Musings are unedited writing meant for a dialectic. Thoughts and sentiments expressed here are evolving in real time… it’s been a while since I’ve written so pardon the dust as I spray some WD-40 on the writing wheel…
SVB and Why We’re Screwed
The rapid collapse of Silicon Valley Bank has stunned the finance world and is sending financial ripples through the economy, the impact of which will only become clear after some time. As vultures circle the auction looking to acquire a new book of business and discount assets and fears of a Lehman-like contagion collapse circle the internet, my concern moves in a markedly different direction – the recent display of human behavior.
Everyone playing with tens, hundreds, or thousands of million dollars should already understand how a bank run works. A bank run does not exist without individual behavior. For the bank’s part, despite having made some poor investment decisions in treasuries and getting squeezed by interest rates, reports show that it is largely solvent with substantial assets. I’ve seen estimates that it has more than enough assets to cover deposits, or that it’s perhaps short by less than 5%. Either way, this is a far cry from the mortgage backed security / insurance / rating / credit default swap absurdity of 2008.
I’d like to give credit to the major depositors that they are smart enough to be able to see the fundamentals are different here – at least as far we know now. More information may come to light that makes this a moot point. But in the heat of the moment when the options are a) choose fear and pull money out as quickly as possible or b) choose stability and encourage others to not panic – everyone chose A. The entire debacle is locked in zero-sum thinking. So Peter Thiel and other big VCs get their money out and pat themselves on the back but it’s their very actions that helped perpetuate the crisis to begin with.
Now maybe they know something we don’t. But this apparently was triggered by a loss of $1.8 billion in a securities sale, representing 0.8% of the bank’s reported total assets. A little fear, panic, and groupthink later and the collective actions of the depositors caused the bank to fail. Runs on the bank are always theoretically possible in a system in which more liabilities exist than assets. Banks are required to keep capital reserves precisely because of this but that will never cover the amount of deposits. My understanding is that in practicality every single bank could experience a bank run that would in the short-term make them insolvent.
Why is this so concerning? Because we know this. We know this is how it works. But when push comes to shove, we always choose the self-interested route of “getting my money out first”. Human greed and selfishness apparently knows no bounds, particularly when dollars, euros, or yen are involved. While the ripple effects of the SVB failure may be quite impactful, what’s more concerning is what this says about the state of human behavior. Despite all of the self-help books, personal development seminars, ceremonies, and church sermons, we are still incapable of effective sensemaking, meaning making, and action taking when the crisis comes.
With all this said, if I had the chance to get a sizable chunk of money out of SVB before others, including money that wasn’t mine but investors, would I? Of course. Not because that’s what I prefer but because that is what the mechanics of the game dictate. Idealism and piety have low utility in game theoretics, as much as I don’t want to admit it.
This doesn’t bode well for the myriad of challenges facing us with the metacrisis. Self-interested actors, whether individual or state, will continue to consider themselves before the collective, just as it has always been. Power dynamics will ensure those with more power (the Peter Thiels of the world) get the better end of the deal and are more insulated from the most acute effects of the actions they helped to set in motion. Politicians send our children off to war, not theirs. SSDD. And on we go propping up a system whose fundamental assumption, financial capital, goes unquestioned. The Great Simplification with Nate Hagens has much to say about this and the implications of a system which makes money out of thin air whose promise of value must ultimately be fulfilled by the finite resources of the planet.
A Theory of Change
Perhaps this type of panic-and-withdraw behavior is hard-wired into the human brain from an evolutionary perspective and there’s no getting around it. But I don’t believe that. In my experience, we have the ability to hone self-awareness and illuminate the biases and fallacies of our thinking, interdicting before we react instead choosing to respond. Would the same sequence of events played out if the decision makers were properly trained to recognize their System 1 thinking and instead opt for System 2 thinking? Would the result be different when the moment of fear arose they were capable of tuning into their nervous system and properly calming it? There’s such a wide array of techniques and modalities that seek to improve human decision making and communication, and yet, here we have yet another failure in collective human behavior on display.
I’ve become convinced that to effectively address the metacrisis we must work the inner game before expecting any external change. Therapy, coaching, ceremony, somatics – you name it. Ultimately we must work at the level of being, first, if we are to affect our individual and collective doing. I see art and aesthetics (like my spoken word) as utterly crucial in helping to de-and-re-construct cultural narratives, norms, and ideals. (note: I intend to expound more on this theory of change at a later date)
Terrance McKenna talked and wrote about the Archaic Revival, a period in which humanity returns to the long-tended threads of myth and magic around the fire as a direct medicine to what ails us from the technocracy. As artificial intelligence surges in our collective awareness and our technocrats dominate news cycles and larger swaths of the economy, there is an aliveness stewarded by those connected with place and community which offers a chance for wholeness and health.
The relationship between this theory of change focused on the developmental path of internal capabilities and the collapse of SVB is a bit murky. Likely it’s exact mechanism can never be fully illuminated or measured. That it just works was always good enough for earth-based societies. The how was relegated to something akin to Spirit or God. But in our world of MBAs, dashboards, ROI, and up-and-to-right, this is unacceptable to linear, mechanistic, Cartesian ways of thinking. And that lies at the very root of the problem. Today our doing is guided primarily by our thinking. The numinous is reduced to abstractions and conceptualization. Everything is an “in order to” aiming at an outcome that’ll lead to more money and prestige.
Indigenous cultures knew very well that it was from our being-ness that emerged the rich fibers of culture, connection, vitality, viability, and evolution. They modeled the universal laws of reciprocity and relationality in action. Because of this the choices they made typically honored the constraints of the lifeshed within which they were nested. Today we’re so disconnected from our bodies, biosystems, and each other that in our culture thinking is given the penultimate place in the hierarchy of faculties. I myself am recovering from the dominance of both thinking and doing seeded in my traditional cultural upbringing and education. Not that having a bias towards action is bad in-and-of-itself. Rather, it’s understanding the “why behind what” that’s important, the hidden motivations for our actions and behaviors that hide masked in our shadow, trauma, and cultural/familial programming.
There are shortcuts in life – but only on the outside external world. There are no shortcuts to “doing the work”. Maybe all of the bankers and VCs have done the work and they are content to play the game in its current zero-sum iteration. It’s sure worked out for them and theirs. Though if one “really does the work”, can self-interest be the outcome of that, either from a rational or spiritual perspective? I think not. Maybe if they had done the work, they wouldn’t have fallen prey to the most predictable and durable elements of human behavior: panic and groupthink.
Write large we are still woefully underprepared at a psychological and developmental level as a species and culture for the challenges we collectively face. Yet there are many, many humans and organizations that have heard this call to do the inner work first. Perhaps this is why everyone and their mother is becoming a life coach. Is this the natural response to the imperative of our current societal need by those who feel responsible to take action? Is the most logical course of action to make a masterclass and a living helping others wake up?
Perhaps Nothing is Wrong
For a short few months in Dallas I took the courses of Landmark Education; the Forum and Advanced Course being the primary offering of this organization that emerged out of the EST trainings in the 70s. One nugget that stuck with me was a short saying to “Be Extraordinary”: Give up the interpretation that there is something wrong.
I must admit that depending on the day I oscillate from grounded optimism to stark pessimism about the trajectory of our country, species, and planet. Inhabiting the full spectrum is a necessary developmental capability in one’s ability to meet the complexity of our gordian knot. I truly am filled with hope when I see the vast sums of individuals who are dedicating their lives to the tiniest nibbles of the metacrisis elephant. So many dedicated people who are coordinating solutions to the myriad of problems that face us.
Despite these well-intentioned efforts there is an acknowledgement among many I speak with that things are not getting better – they’re getting worse. Open kinetic war rages in Europe. Climate data shows up on the upper bounds of all projections. The economic shill game builds the house of cards ever higher. Etc… etc… etc… you already know.
There’s nothing wrong.
And I don’t suggest this as a spiritual bypass. It’s a real possibility. What if all of what we fear with the climate and economic collapse and population decline etc… etc… becomes our reality? And what if that reality is the true and actual course of human development? And because humans are a part of nature (not separated from it), what if that means that all of this nature’s development too? There’s plenty of cases where animal species outgrow their resources and population collapse occurs. Perhaps we too, hindered by our ability for collective long-term thinking or sacrifice, will inevitably overshoot our means. Perhaps the dream of an evolved human species capable of harnessing all of its faculties and senses can only be realized after the great simplification. What if it all must come crashing down to learn our lesson?
What if…nothing is wrong?
There are so many implications of this for our individual and collective behavior that are worth considering. Many are moral or ethical. I’ll leave that for a future post. But in short, even if nothing is wrong – what we do, why we do it, and how we do it, matters.