud committed by Keating and others was clearly partially to blame for the crisis that ensued. The primary villain, however, was something far more mundane and the same thing that took down Silicon Valley Bank: interest rate risk. S&Ls were legally required to invest almost exclusively in long-term, fixed-rate home mortgages. When interest rates skyrocketed in response to the inflation of the 1970s and 1980s, depositors fled S&Ls for newly formed money market accounts that paid four times as much interest. Unable to meet depositor demands without selling their low-rate mortgage portfolios at a significant discount, most S&Ls were technically insolvent. The government came up with an accounting gimmick that allowed them to write off their losses on mortgages over a long period. That fix ensured that S&Ls kept their doors open for the time being. The losses they were writing off were so large, however, if the S&Ls didn’t make high-risk, high-return investments, something they were ill-prepared to do, their failure was certain.
The question that I was looking to unpack in my thesis was simple: Are big banks better than small banks at managing interest rate risks? Having worked at a small, rural bank during the summers, I was exposed to the very detailed work they did every month to measure what would happen to the bank’s portfolio in varying interest rate environments. This was a topic of discussion at every monthly board meeting and impacted the types of loans and investments the bank was willing to make.
Larger banks had access to more sophisticated tools for managing interest rate risks. I wanted to know whether those tools were more effective than the simple measures available to a country bank. Based on the data available at the time, small banks were just as effective at managing interest rate risks as large banks.
When the Silicon Valley Bank debacle is unpacked, like the savings and loan crisis, there will be plenty of blame to spread around. Regulators, the Trump administration, and politicians who received SVB’s financial support, purportedly for supporting changes to banking regulations, are already being vilified in the press and on social media. Populist politicians from both sides of the aisle (except those from California and New York) are already pointing their fingers at venture capitalists who stoked the fear of a contagion in order to cajole the government into backstopping SVB, thereby saving themselves billions of dollars.
The failure of SVB, however, is driven almost exclusively by one thing – incompetence. Both regulators and bank management ignored something that almost every country banker in 1990 had figured out – you can’t finance long-term investments with short-term money.
Government
“True Stories… Could Fuel Hesitancy”: Stanford Project Worked To Censor Even True Stories On Social Media
"True Stories… Could Fuel Hesitancy": Stanford Project Worked To Censor Even True Stories On Social Media
Authored by Jonathan Turley,
While…

While lost in the explosive news about Donald Trump’s expected arrest, journalist Matt Taibbi released new details on previously undisclosed censorship efforts on social media. The latest Twitter Files revealed a breathtaking effort from Stanford’s Virality Project to censor even true stories. After all, the project insisted “true stories … could fuel hesitancy” over taking the vaccine or other measures. The effort included suppressing stories that we now know are legitimate such as natural immunity defenses, the exaggerated value of masks, and questions over vaccine efficacy in preventing second illnesses. The work of the Virality Project to censor even true stories should result in the severance of any connection with Stanford University.
We have learned of an ever-expanding coalition of groups working with the government and social media to target and censor Americans, including government-funded organizations.
However, the new files are chilling in the details allegedly showing how the Virality Project labeled even true stories as “anti-vaccine” and, therefore, subject to censorship. These files would suggest that the Project eagerly worked to limit free speech and suppress alternative scientific viewpoints.
Taibbi describes the Virality Project as “a sweeping, cross-platform effort to monitor billions of social media posts by Stanford University, federal agencies, and a slew of (often state-funded) NGOs.”
1.TWITTER FILES #19
— Matt Taibbi (@mtaibbi) March 17, 2023
The Great Covid-19 Lie Machine
Stanford, the Virality Project, and the Censorship of “True Stories” pic.twitter.com/v41dyC26ZR
He added: “We’ve since learned the Virality Project in 2021 worked with government to launch a pan-industry monitoring plan for Covid-related content. At least six major Internet platforms were ‘onboarded’ to the same JIRA ticketing system, daily sending millions of items for review.”
5.Just before @ShellenbergerMD and I testified in the House last week, Virality Project emails were found in the #TwitterFiles describing “stories of true vaccine side effects” as actionable content. pic.twitter.com/dKxTnxDc3a
— Matt Taibbi (@mtaibbi) March 17, 2023
According to Taibbi, it targeted anyone who did not robotically fall in line with the CDC and media narratives, including targeting postings that shared “Reports of vaccinated individuals contracting Covid-19 anyway,” research on “natural immunity,” suggesting Covid-19 “leaked from a lab,” and even “worrisome jokes.”
That included evidence that it “knowingly targeted true material and legitimate political opinion, while often being factually wrong itself.”
The Virality Project warned Twitter that “true stories … could fuel hesitancy,” including stories on “celebrity deaths after vaccine” and the closure of a central New York school due to reports of post-vaccine illness.
The Project is part of the Cyber Policy Center at Stanford and bills itself as “a joint initiative of the Freeman Spogli Institute for International Studies and Stanford Law School, connects academia, the legal and tech industry and civil society with policymakers around the country to address the most pressing cyber policy concerns.”
The Center launched the Project as a “a global study aimed at understanding the disinformation dynamics specific to the COVID-19 crisis.”
As with many disinformation projects, it became a source of its own disinformation in the effort to suppress alternative views.
It is being funded by Craig Newmark Philanthropies and the Hewlett Foundation.
On its website, it proclaims: “At the Stanford Internet Observatory our mission is to study the misuse of the internet to cause harm, and to help create policy and technical mitigations to those harms.” It defines its mission to maintain the truth as it sees it:
“The global COVID-19 crisis has significantly shifted the landscape for mis- and disinformation as the pandemic has become the primary concern of almost every nation on the planet. This has perhaps never happened before; few topics have commanded and sustained attention at a global level simultaneously, or provided such a wealth of opportunities for governments, economically motivated actors, and domestic activists alike to spread malign narratives in service to their interests.”
What is even more disconcerting is that groups like the Virality Project worked against public health by suppressing such stories that are now considered legitimate from the efficacy of masks to the lab origin theory. It was declaring dissenting scientific views to be dangerous disinformation. Nothing could be more inimical to the academic mission. Yet, Stanford still heralds the work of the Project on its website.
There is nothing more inherently in conflict with academic values than censorship. Stanford’s association with this censorship effort is disgraceful and should be a matter for faculty action. This is a project that sought to censor true stories that undermined government or media narratives.
I am not hopeful that Stanford will sever its connection to the Project. Censorship is now the rage on campuses and the Project is the perfect embodiment of this movement. Cloaking censorship efforts in self-righteous rhetoric, the Project sought to silence those who failed to adhere to a certain orthodoxy, including scientific and public health claims that were later found flawed or wrong. The Project itself is an example of what it called “media and social media capabilities – overt and covert – to spread particular narratives.”
Stanford should fulfill its pledge in creating the Virality Project in fighting disinformation by eliminating the Virality Project.
Spread & Containment
“The New Normal”: New York To Lower Math And English Proficiency Standards Due To Poor Test Result
"The New Normal": New York To Lower Math And English Proficiency Standards Due To Poor Test Result
Authored by Jonathan Turley,
I recently…

I recently wrote how public educators and unions were methodically killing public education. The best example this week comes from New York where a school board committee has solved the dismal math and reading scores for children in the system . . . they lowered the standards. This is not the first system to gut its standards rather than improve its quality of education.
As teachers and unions object to school choice, they continue to make the case for private education.
Parents are increasingly voting with their feet.
The board is simply calling the lack of proficiency “the new normal” and changing the standards. Done.
New York will permanently lower the math and reading proficiency standards after embarrassing results in state testing. It is akin to shortening the 100 yards dash to 50 yards to stay competitive on speed.
The media reported that
“A scoring committee that reports to the Board of Regents said Monday that they must take into account the results of last year’s tests for students in grades three through eight. Some schools posted shocking results — in Schenectady, no eighth grader who took the math test scored as proficient. And the scores for the third through eighth grade tests throughout the state were much lower in 2022 than in 2019, a result no doubt of the absence of in-person learning during the first year and beyond of the COVID-19 pandemic.”
This may seem insane to anyone with a proficiency in logic, but it is being shrugged off by many in New York. There is now an acceptance that the public schools cannot actually educate students to proficiency levels needed to succeed in the modern world. In the meantime, some districts are moving to a four-day work week for teachers to reduce stress.
We previously discussed the elimination of gifted and talented programs to achieve equity by artificially lowering everyone to the same level.
Other schools have eliminated the “F” to guarantee 100 percent passage rates.
Still others have suspended proficiency standards to simply graduate students who cannot reach required levels in writing, math, and English.
There is also a move to end standardized testing.
In a prior column, I was particularly moved by the frustration of a mother in Baltimore recently who complained that her son was in the top half of his class despite failing all but three of his classes. Graduating students without proficiency in English or Math is the worst possible path for these students, schools and society.
It is the dumbing down of America but administrators, boards, and unions insist that it is better for these students, who face dismal prospects for future employment. In the meantime, we are pouring billions into schools that cannot produce a single proficient student in basic subjects. If this were a business, there would be criminal fraud charges across the nation.
Government
Is The US Funding An Experiment In Digital Control In Ukraine?
Is The US Funding An Experiment In Digital Control In Ukraine?
Authored by Marie Hawthorne via The Organic Prepper blog,
Fighting between…

Authored by Marie Hawthorne via The Organic Prepper blog,
Fighting between Russia and Ukraine has been going on for a little over a year now, ending the lives of hundreds of thousands of young men and displacing millions. Ukraine’s Defense Minister, Oleksii Reznikov, invited Western arms manufacturers to test their newest weapons against Russians in 2022. And indeed, all kinds of weaponry have been flowing into Ukraine. It is truly a testing ground.
So, this begs the question, is anything else getting tested there? The Ukrainian government seems pretty willing to use its own citizens as guinea pigs, and the American government seems pretty willing to foot the bill. Are American tax dollars going to any other interesting projects?
Here’s what the US is funding in Ukraine.
Yes, actually. Volodymyr Zelensky became president of Ukraine in May 2019, and almost immediately he introduced his idea of a “country in a smartphone.”
In early September 2019, Ukraine launched its Ministry of Digital Transformation, headed by a World Economic Forum participant, Mykhailo Fedorov According to Federov, the goal of this new government department was to streamline government services, making it easier to apply for driver’s licenses, passports, and so on. Ukraine has long held the reputation as Europe’s most corrupt country, and young politicians like Federov want to take advantage of new technology to make changes.
So, in early February 2020, the Ukrainian government launched its Diia app for smartphones. Developed by volunteers from EPAM Systems, Diia has been touted as a way to streamline government services. By 2021 it had allowed Ukraine to become the first European nation to accord digital passports and one of the first to issue digital drivers’ licenses. Federov reported in 2021 that about one-fourth of the Ukrainian population was using it, and it was gaining in popularity. As of January 2023, about half the adult Ukrainian population was using it.
There is a positive side to streamlining government services. Diia has allowed Ukrainians to easily start new businesses, making all the required government paperwork easily available. I can see this being helpful for young entrepreneurs.
However, negative consequences became readily apparent, too.
Within a year of its launch, millions of Ukrainians found that their personal data, such as driver’s licenses, social media information, and banking information, were being traded online. There’s always been the risk of losing your wallet and your driver’s license, but with everything online, the risks of fraud and identity theft increase astronomically.
Early on in his presidency, Zelensky talked about streamlining the voting process via the app. Aside from the fact that experts have never agreed about the safety of online voting, by July 2022, Zelensky had banned political opposition parties and shut down media companies with alternative views. Having one central app that controls everyone’s important documents makes it far easier for any ruling party to maintain its power.
Controlling elections is only the beginning. Diia launched in February 2020, and by March 2020, Diia was helping the Ukrainian government enforce its lockdown policies, as discussed in the recent report by Redacted.
The Redacted report shows portions of various WEF summits and at 2:06 has a clip of a WEF paper saying, “This digital identity determines what products, services, and information we can access—or conversely, what is closed off to us.” Diia (and other digital identity products) have been marketed as a convenience, but don’t be fooled. Developers of this technology have seen their potential as a control mechanism from the beginning.
The Redacted report also shows clips of Federov speaking at the 2021 WEF summit, and at 5:40 he openly admits that the pandemic allowed the Ukrainian government to speed up Ukraine’s digital transformation. “The pandemic has accelerated our progress,” says Federov. “People are really now demanding digital online services. People have no choice but to trust technology.”
The Redacted report traces Diia’s transformation from a convenient service to a military tool. At 6:39, they discuss an interview in Wired with Anton Melnyk, an adviser in Ukraine’s Ministry for Digital Transformation. In March 2022, Dr. Melnyk stated, “We have restructured the Ministry of Digital Transformation into a clear military organization.”
Wartime features in an app
Shortly after the Russian invasion, Diia added all kinds of new wartime features. Ukrainians can report Russian troop movements through Diia’s chatbot, eVorog (eEnemy). Ukrainians can receive government payments even if they’re displaced. But Diia doesn’t stop there.
Diia encourages citizens to snitch on their neighbors. The wartime features allow any citizen to anonymously accuse any other citizen of being a Russian collaborator. Stalin’s rule in the Soviet Union demonstrated how wrong this can go. Ukrainians hate Stalin, and rightfully so. But using cutting-edge technology to encourage the exact same kind of community-destroying snitching is a page right out of his playbook. Between the snitching and its one official, government-approved news station, Diia is rapidly becoming Stalin in a smartphone.
Here’s why Americans should care.
In case you’re wondering why we should care about the ins and outs of Ukrainian bureaucracy, there are two big reasons worth paying attention to this. The first is that Americans have been paying for much of the technical development. The second is that the “government in a smartphone” concept is rapidly spreading around the world.
USAID has been supporting Ukraine’s digital transformation since 2016. The volunteers that developed Diia were Ukrainians working with EPAM Systems, a software engineering company based in Pennsylvania. And EPAM Systems may be a private company, but USAID isn’t. It’s taxpayer-funded.
After the Russian invasion, USAID donated another $8.5 million to Ukraine to help develop Diia’s wartime features. USAID director Samantha Power spoke at the World Economic Forum in 2023, touting Diia’s success. She and Federov both talked about the huge successes and discussed sharing Diia’s model with other countries. Incidentally, Samantha Power is married to Cass Sunstein, the author of Nudge and a number of other books that some might consider pro-social-manipulation.
Power has stated that USAID intends to look for leaders in developing nations that have been running on anti-corruption platforms and sharing Diia-like technology with them to help modernize their countries. She specifically cited Zambia, the Dominican Republic, and Ecuador. In January, Estonia announced that they would begin trial runs of their mRiik app, modeled after Ukraine’s Diia.
And, of course, all of this sounds very loving and charitable. However, it’s impossible to ignore the financial incentives.
The digital shift in America
The U.S. got a giant shove online when lockdowns were enforced in 2020 and 2021. The U.S.’s “digital transformation,” even though it was only partial, still made already-wealthy tech companies even wealthier. Even though billionaire wealth can fluctuate pretty dramatically, by the end of 2022, American billionaires were still 50% richer than pre-pandemic.
Lovers of free-market economics will point out that increased technological ability is a rising wave that lifts everyone. That can be true, but ask yourself, are most people you know 50% richer than before the pandemic? Probably not. Our lives have been getting pushed online over the past few years. Some people profited, but the quality of life of the average citizen decreased.
Combine the shift to a digital world with the reconstruction after wartime destruction, and you see huge opportunities for profit. It’s estimated that rebuilding Ukraine, so far, will cost over $1 trillion. Zelensky and BlackRock CEO Larry Fink have already come to an agreement about managing the rebuilding of Ukraine. USAID may be charitable, but BlackRock isn’t. Ukraine is in the process of being destroyed and being rebuilt. This is going to be hugely profitable for certain people, and Big Tech seems to be intent on getting their slice of the pie.
This kind of thing isn’t new. Brigadier General Smedley Butler, combat veteran and Medal of Honor recipient, wrote War Is a Racket back in the 1930s. The book is full of examples of industries generating huge wartime profits in conflicts a hundred years ago. War profiteering isn’t new. It isn’t a conspiracy. It’s human nature.
There’s no reason not to think that the same powerful Big Tech figures will not continue to push the expansion of their businesses by pushing life around the world online, with or without violent conflict.
Will we all be pushed into government-by-smartphone?
Maybe some emerging markets will be helped by Diia-like apps. But what about countries that already had reasonably safe and secure government services? Will functional governments be pushed onto a smartphone?
It’s likely, though not imminent. The Improving Digital Identity Act of 2021 is in Congress right now. There are a few versions of it under review. The Senate version actually states that the government cannot require digital identity for any kind of transaction.
Americans are still, on average, relatively concerned about privacy and the concentration of power. The many concerns surrounding Centralized Bank Digital Currencies apply to digital identification, as well. The OP ran an article last month discussing the total loss of anonymity that will occur when CBDCs become implemented.
And there are other, less discussed applications. Look at geofencing. A federal district judge just issued a first-ever “geofencing” warrant for anyone in the vicinity of the Capitol on January 6. This gave police the authority to search the cell phone data of every American whose coordinates happened to be in the area, regardless of whether or not they had anything to do with the shenanigans at the Capitol.
Imagine if they could pull your driver’s license or freeze your bank account, too. Right now, that’s not possible. With all of your important documents linked to something like Diia, it could be.
Here’s how it could unfold.
I don’t think we will all be forced onto something like Diia in the space of a year, but I think we’re at the beginning of a certain chain of events. Digital IDs begin to be offered as a convenience, they become popular, they begin to be preferred by businesses and governments, and we eventually lose the option of physical IDs. And, of course, some kind of crisis (climate change, another pandemic, a hot war) could speed this up more quickly, as happened in Ukraine.
The tools to implement a CBDC linked to a digital identity are already out there. Look at China’s social credit system. It’s technically possible for us, too. It sounds crazy, but conspiracy theorists have been proven correct so consistently lately I don’t think skepticism regarding these new, profitable technologies is unreasonable.
How to retain our privacy
We need to remember that life’s about more than convenience. It’s about the freedom to try new things, some of which will fail spectacularly and some of which will lead to resounding successes. That combination of failure and success is what leads to the deeper insights that make most of us into interesting people. If we continue to trade privacy for convenience, we may find we don’t have much freedom left, either.
If we want to retain some measure of privacy and control over our own lives, if we want to avoid the techno-prison currently being constructed for us, if Americans don’t want our own “Stalin in a smartphone,” we need to avoid feeding the digital beast. Yes, it’s hard, and no, it’s not going to be realistic for 99.9% of us to live completely offline. But we can keep our friendships and purchases offline as much as possible. We can drag our feet when it comes to getting the newest smart gadgets. Perhaps most importantly, those of us with teenagers and young adults can spend time explaining our privacy concerns to the younger generation, so they try to live life offline, as well.
The digital prison is being constructed, but it’s by no means done yet. Grand plans like “government in a smartphone” always fall apart at some point. The problems with Diia are obvious to anyone paying attention. If enough of us can postpone moving everything online, hopefully, this impetus will collapse on its own.
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