David Brooks:
The markets are volatile.
It seems to be there are immediate political things that are germane to politics and our wider national life. The first is, these — this bank informed its investment strategy in a low interest rate environment, which is what we have had for 40 years, and which we no longer have.
And so a bank that invests a disproportion amount of money in Treasuries is suddenly going to suffer, because they're not going to keep up with inflation. And when you get from low interest mentality to a high interest mentality, things begin to break. And the financial system is breaking.
But the other thing that could break is the budget, that we have borrowed and borrowed, borrowed, assumed interest rates were low. They're no longer going to be low. And inflation is here, at least for a good chunk of while, it seems. And so, suddenly, your payments on the debt become massive on the federal level. And that crowds out spending on all other things.
The second thing is, would we have been so quick to act if this were called Managua Hilla (ph) Valley Bank, and not Silicon Valley Bank? And my answer would be no, that the venture capitalists who invested in this bank and whose people who they invested in put money in this bank, they created a narrative that this medium-sized bank, if it went under, the whole economy would go under.
And once they created that narrative, which I think may not have been true, then, more or less, the feds had to act. And so, if I were a populist, I'd be jumping all over this thing, because Silicon Valley Bank gets bailed out? Really? It seems to be tailor-made for our friend Donald Trump.
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