00:53 The First Law of Bond Trading. (A trip down Memory Lane Wall Street.)
08:59 Risky business. (Nobody in charge at SVB.)
15:57 All credit to the Swiss. (Does DEI trump competence?)
20:26 Steinberg’s rule revisited. (Manners, U.S. and U.K.)
25:24 Does Indianization have upsides? (Suella smacks ”out-of-touch lefties.”)
36:17 The old, weird America. (Remembering Rev’m Ike.)
38:27 Across the Mediterranean. (Camp of the Saints in Europe.)
41:04 Newark gets conned. (Why not Turkmenistan?)
42:58 Florida: the algae threat. (Is it natural?)
44:19 Signoff. (With John McCormack.)
01 — Intro. And Radio Derb is on the air! Greetings, listeners, this Saint Patrick's Day; and of course special greetings to Irish listeners … at any rate to Irish listeners who cherish their heritage. I don't want anything to do with this new tribe of woke Irish.
For starters this week I'll take a trip down Memory Lane — in this case, actually Wall Street.
02 — The First Law of Bond Trading. The big talking point of the week was the collapse of Silicon Valley Bank, with a couple of hundred billion in assets evaporating overnight and blowing away on the morning wind.
I ought really to be more interested in this than I actually am. I only became a rootless bohemian 22 years ago. Prior to that I was a middle-class shlub, with a salaried job at a respectable firm — an investment bank, in fact.
What did I do there? Well, I wasn't a hot-shot trader, more's the pity. I was a back-office worker bee, a cube jockey designing and writing software for the bank's Credit and Risk Management Department.
A word about "Credit and Risk Management." Lurking behind both those terms is indeed a word, a single word: exposure. A bank wants to know how exposed it is to the possibility of losses.
The Credit team concentrates on the losses the firm would take if other firms it's doing business with fail in their obligations. It's just like the "credit" in "credit card." Do we really want to do a five-million-dollar trade with Beaverburg Savings & Loan? Are they sound? That's Credit.
(If the question was being asked in the late 1980s there was about a one-in-three chance that Beaverburg Savings & Loan wasn't sound. That was the great Savings & Loan crisis of the time, the one from which we learned, too late, the 3-6-3 rule of Savings & Loan management: Borrow at three percent, lend out at six percent, on the golf course by three o'clock. But I digress.)
That's all Credit. The Risk Management folk try to estimate the firm's exposure not to particular counterparties but to global variables like interest and currency exchange rates. If the Fed raises interest rates or the Japanese yen tanks against the Euro, shall we take a loss on this item of business, or that one? That's risk management.
That was my line of work for fifteen years: cutting code to calculate my bank's exposure to shaky counterparties and changes in global variables. It wasn't glamorous but it paid the bills.
To this elderly Credit and Risk Management geek, the SVB collapse looks like a serious failure of Risk Management. It wouldn't have happened if I'd been cutting their code.
There's some knotty stuff in Risk Management computing — check out the Black-Scholes model for option pricing, if you're confident with your calculus. That doesn't seem to have been in play with SVB, though. What happened here was just basic banking.
Basic banking: A bank is a safe place to stash your money; but a bank doesn't just take your money in tens and twenties and lock it up in a vault, it uses your money. It spends your money to buy stuff.
One variety of stuff banks particularly like to buy is bonds. Bonds — especially bonds issued by the U.S. Treasury — are a nice, safe, dull conservative investment — isn't that what your own financial advisor told you? You hold a million-dollar bond with a four percent coupon, you'll get forty thousand dollars a year from the issuer until either the bond reaches its maturity date, when you get back the million dollars you paid for the durn thing, or you sell the bond to someone else.
What mostly happens in the life of a bond, especially a bond with a long maturity date, is, it gets bought and sold — traded in the secondary market. That's where the First Law of Bond Trading comes in.
See, if you've been holding that four percent bond for a while, and while you've been holding it the Fed has jacked up general interest rates to six percent, you're going to have to sell it at a discount. Why would anyone pay full price for your dumb four percent bond when he can get six percent from a bank deposit account?
Contrariwise, if while you were holding that bond the Fed lowered the interest rate to two percent, your four percent bond is now glowing with health. You can sell it at a premium.
And there's your first law of bond trading: When interest rates go up, bond prices go down, and vice versa.
The Risk Management team at SVB seem not to have known the First Law. Actual Silicon Valley tech companies, when they were swilling in money, gave scads of it to SVB for safe-keeping. SVB used that cash to buy heaps of long-maturity U.S. Treasury bonds with coupons pegged to the very low interest rates that prevailed until recently.
Then the Fed jacked up interest rates in hopes of pushing down inflation. The First Law kicked in. Those heaps of Treasuries were now worth way less than the bank paid for them.
If the tech firms wanted to withdraw their deposits — which they did, facing business losses themselves — SVB had to sell off the bonds at deep discounts. The cash they got wasn't enough to cover the withdrawal slips; and the amounts involved were way over the FDIC insurance limits. [Crashing sound.]
So as I said: a failure of Risk Management. Just a gross failure of competence.
03 — Risky business. Competence, right. Who was in charge of SVB's Risk Management?
Until a few weeks ago the answer was: nobody. SVB didn't actually have a head of Risk Management for the last eight months of 2022. A lady named Laura Izurieta had held the title but she stepped down in April last year, I don't know why. Then for eight months, through to January 4th … nobody.
If SVB didn't have a head of Risk Management, they did of course have a Chief Diversity, Equity & Inclusion Officer for those eight months, a lady named Angela Morris Lovelace. Some positions are too important to be left unstaffed.
Then on January 4th this year SVB finally hired in a head of Risk Management, a lady name of Kim Olson, to work out of the New York office.
In the press release that announced her hiring, Ms Olson declared that, quote:
SVB has an impressive track record of sound growth and remaining true to its strategy of serving the innovation economy. I am excited to lead SVB's outstanding risk management team and continue to build SVB's risk management framework and capabilities in this important next chapter of the firm's trajectory.
Greg Becker, the bank's CEO, gushed that, quote:
Kim's deep and multi-faceted financial services experience as a senior risk leader and former regulator and bank supervisor positions her perfectly to actively manage SVB's financial and non-financial risks and to build and scale the firm's risk management capabilities through our next phase of growth.
If Kamala Harris is out of a job after the next election she could hire herself out writing press releases for the financial sector.
That was in January, before the firm blew up. I can't find out much about Ms Olson, but she doesn't seem to be an idiot. She has a long track record in Risk Management; and sure, it includes a spell at Deutsche Bank, which had a big court judgment against it six years ago for hanky-panky contributing to the crash of 2008, but Ms Olson seems not to have been involved.
And if the bank didn't have a head of Risk Management last year, they did have lower-rank executives working on Risk Management. Here's one of them: Jay Ersapah, Head of Financial Risk Management for the bank's U.K. branch.
That forename "Jay" is a bit misleading; Jay Ersapah is in fact a female. Well, sort of. She tells us that she identifies as a queer woman of color and is passionate about promoting LGBTQ awareness.
As well as running Risk Management for SVB's U.K. branch, Ms Ersapah also served as the company's European LGBTQIA+ Employee Resource Group co-chair.
As for the "woman of color" thing: I can't locate the origin of the name "Ersapah," but it sounds Indian, she looks Indian, and she comes from Birmingham, England, which is populated mainly by Indians, although I think there may still be a few white English people hiding in odd corners of the city. So Indian's the way to bet.
Are you forming some kind of a picture here? I've named four SVB executives, three in Risk Management and one managing the bank's Diversity, Equity & Inclusion Office. All four are women, two white and two nonwhite. One is sexually eccentric, two are married to men, and Ms Izurieta's orientation is not known, not to me at any rate.
All right: Women can of course be competent in Risk Management — I've known a couple. And sure: Four is not an impressive sample size. Still, are you getting a hint — a glimpse of a shadow of a hint — that Diversity, Equity, and Inclusion are driving out competence?
Quote from the New York Post, March 14th, quote:
Jay Ersapah, the boss of financial risk management at SVB's U.K. branch, launched initiatives such as the company's first month-long Pride campaign and a new blog emphasizing mental health awareness for LGBTQ+ youth.
That's nice; but wouldn't Ms Ersapah's energies be better employed in, you know, Risk Management? SVB was, after all, at serious risk … as we now all know.
04 — All credit to the Swiss. Just a short follow-up to those before I pass on to other topics.
I didn't mention it, but my employer for those fifteen years I was coding away for Credit and Risk Management became Credit Suisse. I have to say "became" because when I joined the firm in 1985 they were First Boston Corporation. They partnered with Credit Suisse in 1988 and became Credit Suisse First Boston; then, after I'd left, just Credit Suisse.
I'm telling you this because it keys to the theme of DEI taking over from competence in investment bank hiring. Poster boy here: Pips Bunce.
I have already microaggressed by saying "poster boy." Pips Bunce is Head of Global Markets Technology Core Engineering Strategic Programs at Credit Suisse, and he's gender fluid.
That apparently means that he is either male or female depending on how he feels when he wakes up in the morning. Some days he's a guy, and dresses like a guy in suit and tie; other days he's a gal, in a dress and a rather fetching blonde wig.
That's gotten him into trouble with some identity purists. They say that's not what "gender fluid" means, it's just, to quote one of them, quote: "living out your deep fantasies and legitimizing them socially with a fancy title," end quote.
I can't rule on the precise point of theology here. This identitarian stuff makes my eyes glaze over. The banking industry at any rate takes Mr Bunce's gender fluidity seriously: the Bank of London has nominated him — her, whatever — as the, quote, "inspirational role model of the year," end quote.
I am, however, going to join the ranks of people wondering on Twitter whether Credit Suisse having a senior executive who doesn't know what sex he is may somehow be connected with the fact that Credit Suisse's share price dived off a cliff recently.
They recovered on Thursday, I'm glad to say, following a loan to the firm of 54 billion dollars from the central bank of Switzerland. Say what you like about the Swiss, they take care of each other. I hope if ever I find myself in need of 54 billion dollars, someone will be there for me like that.
And just a footnote to the footnote here. It used to be the case, before London filled up with foreigners, that if you spent much time among working-class Londoners you got used to rhyming slang. They referred to the phone as "the dog and bone," the wife as "the trouble and strife," and so on.
In this diction "merchant banker" was a way of referring to an obnoxious and useless fellow because it rhymes with a common slang word for someone fond of self-abuse. There must be some witty way to key that to the theme of this segment, but I just can't get a grip on it.
05 — Steinberg's rule revisited. The Oscars came and went. Usually they do so without a flicker of interest from your cinematically challenged host. I barely know who any of these people are any more.
This year, however, there was a flicker. That Hugh Grant interview caught my attention, the one where some lady with a mike waylaid Grant on the red carpet and asked him the kind of vapid questions interviewers ask showbiz celebrities.
Grant just wouldn't play the ball back over the net to her. She: "Who were you most excited to see win an Oscar?" He: "No one in particular." And so on.
It wasn't so much the interview itself that caught my interest as the outraged reaction to it by some commentators. Grant was deliberately rude! they shrieked.
I think it was exclusively Americans who reacted like that. Brits couldn't see what the problem was.
Naturally I'm with the Brits on this. In fact I covered this whole zone back in 2015, in my August 21st podcast that year. Which is mighty convenient as it means I can just cut'n'paste the relevant sound clip. Here we go.
Cultural adjustment, Britain to America? Aren't we cousin nations, speaking the same language?
Well … not really. George Orwell said that England has a national culture as distinct and particular as Spain's. It sure is different in key respects from America's.
There is for example the British addiction to understatement and irony, "in which," — here I am quoting the 20th-century British novelist Anthony Powell, "in which all classes of this island converse," end quote. That doesn't work so well in the States.
Don't take my word for it. Here's Jonathan Steinberg, Professor of Modern European History at the University of Pennsylvania, giving a set of lectures for the Great Courses company. This particular lecture concerns the 19th-century English novelist George Eliot. Professor Steinberg prefaces it with some remarks about British irony. Over to him.
[Clip: Prof. Steinberg: Here I speak from personal experience. I was an American who lived for nearly forty years in England.
It may help here if we introduce J. Steinberg's double equation for explaining Anglo-American misunderstanding. It works like this.
• In England the best thing you can be is amusing or clever, and the worst is tiresome or a bore.
• In America the best thing you can be is sincere or genuine; the worst is a phony.
If you put those values together, what you get is:
• English amusing or clever equals American phony, and
• American sincere equals English bore.
This really works. I've tried it for years and I know it works. It's really been road-tested.]
I've taken it out for a spin myself a few times, and Prof. Steinberg nails it. The Englishman cherished by his friends for charm and wit can come across to Americans as a frivolous phony; the American revered by his friends as a paragon of wisdom and morality strikes Englishmen as a smug bore.
This isn't always the case, of course, but there is definitely a nontrivial cultural adjustment to be made. Some people can make it; some can't; some can, but don't see why they should.
Bear this kind of thing in mind when you hear about assimilation. If there are issues like that for English immigrants, imagine how it goes with immigrants from Afghanistan or Korea.
See? That explains the whole thing. Hugh Grant wasn't being rude, just British.
06 — Does Indianization have upsides? Let's just stay in Blighty for a couple of minutes. This is a story from London — actually from the March 14th Daily Mail, but it will sound all too familiar to American listeners.
As you'll know if you follow VDARE.com, Britain is in the fourth year of a huge surge in illegal aliens crossing the English Channel from France. The British media, in an excess of politeness, still refer to the crossers as "asylum seekers," although since France is a perfectly safe country the term has never made any sense.
The so-called Conservative Party, which has controlled Parliament for twelve years, has done nothing to stop illegal immigration. Boris Johnson, Prime Minister until last September, displayed no interest whatsoever in the issue even as the numbers of incoming illegals surged into the tens of thousands.
Rishi Sunak, who replaced Johnson as Prime Minister, seems to want to take some action on the issue. It's not hard to figure out why.
By law there has to be a general election for a new Parliament before January 2025, less than two years from now. Rishi Sunak's Conservative Party is not polling well. The latest surveys show a thumping great majority for the opposition Labour Party.
This is a bit paradoxical. There's widespread public desire for action on illegal aliens — among Conservative voters it's the Number Two issue, right behind the cost of living. The Labour Party is run by anti-white metropolitan progressives: nobody thinks they will do anything to stop the flood.
So if Brits want action on the illegals and nobody thinks they'll get it from Labour, why is Labour polling so well? Rishi Sunak obviously thinks the answer is: Because, on the basis of twelve years experience with the Conservatives, nobody thinks they will act, either, so the immigration issue's a wash. Voters have just given up on it and want Labour in to do some repair work on the economy and the welfare state.
Resolute action by the Conservative government might change their minds, so that's the direction Sunak is trying to go in.
He put a bill before the House of Commons this week that will, if it becomes law, make some key changes. For example: Anyone arriving in Britain by crossing the Channel in a small boat — or any other unauthorised means — would no longer be able to claim asylum in the U.K. They'd be shipped to some third country like Rwanda and put under a lifetime ban on re-entry to the U.K.
The bill also eliminates some of the possibilities for indefinite litigation and re-litigation on "human rights" grounds that lobbies for the illegals use to prevent deportation indefinitely.
So it's good stuff. The House of Commons approved the bill at its second reading Monday night.
However, Sunak didn't get the full support of his party. Just as here, the British political class lives at a distance from ordinary people and doesn't much like them. Conservative Party politicians in general are more liberal than their voters, just as our Republican congresscritters are more liberal than their voters.
No-one in Sunak's party actually voted against the bill; but several abstained in the vote and some spoke against it in the House. One of them was Theresa May, the Prime Minister before Boris Johnson.
The bill was unkind to people escaping slavery, said Mrs May. In point of fact the biggest single component of the channel boat people is Albanian gangsters, but I guess no-one told her that.
Mrs May also said, quote: "Whenever you close a route, the migrants and the people smugglers find another way." End quote. That's the transatlantic equivalent of those Republicans who tell us that building a ten-foot wall on our border with Mexico is no use because illegals will bring twelve-foot ladders with them.
So yes, the Brits have their Lisa Murkowskis, Mitch McConnells, and Lindsey Grahams, too. It's a worldwide plague, or at least an Anglospherewide one.
And to leave on a happier note, they do also have Suella Braverman, who I advertised to you last Fall when she was serving as Britain's Home Secretary — which is to say Attorney General, near enough.
Mrs Braverman is still Home Secretary, notwithstanding a one-week hiatus last October while the Brits changed Prime Ministers. She was on fighting form in the House on Monday.
I'll play the clip; but first I'll remind you that Mrs Braverman is of Indian origin, in fact is a practicing Buddhist. I should also tell you that a second member, also a lady with a voice much like Mrs Braverman's, makes a brief contribution around the 1m20s mark. (The lady's name is Dame Andrea Leadsom, if you want to know, and she is the Member for South Northamptonshire, my home county.) OK, here we go.
[Clip: Braverman. It is unfair on those who play by the rules and it is unfair on the British people, so we must change the law and we must stop the boats. For too long, those of us voicing concerns about the effects of uncontrolled, unprecedented and illegal migration have been accused of inflammatory rhetoric, but nothing is more likely to inflame tensions than ignoring the public's reasonable concerns about the current situation. The public are neither stupid nor bigoted. They can see at first hand the impact on their communities and it is irresponsible to suggest otherwise.
Speaking of acting responsibly, I want to put something on the record. It is perfectly respectable for a child of immigrants like me to say that I am deeply grateful to live here and that immigration has been overwhelmingly good for the United Kingdom, but also to say that we have had too much of it in recent years (noise in the chamber) and that uncontrolled and illegal migration is simply bad.
Leadsom. Does my right hon. Friend agree that in the last couple of years, when we have seen exponential growth in this human trafficking across the channel, the money that people can ill afford to spend on these criminals has been used to make their trade even more effective, putting yet more lives in danger?
Braverman. My right hon. Friend puts it very well. We now have a sophisticated, well resourced, multibillion-pound trade of illegal people smuggling and human trafficking. It is pan-national and it needs to stop. (noise in the chamber)
But to say … (unintelligible interruption) … I am going to make progress. And yes, Mr Speaker, despite the reasonable concerns that we have raised on several occasions, I am, like my right hon. Friend the Member for Witham (i.e. Priti Patel, Mrs Braverman's predecessor as Home Secretary) before me, subject to the most grotesque slurs for saying such simple truths about the impact of unlimited and illegal migration. The worst among them, poisoned by the extreme ideology of identity politics, suggests that a person's skin colour should dictate their political views.
Mr Speaker, I will not be hectored by out-of-touch lefties, or anyone for that matter. (noise in the chamber) I will not be patronised on what are the appropriate views for someone of my background to hold. And I will not back down when faced with spurious accusations of bigotry …]
"I will not be hectored by out-of-touch lefties." I like that. Maybe this takeover of the Anglosphere by Indians that we've all been bitching about here at VDARE … maybe it'll turn out to have some upsides.
07 — Miscellany. And now, our closing miscellany of brief items.
Imprimis: Bishop Lamor Whitehead is in the news again. This is the flamboyant black pastor who was robbed in mid-sermon last year, right there in front of his congregation, by two masked bandits who relieved the bishop of more than a million dollars' worth of jewelry.
This time it's His Grace himself who's been committing robbery. Apparently he fabricated bank records in an attempt to finance his million-dollar New Jersey mansion. That's the charge made by federal prosecutors, anyway, in a March 8th indictment.
Ah, the Prosperity Gospel. Older listeners may recall the Rev'm Ike back in the 1970s. Quote from his Wikipedia page:
He was famous for his "Blessing Plan" — radio listeners sent him money and in return he blessed them.
I can remember hearing Rev'm Ike on the car radio fifty years ago. "You don't want no pah in the skah. You want yo' pah now, with cream an' cherries on top!" Unforgettable.
Rev'm Ike went to join the choir invisible back in 2009. His son Xavier took over the church and seems to be doing well from it.
Good luck there, Rev'm. You are, and Bishop Whitehead is, and your Dad was, little remnants of the old, weird America. It still lives in you.
Item: They're coming across our Mexican border — and, as I told you two weeks ago our Canadian border — they're coming across the English Channel, and … they're still coming across the Mediterranean, in bigger numbers than ever.
That's according to ZeroHedge, March 14th, quote from him:
The number of illegal border crossings from North Africa into Italy more than doubled in the first two months of the year, compared to the same period in 2022 …
According to the European Union's border agency, Frontex, the top three nations of origin for migrants arriving via the Mediterranean are Ivory Coast, Guinea, and Pakistan.
There are some real numbers here. Last year, 2022, a third of a million border crossings were detected. And that's just the ones detected. Across the EU altogether, almost a million asylum claims were made last year. That's real Camp of the Saints numbers.
Italy is particularly hard hit. That nation's Prime Minister, the lovely Giorgia Pippalina, is locked in a struggle with do-gooder NGOs — Non-Governmental Organizations — who have fleets of ships patrolling the Mediterranean looking for boats full of illegals they can pick up and transport to Italian shores.
But there are some welcome signs of spine-stiffening over there. Breitbart, March 16th, quote:
The European Union is calling on member states to do more to deport illegal immigrants and those without valid reasons for being in their countries, noting a low rate of deportations that are actually carried out.
And look at that: they said "illegal immigrants," not "asylum seekers." Anyways I hope they did, I hope it's not just a Breitbart edit.
Item: Newark, New Jersey is where people go when they find Baltimore too civilized. So I wasn't too surprised at this story about Newark's signing a Cultural Trade Agreement with the Hindu nation of Kailasa. There was a formal signing ceremony on January 12th, attended by the Mayor and city officials and delegates from Kailasa.
Only after the signing ceremony did someone bother to find out, after a couple of minutes internet browsing, that there is no such nation, nor even just a city, as Kailasa. The whole thing with Newark was a set-up by notorious Indian con man Swami Nithyananda.
The city fathers of Newark would be blushing with shame and embarrassment, except that they're all black.
For goodness' sake, people: If you want to enter into Cultural Trade Agreements with real nations of worldwide influence and significance, what's wrong with Turkmenistan?
[Turkmenistan national anthem.]
Item: Finally, if you are thinking of moving to Florida as it seems like half my neighbors have done, you might want to hold off for a while.
A report here in The Hill, March 14th, says that a vast blob of algae is heading toward Florida's Gulf coast.
This sucker is big — five thousand miles across. That's bigger than the U.S.A. "Scientists warn that Florida beaches could soon be inundated with seaweed," says the report. Well, yes.
The only thing I'd like to be sure of is, is this an entirely natural phenomenon? Or could some very seriously rich guy hire a bunch of marine scientists to make it happen? You know, some very seriously rich guy like, er, … mm …No, no names come to mind.
08 — Signoff. That's it, ladies and gents, all I have. Thank you as ever for your time and patience, for your emails and your many varieties of kindness.
Special thanks to the friend who sent me a book at the end of February. Not only did I read it with interest, Sir, it inspired two whole segments in my March Diary, upcoming at month end. Thank you!
For sign-off on Saint Patrick's Day we must of course have something Irish. Here is the immortal John McCormack lamenting a lost love with full Irish eloquence.
There will be more from Radio Derb next week.
[Music clip: John McCormack, "Molly Brannigan."]