It’s been a long time since I posted, I know. But rather than explain that in this post, I will get into today’s musing and save that story for another post.
The other day I was sitting in my car listening to some old-oldies while going to the pharmacy. My old-oldies playlist has artists like Edith Pilaf, Elvis Pressley, Doris Day, and Audrey Hepburn. The song that got me thinking though, and is relevant to today’s subject, was “Brother Can You Spare a Dime” by Bing Crosby. It’s a song from 1932 during the height of the Great Depression. The song is from the point of view of a man who worked hard to build his American Dream just to see it taken by the financial collapse. With the collapse of Silicon Valley Bank (SVB), Signature Bank, and the imminent collapse of Credit Suisse, it’s a tune we will all be singing soon.
The question of course is who to blame. Just like with the 2008 recession, Democrats like Joe Biden and Elizabeth Warren are trying to place the blame on Republicans. The Republicans have rightly pointed out that this is entirely caused by Biden and the Democrats who have caused massive inflation and an accompanying rise in interest rates. But while this is Biden’s fault, Republicans are missing another piece to the puzzle. The other factor that led to this collapse is that we have been carving out a special economy for the most useless people in all of society. We see them as DEI experts, social scientists, and writers like Ibram X Kendi. And I have a name for what we created for them, the “Social Justice Economy”.
To be fair, both sides are to blame for the creation of this. Democrats and other leftists are to blame because they screamed, bullied, and threatened society to create and carve out this part of the economy. They told us we need every company to have a DEI Director to tell our CEOs they are racist and they need to focus more on social justice than their bottom line. They started convincing rich white liberals with more money than sense that we need to fund a field of “Science” revolving around how to claim people and things they don’t like are evil and contribute to racism, all while calling for solutions that look like they were ripped from the pages of Jim Crow Handbooks. They basically created a professional market for busy-bodied scolds who have no other skills aside from making themselves and others miserable.
But Republicans share the blame too. Even when we were in power, we turned a blind eye to state colleges and institutes of higher learning like Yale and Harvard while they acted as Diploma Mills, churning out useless pions with useless degrees that provided no real value to society. We could have cracked down on these “Social Justice” degrees by withholding funding from these “Schools” or by using regulatory powers to prevent Banks and companies from feeding the groups that push these things on young minds. Particularly it’s the banking aspect we REALLY should have cracked down on. SVB apparently had deep investments in ESG (Environmental, Social, Governance) and DEI (Diversity, Equity, and Inclusion) Funds, the formal term for the Social Justice Economy, and this contributed to what is now the 2nd Largest Bank Collapse in US History.
Banks have a fiduciary duty to their customers not to take harmful investments, however, SVB completely ignored that. To start, they invested heavily in the ESG funds by claiming they were stable and were in line with the values of their left-wing investors and clients. But none of this was true. To quote a study by two professors at the London School of Economics and Columbia University:
Using a comprehensive sample of self-labelled ESG mutual funds (as identified by Morningstar) in the United States from 2010 to 2018, we find that these funds hold portfolio firms with worse track records for compliance with labor and environmental laws, relative to portfolio firms held by non-ESG funds managed by the same financial institutions in the same years. Relative to other funds offered by the same asset managers in the same years, ESG funds hold stocks that are more likely to voluntarily disclose carbon emissions performance but also stocks with higher carbon emissions per unit of revenue. Despite these findings, ESG funds hold portfolio firms with higher average ESG scores. We show that ESG scores are correlated with the quantity of voluntary ESG-related disclosures but not with firms’ compliance records or actual levels of carbon emissions. Finally, ESG funds appear to underperform financially relative to other funds within the same asset manager and year, and to charge higher fees. Our findings suggest that socially responsible funds do not appear to follow through on proclamations of concerns for stakeholders.
Raghunandan, Aneesh and Rajgopal, Shivaram, Do ESG Funds Make Stakeholder-Friendly Investments? (May 27, 2022). Review of Accounting Studies, forthcoming, Available at SSRN: https://ssrn.com/abstract=3826357 or http://dx.doi.org/10.2139/ssrn.3826357
Essentially SVB lied to their investors and depositors about two critical things. First off, they lied about the stability and financial return of the ESG funds and put their client’s money at risk with a weak portfolio. They also lied about the goals of these funds, as the findings show ESG funds tend to pollute more and have more violations of labor laws than their non-ESG counterparts. This means that the ESG funds that SVB was investing in were a lot like the Social Justice degrees of the people pushing them, a big scam to transfer wealth to the undeserving by lying.
What is more shocking though is the company’s investments in DEI causes. These aren’t even funds, they were quite literally using clients’ funds to pay for pride parades or to donate to social justice-oriented groups which provide no return on investment. Someone playing Devil’s Advocate could of course claim that the ROI was advertisement, however as a bank that dealt with tech startups and Hollywood productions, there is not really much of a chance an SVB banner at a pride parade would bring on more clients, just satiate the appetite of current clients who crave virtue signaling. And it doesn’t excuse the fact they had no Chief Risk Officer (would have been nice to have one of those around last week) for 9 months last year. In addition to this blundering oversight, the employee who was supposed to fill that gap, the CRO for Overseas Markets, spent her time working on diversity initiatives rather than doing her job of assessing market risks.
I don’t want to seem like I am just shitting on SVB though, Signature Bank who also collapsed last week put funds into DEI nonsense as well which provided no value to shareholders or depositors. Take for example this ad from before they collapsed:
And of course, it is interesting to note that SVB and Signature Bank, along with Credit Suisse have been major donors to the Democratic Party, the patrons of the ESG/DEI cabal, and the creators of, you guessed it, the Social Justice Economy. But I haven’t touched too much on that idea in this post yet, aside from the fallout of its existence. I guess to truly explain it, we need to go back to the idea of the “Professional Scold”.
Many of you probably aren’t familiar with the use of the term “Scold” as a noun rather than a Verb. The Oxford Dictionary Explains it better than I do:
scold
verb
- remonstrate with or rebuke (someone) angrily.
“Mom took Anna away, scolding her for her bad behavior”noun
DATED•US
Oxford Languages
- a person who nags or grumbles constantly (typically used of a woman).
“his mother was the village scold”
So basically, back in the day, a Scold was an unpleasant person who got on everybody’s nerves, nobody liked and wasn’t very successful in life usually. Today however a scold is a well-paid person with a degree but no other useful skills other than going around nagging and harassing people. This is thanks to the Social Justice Economy. You see at first we all laughed at these nitwits who wasted daddy and mommy’s money on useless degrees. Little did we know they were being trained to be the left’s shock troopers, and while we mocked them about taking their degrees to get a job at the Social Justice Factory, left-wing extremists were preparing a niche for them in the corporate world to perform a totally unwanted and unnecessary role. But to what end? Well, predictably a horrible one.
See the motivation is twofold. On one level it’s meant to give a job to these useless people so they don’t default on their loans and bring attention to what a scam Social Justice Degrees are. But on another level, it has been a real and concerted attempt to get their ideologues into positions of importance beyond their actual skill or merit so they could push an ideology of control and obedience to the left wing. And so far, they haven’t just merely gotten away with it, they have been wildly successful. Of course the risk they gambled with has now blown up in our faces.
Banks are collapsing, and once-strong companies like Disney are now seeing their stock prices dropping wildly. This is the consequence of forcing assets without value on the corporate world. This is what happens when you forcibly carve out a place of importance for those who should remain unimportant. This is the penalty we are now paying because a select few decided to saturate the economy with people who have no real or desirable skills. But how low will this take us and how will we respond?
As to how low it will go, Moody’s has already downgraded its forecast on American Banks and predicts a full recession by the end of the year. I predict a full-on Depression unless the leadership in Washington changes next year and these corporations learn their lesson and start purging their Companies of ESG, DEI, and the employees associated with it. Then again I don’t see that happening, cause the same people who brought in the delusional people at the heart of this crisis aren’t exactly tied to reality themselves. So there are hard times ahead. But what should we do?
What should happen is these people should be brought to justice. I am talking jail time for the bank directors and the DEI/ESG obsessed employees who made these reckless decisions. And we should pursue investigations into the colleges that issued their degrees. It’s not too late to put that ban on funds to colleges that push this diploma mill nonsense. But most of all, we need to create banking rules that specifically bar banks from investing funds into political or social causes that have little to no returns on investment.
But again, Republicans are focusing on half the issue right now, and I am sure they will bumble that half up as well. Nothing will happen, the wokesters will push us into a full-on depression they somehow manage to keep above themselves. More banks will pick suppliers and employees based on SJW nonsense rather than value, and more Democrats will retire to the boards of banks that will collapse and beg for a bailout. Sad really, cause once we built a country and made it run. We made it race with the times. Once we built a country and now it’s done. Don’t bother sparing me a dime.
William Hellmann 