Kevin Drum

Bethany Mandel, a conservative writer, had a bit of brain freeze on live TV yesterday and was unable to define woke for her interviewer. This gave us lefties a chance to laugh at her, and fair enough. That's life in the arena. I really don't understand why movement conservatives haven't yet figured out a simple, bumper-sticker definition of woke that they can haul out anytime they need it.

David Roberts tries to help them out:

At root, cons mean basically the same thing by "woke" as the black activists who originally coined the term: aware of & committed to addressing systemic injustice in the US. It's just, cons think it's a bad thing!

— David Roberts (@drvolts) March 15, 2023

This is true as far as it goes. Conservatives have a long history of actively opposing nearly everything that might improve the lives of non-white-male people.

That said, there's more to it than just that. What conservatives—and many other people—mean by woke is an obsessive commitment to the most extreme and trivial versions of the original definition. "On the political right," says Chris Drew, "it is a pejorative term used to criticize people for seeing injustice where it doesn’t exist." He goes on to offer a bunch of examples from a conservative perspective:

• Race-Based Silencing – Telling a white person they don’t have the right to speak because they’re an oppressor.
• Cancel Culture – Canceling a college speaker because they have controversial views on power and race.
• Digging up Old Tweets – A company digs up tweets and photos from 1995 to play “gotcha” and sink a political candidate’s campaign.
• Critical Race Theory – A school’s history curriculum teaches a ‘white oppressor’ narrative in their classrooms, which makes young white children feel like they’ve done something wrong.
• Day of Absence – A college asks white students to stay home for one day per year to discuss and think about their privilege.
• Taking a Knee (By Social Pressure) – A school or sports organization pressuring you to take a knee during the anthem to send a message about racial inequality.
• Pride Jerseys – Conservative Christian football players are asked to wear pink pride jerseys on the football field in support of LGBT values, against their religious views.
• Virtue Signalling – Brands use pro-LGBT, pro-BLM imagery to appear inclusive. But this marginalizes half of their potential user base.
• Gender Pluralism – People saying there are over 70 genders and that if you disagree, you’re a horrible person.

Chris Drew (and I) are neither approving or disapproving of any of these things. They're just examples of how the right thinks. You can add your own examples if you want: microaggressions, language policing, reparations, and so forth.

It is, obviously, a matter of opinion whether any particular thing qualifies as "going too far." But that's the battleground, and there's really no point in pretending that it doesn't exist. We all know perfectly well that it does.

Here's a chart that must be driving all the ex-managers of Silicon Valley Bank nuts:

One of SVB's problems was a portfolio of long-dated Treasury bonds that was $15 billion underwater. But 10-year Treasurys have fallen by more than 50 basis points since Peter Thiel's run on deposits put SVB into receivership. Their portfolio has probably recouped a couple of billion dollars just in the last week.

Of course, SVB's collapse is part of the reason that yields on 10-year Treasurys have gone down. In other words, destroying the bank put in motion events that made it unnecessary to destroy the bank.

Whatever. On the bright side, this is all good for the FDIC and SVB's creditors. On the downside, now that Peter Thiel realizes that torpedoing the global banking system requires no more than inducing an absurd panic among the snowflakes in Silicon Valley and Wall Street, who knows what he'll do next?

We have good news and bad news today. The good news is that producer-level inflation was negative in February:

This doesn't tell us anything about inflation in services, so it's limited good news. Still, good is good.

The bad news is that retail sales fell for the sixth straight month:

Of course, this is good news insofar as it suggests the economy is slowing and the Fed doesn't need to raise interest rates to slow it even more. Take your pick.

It is the Ides of March. If you happen to have any friends named Brutus—or anything else vaguely Latinesque—you might want to stay home today.

It's time for some serious geekery. This post will (once again) address the question of whether the 2018 bank deregulation law had any effect on the collapse of Silicon Valley Bank.

Yesterday I looked at SVB's capital ratios and concluded that they were higher than required either with or without the law. If deregulation had never passed and SVB had been more tightly regulated, they still would have passed every test easily.

But David Dayen suggests I look specifically at the Liquidity Coverage Ratio (LCR). What if SVB had been required to meet the LCR requirement for medium-sized banks?

The idea behind LCR is simple: During a period of stress, does a bank have enough liquid assets to cover 30 days of cash outflows? The equation for medium-sized banks is:

My horseback guess puts HQLA at about $40 billion and net cash outflow at $30 billion or so. Luckily, though, we don't have to take my word for it. Bill Nelson of the Bank Policy Institute takes a deeper dive and comes up with this estimate:

• HQLA = $52.8 billion
• Cash outflow = $50.3 billion

Thus, LCR was about 105%, well above the 70% requirement. Hell, it was above the 100% requirement imposed on large banks. So even if the strict old law had been in existence, SVB still would have passed with flying colors.

POSTSCRIPT 1: The primary motivation for regulating LCR is to ensure that banks have a leverage ratio above 3% (minimum Basel III requirement), 5% (Fed requirement for normal banks), or 6% (Fed requirement for big banks). SVB had a leverage ratio of about 8%, well above all of these requirements.

POSTSCRIPT 2: I should note that the Bank Policy Institute has a dog in this fight since it supported the 2018 deregulation. Nonetheless, its estimate of LCR looks reasonable to me. Needless to say, I'm wide open to other estimates if anyone has done them.

It's hummingbird season again, and I have several who buzz around my window these days. The top picture is (I think) a mature Allen's hummingbird, while the bottom picture is a young 'un.

I realize that I posted a picture of a hummingbird just about a month ago, but what can I say? I like hummingbirds.

Well, how about this?

Our long national nightmare is finally over.

Today is inflation day, and the BLS reports that CPI moved sort of sideways in February:

Headline CPI dropped from January's high reading, but core CPI moved up a bit. This makes three months in a row that core CPI has been creeping upward.

(In case you care—which you shouldn't—the year-over year rate that news outlets highlight was 6.0% for CPI and 5.5% for core CPI.)

But inflation is actually not as bad as it looks. According to the BLS, shelter accounted for more than 70% of the increase in the headline rate. This is kind of crazy. We all know that shelter CPI lags the actual market, but is it ever going to catch up?

Shelter inflation measured by CPI is still rising steadily and clocked in at 9.5% in February. Zillow, by contrast, shows rents falling since last June. Their figure for February is 3.7%. Here's what core CPI looks like if you remove shelter:

That's . . . not bad. It's disconcerting that it's increased for four consecutive months, but it's still at only 2.7%.

Policywise, none of this may matter. Given the wobbliness in the banking sector right now, the Fed is unlikely to want to raise interest rates much, if at all. The latest CPI numbers could be better, but they're good enough to allow a pause.

Cheryl Rofer, a retired nuclear chemist who is currently acting as servant to a pair of adorable cats, wants to know why I think artificial intelligence is so great:

I keep asking that question and getting no answers. There’s a lot of activity going on in what is called artificial intelligence, but it is more accurately called machine learning. The chatbots now amazing the credulous simply predict, on the basis of a training set, which word will follow the previous one.

....But there has to be a reason that Big Tech is putting money into the enterprise, and presumably they believe they will make money out of it. They gloss this with Benefits To The User. Better search! Automated letter writing! They leave out things like automated facial recognition to help arrest people and yet another way to separate the customer from the seller.

This is a tricky question. I happen to think that things like ChatGPT already have some usefulness, including—yes—better search and help with letter writing, among other things. But I also agree that the current version of ChatGPT isn't anywhere close to artificial intelligence.

But! Even though I think true AI is still ten or fifteen years in the future, the software we build along the way will become increasingly useful even if it isn't truly our cognitive equal. I've suggested, for example, that in a couple of years ChatGPT might very well be good enough to replace lots of lawyers. Probably some doctors, too. Maybe even teachers, though that's more speculative.

Those are just tidbits, though. The real usefulness of current machine learning software is that it's a (necessary) step along the way to AGI—artificial general intelligence. AGI will be able to do pretty much anything humans can do, and shortly after that it will be able to do more than humans can do.

Now, if you don't believe that we'll ever be able to produce AGI, or that it's hundreds of years away, then there's nothing to talk about. We'll just have to wait a decade or two and see what happens.

But if you agree with me that we'll have it fairly soon, then Cheryl's question becomes: What do I think is the usefulness of a machine version of human intelligence? And there, I assume the answer is fairly obvious:

• Since I'm positing that AGI-powered robots will be the cognitive equal of humans, then by definition they'll be able to perform every conceivable human job.
• But better than humans! In addition to our raw smarts, they'll work 24 hours a day, have instant access to all human knowledge, and never ask for a raise.
• As teachers, they'll be personalized to every student. It won't matter if you have a visual learning style. It won't matter if you're on the spectrum. It won't matter if you're dyslexic or ADHD. They'll adapt to whatever works best.
• As caregivers they'll be completely reliable, infinitely patient, and willing to talk endlessly about anything that we olds want to natter on about.
• If we haven't done so already, superhuman AGI will solve both our energy problems and global warming.

I'll confess that I've never understood why anyone would ask what AGI is good for. It just seems so obviously world-changing. But maybe I'm missing something.

Was Silicon Valley Bank in good shape before it was put out of business by a bank run? As of Tuesday, March 7, here's what the rating agencies said about them:

These ratings hadn't changed in over a year. Here's what the major stock analysts had to say:

Buy! Overweight! Outperform! The analysts who followed SVB and were intimately familiar with its balance sheet remained enthusiastic until literally the very last minute.

I'd also show you what the regulators said, but there's nothing to show. Like the rating agencies and the analysts, they saw no problems.

Even on Wednesday, March 8, after SVB had issued its mid-quarter review, nothing happened. Moody's downgraded them slightly to Baa1, which is still solidly investment grade, and that was about it. None of the pros who understood SVB best had anything bad to say about them.

By close of business the next day there was nothing left but ashes.