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> hard to maintain a revenue stream if your product is good enough to last

Servicing. High-end appliances seem to last just fine.


I had a certified GE service technician come to my home and install a electric glass top range that came with the home because it had broken from my cast iron sitting on it while the glass cooled.

I turned off the range with my Cast Iron on it, the cast iron cooled slower than the glass and the glass cracked. Poor design not built for cast iron.

This happened twice.

That meant I got to spend good time chatting with the service tech. He said he’s the last of a dying profession for a few reasons:

1. Nothing is fixed anymore except really old stuff. The things are simply replaced because the cost of fixing is higher than just replacing it with new. This means we’re literally throwing what are effectively new products into the landfill months after being installed. Even the old stuff, they are pushed into suggesting new build because the supply chain for old parts is small and there’s no money in it anymore.

2. There’s no career path for technicians because of 1 so where he used to be training apprentices they are going for other trades.


> cost of fixing is higher

Paying a human to do anything is so expensive. And it makes sense when you break it down by what their costs probably are.

I don't think anyone is even making a lot of money there is so much overhead costs.


But you have to use a human no matter what.

In this case the thing that changed was we went from fixing with a few parts, to wholesale replacing.


Do any appliance brands still do in company servicing? At least near me Wolf/Subzero and competitors outsource service.

Nope, talk to appliance people and they will tell you all of the traditional high end brands are junk now too

I specifically did not call them "repair" people BTW since most have lapsed into doing mostly installs...it's not even worth it to repair today's s junk and most people just replace. Cost of parts and labor now can easily exceed replacement cost (by design obviously)

Maybe Speed Queen is the one exception. I've had folks explicitly single out Bosch as a brand people still mistakingly believe is high quality. Follow the supply chain...it all comes out of just a few factories with most parts shared.

There are no longer high quality brands, only high price. High price is usually just for the name or appearance.


> nationalist leaders (often democratically elected) who want to keep some of a country’s resources from falling further into the control of American corps

This is an old geopolitical problem: rich democracies tended to surround themselves with alliances of despots. Athens, Rome and America. The corporate interests hypothesis is interesting. But the resilient one is that dictators reliably deliver foreign policy goals that electeds' voters value.


> the ongoing 50 year old, fiat money system experiment is a bad idea

We're still talking about the largest era of wealth generated across any territory or time in human history, the American post-War ascendancy, right?


Not really. "Post-war" means 1945. "Fiat money" means 1971. "Largest era" means 1981.

Grandparent said "collapse," which is what Jenga towers do.

Here's the era, in two charts:

[1] https://tradingeconomics.com/united-states/government-bond-y... [2] https://www.cbpp.org/income-concentration-at-the-top-has-ris...


> Here's the era, in two charts

Out of curiosity, what are you seeing? Rates going down is bad?

Here's the last millenia [1]. You'll notice a long-term trend of decreasing rates.

[1] https://www.businessinsider.com/chart-5000-years-of-interest...


> I don't believe there was no other option. The problem with what we did is we confirmed there is no risk to owning bank stock or lending to banks and that should never be true

There were better options. But it's unclear we would have found them in time. That's why we explored and enacted them aftewards. Which is what let First Republic, SVB and Signature fail last year, with investors being wiped out and no depositors impaired, so smoothly that it's no longer in popular memory.


Executives didn't go to jail and boardrooms weren't bankrupted en masse. Nobody had their bonuses clawed back and golden parachutes invalidated, and the government in all their power still allowed bonuses to be paid out with TARP money even as people were losing their jobs en masse.

There was never any meaningful regulation that came to pass afterward that split the banks up.

There were some marginal improvements to solvency requirements (which ironically were the standard before de-regulation in the 1980s and 1990s) and on the consumer banking side there is a little bit more protections, but nothing truly meaningful that limits downside exposure from the broader public ever got passed, let alone debated. Everyone was so fast to get back to "business as usual" you'd think nothing happened.

What happened with SVB et. al. last year is actually what the FDIC is suppose to do and was established to do, well before the 2008 financial crisis. The FDIC has always had the power to take receivership of failing banks and sell off their assets to make depositors whole. By their own admission they did much the same in the 80s and 90s[0]

[0]: https://www.fdic.gov/resources/publications/crisis-response/...


> Executives didn't go to jail and boardrooms weren't bankrupted en masse

Sure, populist shows of retribution weren't prioritised. Keep in mind the time frames within which TARP was passed.

In last year's failures, stockholders were wiped out.

> government in all their power still allowed bonuses to be paid out with TARP money even as people were losing their jobs en masse

Based on what law did you want these binding legal agreements invalidated?

> never any meaningful regulation that came to pass afterward that split the banks up

Not true. The Fed and FDIC's powers were expanded thoroughly post crisis.

It remains unsettled whether breaking up the big banks is the right move for stability. America continues to have a large number of banks per capita relative to other countries.

> Everyone was so fast to get back to "business as usual" you'd think nothing happened

If you didn't watch the picture, sure.

> What happened with SVB et. al. last year is actually what the FDIC is suppose to do and was established to do, well before the 2008 financial crisis. The FDIC has always had the power to take receivership of failing banks and sell off their assets to make depositors whole.

What happened in '08 was outside the FDIC's purview. That was the problem. Depositors weren't running, it was the other parts of the system that failed.


>Sure, populist shows of retribution weren't prioritised. Keep in mind the time frames within which TARP was passed.

I don't think anyone is asking for populist retribution[0]. I'm asking for fraud, gross negligence, financial impropriety and a host of other actual things that happened to be prosecuted to the fullest extent of the law, and that would mean going after executives and boardrooms, where the decisions were made. Even by this point fining corporations is a slap on the wrist. Culpability is with the decision makers. That means executives and boardrooms.

Conversely, upon further review, it also means at least a few dozen regulators needed to be removed from their posts and investigations should have been opened into those failures too, to a much broader extent than they were.

>Based on what law did you want these binding legal agreements invalidated?

They should have made it a condition of accepting the TARP funds. I'm not surprised it wasn't (though I'm getting conflicting information when I go to look this up, there appears to be an optional provision that allowed the government to elect to do so, but its unclear if it made it into the final bill), but its plain silly that we attached no real sticks to this. In fact, it was proposed at the time[1], that much is certain.

>Not true. The Fed and FDIC's powers were expanded thoroughly post crisis.

Their roles perhaps, and we could discuss that, but it isn't what I posited. The real question I have is: What meaningful reform happened? There has already been rollbacks of the Dodd-Frank bill in the intervening years[3] and I'm unaware of any regulatory teeth over the derivatives market, for example.

Whether the FDIC and The Fed have expanded regulatory scope isn't the same thing as passing meaningful reforms.

>It remains unsettled whether breaking up the big banks is the right move for stability. America continues to have a large number of banks per capita relative to other countries.

I will contend that splitting banks up where "main street" banks (traditional loans, checking, savings and other things traditionally associated with mainstream consumer banking) and investment banking should be split. There's no reason the holder of my deposits should also be actively exposing the core safety of the institution by making speculative investments in the derivatives market, for example. Separating concerns is how it used to be, and the only outgrowth of the M&A of the 80s and 90s in the banking sector seems to only be new ways to create riskier investment portfolios. I don't think having these very disparate activities under the same business is a good thing, as you risk the institutions stability, as we saw in 2008, and again, to a lesser extent last year.

Boring banks are good banks. Note however I'm not saying those risky financial opportunities are in and of themselves bad. They aren't, per se, but they should be a separate business entity entirely, and not allowed to cross-pollinate each other to the extent that they do today, if at all.

>What happened in '08 was outside the FDIC's purview. That was the problem. Depositors weren't running, it was the other parts of the system that failed.

I said as much.

EDIT: I initially posited that the FDIC had similar authority prior to the events of 2008-2013. I incorrectly conflated the role of the Resolution Trust Corporation and the FDIC having management over that with the FDIC itself having authority to take a bank into receivership and to seek to sell its assets in-part or in-full, to make depositors whole. That's my memory failing me. I retract this assertion. This is indeed a post 2008 role it has assumed.

[0]: To me "populist shows of retribution" is more guillotine justice than simply enforcing the rule of law, and I think its intentionally combative. All anyone is really asking for here, as upset as I maybe regarding what happened in 2008[2], I'm only asking that we actually prosecute those responsible for the myriad of financial improprieties that took place. I don't know why this is controversial. To re-iterate, I have stated I want to see those culpable stand trial to the fullest extent of the law.

[1]: https://www.businessinsider.com/senate-can-claw-back-any-200...

[2]: To which I admit, I'm a bit combative over. Look at this way; We know the players, we know the causes, and we even know down to the groups of people who the actors were that were major influences on why things went the way they did, and they all get to walk away, head high? I'm saying that we know what crimes took place and even who committed them, and no case was ever opened, let alone prosecuted. In what other sector could crime happen at this scale, and we know the players, the whens, the hows, and we don't prosecute?

[3]: https://www.nytimes.com/2018/05/22/business/congress-passes-...


> What meaningful reform happened? There has already been rollbacks of the Dodd-Frank bill in the intervening years[3] and I'm unaware of any regulatory teeth over the derivatives market, for example.

Most derivatives are now centrally cleared, which means centrally reported. SIFIs are held to tight stress testing and reporting standards. Banks have to maintain failure plans. That's just off the top of my head.

All of these components allowed First Republic, SVB and Signature to fail in a way they could not have pre-2008.

> the FDIC has always had this power, and it was well exercised in the S&L crash and its aftermath between 1987-1994

No, it did not. No competent banking lawyer would allege as much.

And the S&L crisis famously involved depositors losing money because the FDIC was hamstrung [1]. The FDIC did not have the power to bail out e.g. AIG in 2008.

> Boring banks are good banks

I strongly recommend an introductory money and banking text [2]. Each of First Republic, SVB and Signature failed due to boring banking mechanisms.

[1] https://www.fdic.gov/bank/historical/history/167_188.pdf

[2] https://www.amazon.com/dp/0134733827?ref_=cm_sw_r_apin_dp_NC...


>Most derivatives are now centrally cleared, which means centrally reported. SIFIs are held to tight stress testing and reporting standards. Banks have to maintain failure plans. That's just off the top of my head.

Which is a lower pool of banks, because of rollbacks to Dodd-Frank, which designate a much smaller class of banks as SIFI. In fact, the Federal Reserve pointed the finger at these rollbacks as an important piece of how SVB managed to fail in the first place[0][1]

If I understand correctly, being exempted of the SIFI status in practice means that regulators are much more lax in stress testing and enforcement of the tighter Dodd-Frank provisions.

When you say failure plans, we are really talking about reserves, there has always been some reserve / loss requirements, they were tighter until the de-regulation of the 80s and 90s, IIRC, and the only thing that has happened there is that some of that same tightness in regulation was restored, but its not net new in the sense that it pushed broader regulation, it only restored some aspects that were actually already in place at prior to the aforementioned de-regulation, IIRC

>Most derivatives are now centrally cleared, which means centrally reported

I'm unsure if this is meaningful or not, particularly since the conditions that caused LTCM to fail (and really drove much of the 2008 failings) still exist[3]

>No, it did not. No competent banking lawyer would allege as much.

And you're right. I conflated the role of the Resolution Trust Corporation and the FDIC (at some point, the FDIC was in charge of the RTC I think) which played a similar enough role in my memory that I ended up conflated here. I edited the post to reflect my errors. I should revisit this time period at a later date.

> Each of First Republic, SVB and Signature failed due to boring banking mechanisms.

That isn't really consensus of multiple agencies. They were negligent in managing their risk[1][2]

I don't think that's "boring bank" activity, to be repeatedly mismanaging risks. Unless textbook case of mismanagement by the bank[2] is a boring bank activity.

[0]: https://www.reuters.com/business/finance/us-fed-points-finge...

[1]: https://www.newyorker.com/news/q-and-a/the-regulatory-breakd...

[2]: https://www.federalreserve.gov/publications/files/svb-review...

[3]: In my research, Warren Buffett of all folks maintains these risk are alive and well, "a ticking time bomb that will serve to poison markets", to paraphrase. I'm unsure what to make of it (Buffett by his own admission isn't the foremost authority on economics, though its hard to dismiss the guy given the track record) but it is interesting never the less.


> few billion in profit doesn't come close to canceling out the moral hazard involved

Sure. But the reforms enacted thereafter do.


Sure. Words speak louder than actions, right?

> Words speak louder than actions

The second, third and fourth largest bank failures in the nations history weren’t actions?


> What about moral hazard?

Less than a year ago, we suffered the second, third and fourth largest bank failures in our nation's history [1]. Shareholders were zeroed.

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


Those were also cases where the power-that-be decided to change the laws and regulations on the fly and removed the FDIC insurance limit to protect their friends in high places.

> the power-that-be decided to change the laws and regulations on the fly and removed the FDIC insurance limit to protect their friends in high places

No laws were changed. The FDIC always had broad discretion in managing assets and liabilities under receivorship. You are correct, however, in that a precedent was set.

Where you are incorrect is in the friends in high places bit. I was near (though not on) ground zero in those crises, and to the degree politics were involved, it was in the goodwill that would have resulted from visibly screwing certain Silicon Valley elites. If Signature hadn't failed, there is a good chance SVB's depositors would have been capped at the legal limit.


> What about the "and afterwards" part, where the banks that were too big to fail were split up, and regulation was improved?

Whether TBTF banks should be split up is still being debated. With size comes resilience (and fewer books to look over).

In terms of improved regulation, the fact that we're less than a year out from the second, third and fourth largest bank failures in our nation's history with seemingly no memory of it seems to speak for itself [1].

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


> a headline to collect clicks for profit

The Financial Times doesn't bait for clicks. It's written for subscribers who should understand the difference between reserves and capital in shorthand with respect to bad debts. A large part of why I love the FT is its articles are short. That means I can process them quickly. But it comes at the cost of context.


Subscription services are all about engagement and capture, both of which require clickbait to survive. This headline is absolutely designed to attract a click by harkening to financial collapse rather than crazy high capital requirements on mortgage books post financial crisis requiring mechanical recapitalization as interest rates and market stress take a toll.

> headline is absolutely designed to attract a click by harkening to financial collapse

No, it's not. I read it this morning and passed it over. Then I saw it on HN and realised we'd have a clusterfuck. A technical analogy might be someone conflating an outage with the service going under.


Why? Do you really think banks haven’t realized commercial loan debt isn’t lined up for major losses and haven’t securitized and hedged with CMBS credit default swaps? The article talks about the models assume historical losses - but this is an exact replay of residential subprime modeling. You would have to be a very dense portfolio manager to not have your own risk models aside from the regulatory mandated models for losses. In fact from my years trading on a major commercial and residential desk leading up to the financial crisis I emphatically know they all do, and even more so after the crisis with the roll out of relatively boned headed reg collateralization models. With SVB eating in it with unhedged loan portfolios in the rates spaces you better believe risk managers and the government have been poring over portfolio exposures to rates and credit shocks. The commercial mortgage bloodbath is executing in extreme slow motion over what’ll likely be a decade. No one is being caught unaware and unprepared.

That’s why it’s clickbait. The reaction here is exemplary. This isn’t doom this is the bread and butter ebb and flow of a banks loan book but without any sophistication on the reality of how banks manage these sorts of things. The regulatory loss provisions aren’t the only line of defense and it’s not even the first line. It reads as if banks were caught unaware of this looming crisis in commercial mortgages and there’s some unthinking machine responding only to the bare minimum regulatory requirements. The hand wringing about the financial crisis, as if no one learned anything and bank trading operations are run by total morons… if only they would listen to a bunch of programmers things could be different, etc.

Doom sells subscriptions, engagement is driven by dire headlines and articles that twinge out anxieties. The mechanical realities are boring, and are covered in trade media not general financial news.


> only I could be in so much debt and the govt gives me a loan with such generous terms

This was the CARES Act.


> the banks do not have enough cash to take the losses

Nope, the headline refers to loss reserves. The specific reserves these banks have set aside for these loans. The article alleges they need to increase those. That might, at worst, hit their earnings.

> all money is someone else's debt

All money originates as a loan. (Other than federal spending.) That link disappears the moment it’s created.

> if the government steps in with FDIC or other protections to prevent hundreds of people losing $1, then the government has to print more money

Deposits are highly liquid. Replacing a deposit with an FDIC guarantee isn’t generally inflationary. (In practice, the FDIC having to step in tends to dampen credit and money velocity.)


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