Arnold Kling on the Silicon Valley Bank
The long-time blogger and economist joins me to explain what happened, and what's coming next.
Arnold Kling has seen a lot of changes in his career as an economist and entrepreneur.
He worked at the Federal Reserve and later at Freddie Mac — one of the quasi-government lending agencies that played a role in the subprime crisis. In 1994, he started one of the first businesses on the Web, selling it in 1999. He live-blogged the 2008 financial crisis at EconLog with an insider’s knowledge of the financial system.
He has been sought after in the wake of last weekend’s run on SVB, having been featured on a recent Reason forum hosted by Zach Weissmueller, and writing about the situation as it unfolded on his own Substack Newsletter – In My Tribe.
I'm fortunate to have Arnold to myself for a full hour this Sunday, to pick his brain on the implications of this event on the macroeconomic forecast. Even more interesting, however, are the political and social ramifications — not least of which is the so-called moral hazard that Larry Summers tells us we shouldn't worry about (at least not now, while the risk of another financial crisis exists).
Is this Bear Stearns all over again—another bailout of "too big to fail" bank? Not exactly, but the parallels are there, and once again, government bears much of the responsibility. Can the Fed still come to the rescue with inflation rising?
SVB is safe for now, but the system-wide risks have not been extinguished.
Tune in this Sunday to the show of ideas, not attitude.