This report by Aaron Zitner in the Wall Street Journal has some resonance with things I’ve been saying around here recently:

Patriotism, religious faith, having children and other priorities that helped define the national character for generations are receding in importance to Americans, a new Wall Street Journal-NORC poll finds.

The survey, conducted with NORC at the University of Chicago, a nonpartisan research organization, also finds the country sharply divided by political party over social trends such as the push for racial diversity in businesses and the use of gender-neutral pronouns.

Some 38% of respondents said patriotism was very important to them, and 39% said religion was very important. That was down sharply from when the Journal first asked the question in 1998, when 70% deemed patriotism to be very important, and 62% said so of religion.

The share of Americans who say that having children, involvement in their community and hard work are very important values has also fallen. Tolerance for others, deemed very important by 80% of Americans as recently as four years ago, has fallen to 58% since then.

and this is disheartening:

The share of Americans who say that having children, involvement in their community and hard work are very important values has also fallen. Tolerance for others, deemed very important by 80% of Americans as recently as four years ago, has fallen to 58% since then.

As you might expect there’s some difference between the priorities of Millennials and Baby Boomers or Silent Generation but the decline in importance of those traditional values was observed among all cohorts.

Much of the rest of the report is devoted to searching, largely in vain, for an explanation for the dramatic change. I’ve already provided my explanation.

Coming up with anything to post about has been a challenge lately. The reasons are various including some of the things people are talking about incessantly are of little interest to me, on some I’ve commented to death, and on many we’re waiting for new developments and holding our collective breath. Life isn’t like television or the movies and some things just don’t resolve themselves over the course of an hour or two.

I see a common thread running through many of these stories: denial. I mean it in the clinical sense of avoiding uncomfortable truths by denying reality.

Our political parties are greatly polarized—more polarized than at any previous time in my lifetime. They are polarized to the point that each party reflexively rejects what the other party wants, frequently just because that’s what the other party wants.

It’s bad enough when one of our political parties is in denial but both of our political parties seem to avoiding uncomfortable truths.

Take the whole kerfuffle over Donald Trump’s indictment. Will he or won’t he? Should he or shouldn’t he? I maintain the view I have held for some time: that President Trump should be prosecuted to the full extent of the law but those to whom that is a critical matter of saving the republic will be disappointed that extent isn’t particularly far. Furthermore, there is a strong element of battlespace preparation in the whole matter.

One of our political parties is in denial that there’s anything at all to prosecute over; the other is in denial that their primary interest is battlespace preparation.

While I understand the appeal that Donald Trump had for some I didn’t agree with it. I agree even less with maintaining loyalty to him at this point. It’s hard for me to imagine something more discouraging than a rerun of the 2020 presidential election.

There is similar denial about the war in Ukraine, what may or may not be an incipient banking crisis, the grave differences of opinion being called “the culture wars”, the U. S.’s relationship with China, and a h0ost of other issues. It’s not that they’re not important, it’s that they won’t be resolved in a way to satisfy the 24/7 news cycle and the realities of all of them are uncomfortable.

You might find this first-hand account of the collapse of Silicon Valley Bank interesting. Darius Rafieyan and Mattathias Schwartz report at Business Inside:

Over the last two weeks, Insider has conducted a series of interviews with an employee of Silicon Valley Bank who gave a firsthand account of the bank’s March 10 implosion as experienced by rank-and-file staff. Their identity is known to Insider, which agreed to kee

Here’s a snippet:

The weekend after the FDIC takeover was crazy. Originally there was a list of 13 VC firms, which said they were willing to sign a statement saying that they supported us. We needed to grow that number. We spent a whole weekend on the phone, email, chat, any sort of way to get in touch with the VC firms, partners of the VC firms, operating partners, CFOs, anybody we could to try and get them to rally. I think the number is at 630 supporters as of today. It’s been amazing to see the VCs themselves rally and create this awareness. Many folks had our back from the beginning. Once they knew their money was safe again, other folks changed their tune.

I wouldn’t even say that they were rallying for SVB. It was for an institution like SVB to exist, for the sake of the innovation economy. Our goal that first weekend was to get as many clients as we could on board. Because if they’re on board for support, that will help send a signal to the Fed or the FDIC to step in in some capacity. And they did — it worked. On Sunday, when the Fed said, “We’ll make depositors whole,” that was a huge sigh of relief for VCs trying to make payroll. We’d had so many clients tell us that they might have to shut down or cover payroll by borrowing with a personal guarantee.

A study by some German researchers has found empirical support for the Sapir-Whorf hypothesis: Anna Demming reports at Live Science:

A person’s native language may shape how their brain builds connections between different hubs of information processing, a new brain scan study reveals.

The observed differences in these language network structures were related to linguistic characteristics in the native languages of the study participants: German and Arabic.

“So the difference we find there shouldn’t be due to different ethnic background but really because of the language we [they] speak,” Alfred Anwander(opens in new tab), a researcher at the Max Planck Institute for Human Cognitive and Brain Sciences in Germany who led the study, told Live Science. The research was published online in February in the journal NeuroImage(opens in new tab).

and

Discussing the paper at a seminar(opens in new tab), Patrick Friedrich(opens in new tab), a researcher at the Institute for Neuroscience and Medicine at Forschungszentrum Jülich in Germany who was not involved in the study, noted that the brain’s language network is understood to be “more or less universal among participants of different native languages.” Yet, scientists have observed differences in how the brain processes second languages.

“I thought this study was really interesting because it shows for the first time a structural difference depending on the native experience,” rather than languages learned later, Friedrich said.

The “Sapir-Whorf hypothesis” also known as “linguistic relativity” is the idea that language influences the speaker’s worldview and thinking. I don’t believe in the strong version of that theory which is that the language you speak dictates the concepts you can understand. I do believe in the weak version which is that language affects what and how you think.

None of this should be particularly surprising. Like a muscle the brain develops in specific ways when exercised and different languages place different requirements on the speaker. This study is interesting in that it focuses on the “mother tongue”, i.e. the first language you learn to speak. Clearly, more study is needed but but it certainly provides some food for thought.

In the Wall Street Journal Aylin Woodward reports on a study at MIT to determine the best way to twist an Oreo:

“I’ve always been annoyed that I have to twist them apart and then push creme from one side onto the other,” said Crystal Owens, a Ph.D. candidate in MIT’s mechanical engineering department.

She led a group of researchers on a quest to figure out if there was a trick to getting the creme to glom onto both halves.

Usually, Ms. Owens studies materials that could be used as ink for 3-D printing, squishing them between two counter-rotating metal plates in a device known as a rheometer to study how the fluids deform and respond to torsion, or twisting forces.

She and her colleagues determined that the creme stays on one half or the other 80% of the time. Speed, direction, or technique don’t seem to make a difference. Their hypothesis is that the creamy center is stronger than it is sticky. Nabisco expressed delight in the study, favoring “data-informed creativity”.

No report on what happened to the cookies that were used in testing. By my count 28 family-sized bags of Oreos were used.

Ruy Teixeira proposes that rather than ignoring or counter-attacking when attacked on “culture war” issues the Democrats the Democrats should take some “commonsense steps”. I am excerpting his steps.

Here’s common-sense proposition #1: Police misconduct and brutality against people of any race is wrong and we need to reform police conduct and recruitment. However, more and better policing is needed to get criminals off the streets and secure public safety. That cannot be provided by “defunding the police”.

Here’s common-sense proposition #2: America benefits from the presence of immigrants and no immigrant, even if illegal, should be mistreated. But border security is hugely important, as is an enforceable system that fairly decides who can enter the country.

Common-sense proposition #3: Equality of opportunity is a fundamental American principle; equality of outcome is not.

Common-sense proposition #4: Racial achievement gaps are bad and we should seek to close them. However, they are not due just to racism and standards of high achievement should be maintained for people of all races.

Common-sense proposition #5: No one is completely without bias but calling all white people racists who benefit from white privilege and American society a white supremacist society is not right or fair.

Common-sense proposition #6: People who want to live as a gender different from their biological sex should have that right. However, biological sex is real and spaces limited to biological women in areas like sports and prisons should be preserved. Medical treatments like drugs and surgery are serious interventions that should not be available on demand, especially for children.

I agree with all of those and I suspect that the majority of people who vote Democratic do as well but I think there’s something Mr. Teixeira is missing. The sources that contribute to Democratic campaigns and people who work on campaigns don’t agree with those views.

We’re seeing that work out in the Chicago mayoral run-off right now. Both of the candidates are Democrats and have been all of their lives. One candidate receives almost all of his campaign contributions from labor unions; he has stated pretty unequivocally that he considers defunding the police a political goal (he’s trying to walk that back). He derives his support mostly from blacks (he’s black) and lakeshore liberals. He’s been endorsed by Toni Preckwinkle and Chuy Garcia among others. The other candidate is derives most of his contributions from individuals and is running on law and order. He derives most of his support from the Northwest Side which is primarily white but he’s receiving badly needed endorsements from key black leaders, e.g. Jesse White, Bobby Rush.

The election probably won’t tell us whether most Chicagoans are progressives but it will tell us whether safety is more important to black Chicago voters than having a black mayor.

The editors of the Washington Post have expressed their views on the tack the Biden Administration is taking on the incipient banking crisis and their views are closely aligned to those of the editors of the Wall Street Journal—the administration is erring and introducing serious moral hazard:

President Biden has long positioned himself as a champion of the middle class, but his administration’s bank bailouts have the potential to become a generous gift to the rich. The most controversial aspect of the emergency rescue of Silicon Valley Bank and Signature Bank was the decision to fully compensate all depositors of those banks, even sophisticated millionaires and billionaires who presumably were fully aware that the amounts they were holding in their accounts were well above the usual $250,000 limit that the government insures.

Now other bank executives are understandably asking: Are all their customers’ deposits fully insured as well? Treasury Secretary Janet L. Yellen pretty much said yes this week when she told the American Bankers Association that it is “our resolute commitment to take the necessary steps to ensure that deposits’ savings and the banking system remain safe” and that “similar actions could be warranted” if other institutions face runs like Silicon Valley Bank did.

A blanket government backing of all deposits in the United States would be a mistake. It would encourage risk-taking at banks because they know the government would step in if they faltered. Even worse, such sweeping action would protect wealthy Americans — and would be funded through fees that banks pay to the Federal Deposit Insurance Corporation, which means, indirectly, by anyone with a bank account.

They have their own proposal:

There is a better approach. The goal should be to protect the savings of the middle-class bank customers and of the small and midsize businesses that are key to economic dynamism and growth. These are the people and firms for whom the FDIC’s safety net was designed during the Great Depression, when thousands of banks failed, leaving their customers stranded. They do not have the financial sophistication, or the armies of financial analysts, to assess bank balance sheets and suss out the likelihood that a bank is going to fail.

To achieve this goal, the FDIC should continue to insure accounts up to $250,000 and add an emergency provision to fully back all “transaction accounts” that businesses use to make payroll and cover other basic needs. In so doing, it would protect the vast majority of U.S. deposits. It would also stabilize the banking system. This is exactly the approach that the FDIC took during the 2007-2009 financial crisis to help buttress the system during a more extreme crisis. Though such a move would require increasing the fees that banks pay to the FDIC, it would be manageable, especially if the coverage is temporary.

That will almost undoubtedly require an act of Congress.

As I see it there are several strategies that might be used:

• Cover all deposits regardless of size by having the Treasury underwrite them. Not only is that at odds with controlling inflation, it is probably illegal and will disproportionately help rich depositors.
• Cover all deposits regardless of size through the FDIC, increasing the FDIC levy to cover it, either via special levy or permanently. That appears to be the WaPo’s proposal using a special levy. That will bring a host of unforeseen secondary effects including driving some banks out of business (because depositors flee due to the increased cost), increase the number of the unbanked, and disproportionately help rich depositors.
• Cover all deposits regardless of size through the FDIC, increasing the FDIC levy using a graduated scale to ensure progressivity. That alleviates some but not all of the problems listed above.
• Let the FDIC cover deposits up to $250,000. Caveat emptor. Some companies may go out of business.
• Let the FDIC cover deposits up to $250,000. Provide assistance to companies to allow them to meet payroll on a case-by-case basis. That seems to be the approach proposed by the editors of the WSJ.

If the last alternative is selected I think it absolutely, positively needs to be covered by either a) an increase in taxes or b) a reduction in other spending in the amount of the assistance. Anything else is inflationary.

Regardless of which strategy is adopted, there should be investigations, not just by the FDIC and the Federal Reserve but by the Congress as well.

The editors of the Wall Street Journal are pretty upset about the direction of the Biden Administration’s strategy in dealing with the banks:

Financial regulators have ignored their post-2008 rule book to contain the latest banking panic. And on Tuesday Treasury Secretary Janet Yellen tore it up by announcing a de facto guarantee of all $17.6 trillion in U.S. bank deposits. Regional bank stocks rallied, but it’s important to understand what this moment means: the end of market discipline in U.S. banking.

“Our intervention was necessary to protect the broader U.S. banking system,” Ms. Yellen told the American Bankers Association convention. “And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion.”

Translation: Depositors needn’t worry about the safety and soundness of banks. Uncle Sam will make sure you don’t lose money.

This isn’t an explicit guarantee, but it’s close enough for government work.

They characterize it as “the end of market discipline”:

The Administration is presenting its intervention as a one-off. But once regulators do something, they create the market expectation that they will do it again. And if they don’t, the ensuing market panic will invariably impel them. Biden officials are crossing a Rubicon here, and they’re doing it essentially by fiat without approval by Congress.

Regulators have become all too accustomed to doing anything they want during a market panic, reaching for extraordinary power even in non-emergencies. Ms. Yellen may have shored up confidence in midsize banks, but the cost of her guarantee will be a less sound and safe U.S. banking system.

IMO there are only a couple of viable ways to handle the situation.

1. All commercial banks could be nationalized and all deposits covered.
2. The FDIC’s insurance rates could be raised to cover all deposits. That alone would probably drive some depositors away and cause some banks to close.
3. Only insured deposits should be covered; businesses that can’t meet payroll because they had too much in uninsured deposits in the wrong banks should be thrown a lifeline; the Congress should act to change the law consistent with all of this.

My preference is C. We don’t appear to be doing any of those but, as the WSJ editors point out, are encouraging banks (and companies!) to take greater risks.

James K. Galbraith expresses his thoughts on the incipient banking crisis in a piece at The Nation. The TRL;DR version of his piece is that progressives are wrong about it:

The problem was not (as Larry Summers declared) that a bank should not convert short deposits into long loans and investments. That is—more or less—what banks do. Loans and bonds are their business. It was also not (as Elizabeth Warren declared, along with other progressives fighting the last war) that the bank took on too much risk. Its loans were risky—because it specialized in start-ups, which are inherently risky. But they were not failing. Its investments, in bonds, were not risky in the usual sense—they were not in danger of default.

In the same vein as Warren, Paul Krugman declared that tougher regulation (of loans) and larger capital requirements or liquidity cushions might have saved the day. Again, fighting the last war. SVB’s loans were all right so far. SVB’s bonds, of course, are liquid! Treasuries and high-quality mortgage-backed securities can be readily sold. SVB’s capital and liquidity would have passed tests until a few days before the crash. This is characteristic of bank failures: Capital looks ample until it disappears. In SVB’s case, the run drained $42 billion in one day—and that was that. The idea that capital requirements provide safety is an economists’ illusion.

This observation is interesting:

The business model of SVB consisted of an attractive return on deposits, adventurous loans mainly to young companies in the tech sector, perks for big clients to keep their funds in the bank, and large investments in government bonds and mortgage-backed securities. The safety of the bonds worked to offset the risk of the loans, while the bonds’ return covered the cost of deposits—which grew rapidly as client companies and some cash-rich individuals parked their funds at the bank.

He blames SVB’s problems on the Federal Reserve and, consistent with that, he thinks that the Fed’s actions to fight inflation are a fool’s errand. Basically, he still belongs to Team Transitory:

So why did the Federal Reserve invert the yield curve? To fight inflation? To kill jobs and stall wages? If so, the stupidity—or the economistic groupthink—is shocking. Most price increases have already faded from the economy (for now). Though job growth is strong, wage increases lag prices: Real wages have fallen. The Fed obviously operates in total disregard of its full-employment mandate—nothing new in that—and indifference even to the textbook logic of labor markets. Why is that? Among specialists, opinions differ on how smart top officers of the Federal Reserve actually are. Personally, I vote for dishonest over stupid.

He also predicts instability in the global banking system.