Mark Cuban: It’s not the wealthy taking the hit.
I’ve seen a lot of articles where rich people (aka investors) are saying that the govt needs to rescue Silicon Valley Bank, otherwise a lot of poor people (aka people who work) will suffer far more than the rich people making these claims. At first glance, this seems to make sense. Rich people are rich, they’ll always be rich and most of their money isn’t in a bank anyway. Poor people work for a living and if companies collapse without cash, or even skip payroll for a month or two, poor people will at best miss a paycheck and at worst lose their job. Losing a job on the surface seems way worse than losing 5 percent of your 10s of billions, but there are a few problems with this way of thinking.
The first is that companies keep way more money in banks than rich people, and rich people keep way more money in companies. So yeah, rich people won’t lose a lot of cash, but they will lose a lot of wealth in terms of investments in companies. And when I say rich people, I mean people who have that covetous generational wealth. So the second problem with this way of thinking is that generational wealth takes generations to rebuild (obvi) and a lost job takes only months to rebound from. So rich people are begging to save the bank and that we should think of the poor people but the poor people will bounce back before they need to buy more dog food, and the rich people will spend decades getting back to their current net wealth.
And here’s the other thing, let’s say you’re a 10 billion dollar company and 25 percent of your 2 billion in cash is at SVB. If SVB goes down, you’re losing about 6 percent of everything you’ve got. Now let’s look at the poor people. If you’re a working stiff like me, maybe you’re relying on a 401k and other employer based retirement savings plans and social security to retire. If that’s the case, let’s go further to say you’re living almost check to ckeck as so many Americans do. That would mean that you’re going to work 30 to 40 years in your life, and the loss of 3 months of income would only be a little more than half a percent. Also, this country has unemployment for us, so those 3 months of lost income might not even be total losses.
I think it’s disingenuous to say we must save the banks to save the poor people. We (poor people) don’t have a lot of money in them and we’ll still be poor whether any bank stands or falls. To the rich, not giving them their money back when they do dumb shit might be the closest thing to genuine govt taxation any of them have ever seen.