Happy Anti-Communism Week everyone! (In addition, of course, to May 1st being one of two Victims of Communism Day.) The #SchumerShutdown ends with a whimper, a whole lot of SNAP fraud has been uncovered, more Democrats committing fraud, Chip Roy wants a complete immigration halt, Ukraine hits a bunch more Russian oil refineries, some semiconductor shenanigans, another company leaves Delaware for Texas, some tech companies in trouble, an interesting new pistol design, and a novel theory on “AI-related layoffs.”
It’s the Friday LinkSwarm!
As a side note, the mosquitos have been brutal the last few days. Possibly because it’s been a very warm (though largely dry) November, and the bats have already migrated south.
President Donald Trump on Wednesday night signed a continuing resolution at the White House that ends the record-breaking 42-day federal government shutdown.
The Senate passed the resolution on Monday and the House passed it earlier Wednesday evening. The resolution will keep the entire government funded through Jan. 30, and extends funding for military construction, Veterans Affairs, the Department of Agriculture, and Congress beyond that, through Sept. 30.
Trump slammed Democrats for causing the shutdown by refusing to go along with a clean continuing resolution for over a month, and urged voters to remember the party responsible for causing the six-week-long chaos during next year’s midterms.
“Republicans never wanted a shutdown and voted 15 times for a clean continuation of funding,” Trump said. “The Democrats shutdown has inflicted massive harm … So I just want to tell the American people, you should not forget this when we come up to midterms and other things. Don’t forget what they’ve done to our country.”
The resolution gives backpay to many federal workers and reinstates employees who were fired during the shutdown, but does not include an extension of Affordable Care Act subsidies despite it having been a key Democratic demand in the shutdown. The subsidies are set to expire at the end of the year.
And what did Chuck Schumer get for shutting down large portions of the federal government for more than a month? Two things: “Jack” and “Squat.”
I hear that if you call Senate Minority Leader Chuck Schumer’s office, the hold music is Cheap Trick’s “Surrender.”
Last Tuesday night, Democrats were jubilant, convinced they had just inflicted the first of many consequential defeats upon their detested foes, President Trump and the Republican Party. And now here we are, six days later, and Democrats are once again disappointed, infuriated, and at each other’s throats.
For the past 41 days, Republicans have had 53 senators willing to reopen the government, joined by Catherine Cortez Masto of Nevada, John Fetterman of Pennsylvania, and “independent” Angus King of Maine, who caucuses with the Democrats. But it requires 60 votes to cut off debate and bring the legislation to the floor for a vote, and thus to reopen the government, Republicans needed at least four more Democrats to change their mind.
Last night, five additional Democratic senators agreed to vote to reopen the government — and in the eyes of their fellow Democrats, effectively surrendered. Tim Kaine of Virginia, Dick Durbin of Illinois, Maggie Hassan of New Hampshire, Jacky Rosen of Nevada, and Jeanne Shaheen of New Hampshire shifted their positions.
Those eight agreed to reopen the federal government at current funding levels through January 30, and in exchange, all they needed was a pledge from Senate Majority Leader John Thune of South Dakota to hold a vote on legislation to extend the Obamacare exchange premium subsidies by the second week of December.
There are one or two other deal-sweeteners in there for Kaine, notably an attempt to reverse more than 4,000 federal layoffs the Trump administration announced in the shutdown, and language to prevent future layoffs through January 30.
Snip.
Republicans just got the government reopened in exchange for a promise of a vote — not even promise of passage! — and rehiring government workers who were on the job on September 30. That’s a very small price to pay, and Republicans didn’t have to get rid of the filibuster, the ultimate short-term gain, long-term loss for Republicans in the Senate.
Across three-fifths of the United States, the Trump administration has found half a million people receiving SNAP benefits twice over and 5,000 dead people receiving them. In deep blue states, the fraud is probably much worse.
It is important to clarify that 20+ states out of the 50 did not comply with the federal government’s request for information on SNAP beneficiaries, likely because they are trying to hide how many illegal aliens are illicitly receiving food stamps. So the horrifying numbers revealed by U.S. Secretary of Agriculture Brooke Rollins on Laura Ingraham’s Fox News show, The Ingraham Angle, are actually incomplete, and will probably be much higher if the administration can make radical Democrat states provide the necessary data.
Snip.
The secretary continued to list off food stamp recipient statistics: “80% [are] able-bodied Americans, meaning they can work, they don’t have small children at home, they’re not taking care of an elderly parent. They can work, and they choose not to work, of course, because they’re getting significant benefits from the taxpayer.”
We need to restore shame to able-bodied adults living on the public dole.
(Hat tip: Stephen Green at Instapundit.)
A Texas congressman is proposing a “freeze” on all immigration until the federal government fixes the country’s broken system.
U.S. Rep. Chip Roy (R–TX) said Wednesday he is introducing a bill called the “Pause Act” that will freeze all immigration until Congress achieves certain objectives, including reforming chain migration and birthright citizenship and ending H-1B visas.
He said the nation’s record-high foreign-born population is creating “a cultural problem about who we are as Americans.”
Roy, who is in a four-way race to be the Republican nominee for Texas attorney general in 2026, explained his proposal on The Benny Show.
In addition to the immigration freeze and related reforms, Roy called for revisiting Plyler v. Doe, a case originating in Texas that resulted in a 1982 U.S. Supreme Court decision requiring states to fund the education of illegal alien children.
Roy also said his bill would require vetting people for their adherence to Sharia law.
“Why are we importing any human being that is adherent to Sharia law, which is totally contrary to the Constitution, and our values, and Western civilization?” Roy asked host Benny Johnson.
“In Texas, we’ve been dealing with the brunt of the illegal immigration influence. But now we’re seeing, I think, the ramifications of the H-1B system and how it has been abused, in addition to chain migration and diversity visas, which we’ve been trying to fix for a long time, and we’ve been unable to do so,” said Roy.
Mostly agree with this, though there would probably have to be a way for individual exceptions to be made (say, a foreign Christian under a death threat from jihadists, or a Russian or Chinese defector, or a foreign NBA draft choice). But it should be so narrow as to require the personal approval of DHS Director Kristi Noem…
There are Somalis in Minnesota who wouldn’t vote for far leftist Somali Omar Fateh because he was from a different Somali clan, and they want members of the rival clan kicked out of the country…
They also hit multiple targets in Novorossiysk, including both the oil terminal and the S-300/400 system defending it. Also, there’s no way I can donate €100 right now, but I really want one of those “This Is Fine” patches…
Orchestrating Over 180 Anti-Trump Lawsuits Through CREW: As co-founder of Citizens for Responsibility and Ethics in Washington (CREW), Eisen led hundreds of ethics complaints and lawsuits against the Trump administration, often perceived as partisan harassment that politicizes oversight and strains constitutional separation of powers.
Snip.
Involvement in USAID Funding Scandal: Accused of ties to $17M misappropriation via family-linked NGO, raising corruption concerns in foreign aid.
Plenty more at the link.
(Heavy sigh) Look, I’ve been avoid the whole stupid Tucker Carlson thing because he hasn’t been a particularly important part of the mediascape for a while, and plenty of other people were already dog-piling him. Yet, this week he seemed to turn up some pretty interesting information on would-be Trump assassin Thomas Crooks. Namely that he was a pro-Trump supporter…until he radically changed his tune in early 2020.
On July 19, 2019 Crooks writes: “Ilhan Omar and others are invaders and should honestly be killed and their dead bodies sent back.”
On July 20, 2018, Crooks writes: “If youre saying trump is a bad president you arent a patriot as trump is the literal definition of Patriotism”
Seven hours after that comment, Crooks writes: “I hope a quick painful death to all the deplorable immigrants and anti-trump congresswoman who dont deserve anything this countru [sic] has given them”
Later that evening he wrote: “Everyone of the Trump hat-ing democrats deserve to have their heads chopped of and put on steaks for the world to see what happens when you fuck with America”
These types of comments continued for months, “and became increasingly violent.”
“If any of the democratic candidates win. They wont be in there for long. Because unlike the dems we have guns and lots of them”
He also quoted Mao – writing “The only real political power comes from the barrel of a gun.”
The Change:
In early 2020 as the pandemic shifted into the headlines, crooks “radically” changed – writing of “trumps stupidity.”
He then began to mock the idea of the deep state – writing that “The deep state is simply made up of anybody who dis-agrees with the right wing. Conversation over.”
In Feb. 2020, Crooks called out Trump supporters as “brainwashed,” and a “cult.”
Later that day, Crooks called Trump a racist.
And in April 2020 when the COVID panic was in full swing, Crooks became pro-lockdown, writing “It seems that you people don’t understand that sometimes Public safety comes before your Personnel rights.”
He then wrote: “…going to a chinese new years party in america isn’t putting you at risk for corona virus because believe it or not viruses don’t spread through race like Tucker Carlson probably told you.”
In May of 2020, Crooks called Republican concerns over voter fraud “ignorant.”
He then wrote a comment that sounded like a “digital manifesto,” Carlson reports.
“they only way to fight the gov is with terror-ism style attacks, sneak a bomb into an essential building a set it off before anyone sees you, track down any important people/politicians/military leaders etc and try to asasinate them. Any sort of head fight is suicide and even ambush/surprise attacks likely aren’t going to end well.”
Sounds like another “known wolf,” doesn’t it? And the assertion that “there’s no deep state” (combined with what else we know about the assassination) makes you go “Hmmm.”
Senator Mike Lee (R-UT) is pushing back on the idea that the Affordable Care Act (ACA), known as Obamacare, has made health insurance costs more affordable, saying, “Obamacare makes everyone else poor.”
Lee shared a graphic, first posted by President Trump on Truth social, showing how major health insurance company stocks have performed since the ACA was enacted in 2010 to November 2025.
The seven major health insurance companies depicted on the graph show gains of anywhere from 414% to 1177% in their stock prices between March 2010 and November 2025.
Health insurance companies are making money hand over fist—not because they’ve discovered new & innovative ways of making Americans healthier, but because Obamacare insulates them from competition while giving them massive subsidies
Lee called out the insurance providers, noting that they’re “making money hand over fist” but not because they are providing “new & innovative ways of making Americans healthier.”
Instead, Lee says, these health insurance companies are prospering due to the bureaucratic barriers that prevent new competition and from massive subsidies from the federal government.
The Saudis are getting ready to purchase 48 F-35s.
California Governor Gavin Newsom’s former chief of staff Dana Williamson was arrested Wednesday in an FBI corruption probe and charged with multiple counts of bank and wire fraud.
Federal authorities accused Williamson, 53, of participating in a scheme to funnel campaign money from former federal Secretary of Health and Human Services Xavier Becerra into a personal account. Sean McCluskie, Becerra’s former chief of staff, was named as a co-conspirator.
“This is a crucial step in an ongoing political corruption investigation that began more than three years ago,” U.S. Attorney Eric Grant said in a statement. “As it always has, the U.S. Attorney’s Office will continue to work tirelessly with our law enforcement partners to protect the people of California from political corruption.”
Williamson and McCluskie stole $225,000 between February 2022 and September 2024 from Becerra’s dormant state campaign fund, the federal indictment says. The Department of Justice investigation into the matter began three years ago, under former President Joe Biden’s administration, FBI Sacramento Special Agent in Charge Sid Patel said.
“The news today of formal accusations of impropriety by a long-serving trusted advisor are a gut punch,” Becerra told local outlet KCRA 3.
Williamson was hit with 23 charges, including conspiracy to commit fraud, conspiracy to defraud the United States and obstruct justice, subscribing to false tax returns, and making false statements, the U.S. Attorney’s Office said.
Democratic political consultants are so money-hungry they’ll rake graft off other Democrats. Big fleas have little fleas…
Man, it sure seems like a lot of prominent Democratic politicians are committing mortgage fraud. ‘Rep. Eric Swalwell (D-Calif.) was hit with a federal criminal referral for alleged mortgage and tax fraud related to his purchase of a $1.2 million home in Washington, DC, that he claimed as a primary residence.” As Dwight notes: “You may remember Eric Swalwell for such hits as ‘banging a Chinese spy‘” and “threatening to use nuclear weapons against gun owners.”
So a Chinese fraudster connected to Communist intelligence services wandered in from Canada and bought a trailer park next door to a stealth bomber base in Missouri.
This is not the opening line of a surreal joke.
Whiteman Air Force Base is home to our tiny fleet of B-2 bombers, and yet an RV park just a mile away “is one of several properties near U.S. military interests acquired by a web of shell companies, which are ultimately owned by a couple who live in Canada and belong to organizations controlled by disgraced Chinese tycoon and self-described former CCP intelligence ‘affiliate,’ Miles Guo,” according to a bombshell Daily Caller report.
Someone in the federal government needs to get this fixed. Get a warrant to toss the entire trailer park to see what spectrum warfare equipment they might be using, then seize the place under eminent domain for national security reasons.
BREAKING: The Attorney General of Kansas just charged Mayor Jose Ceballos of the City of Coldwater for illegally voting as a noncitizen in several elections.
Not only did he get elected city councilman & mayor as a noncitizen, he also voted. WOW! The six charges come immediately… pic.twitter.com/amhsJJvaZW
‘We now have tools, thanks to the current White House, that we haven’t had in over 10 years,’ said Kansas Secretary of State Scott Schwab, ‘that we can check through the SAVE program, to find out if folks end up on our voter rolls. And they could be a legal resident, but they’re not a citizen. We want to make sure that gets clarified.’
Deport him.
Least you think I’m never critical of President Trump, I want to note that his trial balloon for 50 year mortgages is a really bad idea. It’s not a way to build wealth, and the only party getting rich off that deal is the banks. Financially, you’d be better off living in a van for a few years until you can afford a real mortgage.
This certainly has a whiff of scandal: “Houston ISD Sues Texas Attorney General to Block Release of Emails with California PR Firm. The district wants to keep communications with a PR firm from becoming public.”
Houston Independent School District (ISD) filed a lawsuit against Texas Attorney General Ken Paxton to block the release of emails between the district and Los Angeles public relations firm Bryson Gillette.
Bryson Gillette is former Obama aide Bill Burton’s public relations firm run by Democratic operatives. White House Press Secretary Jen Psaki was a senior adviser there.
Bryson Gillette was involved with the district’s rebranding in May. Houston ISD’s Chief of Public Affairs and Communications Alex Elizondo told an advisory committee that the district had a brand identity that “isn’t inviting or super compelling.”
A Houston ISD spokesperson said the rebrand came at no additional cost to the district and coincided with the rollout of new district and campus website designs scheduled for August.
According to the suit, ABC13 News requested one month of emails between Houston ISD and Bryson Gillette on May 8, which the district received on May 9. On May 21, the district asked Paxton to withhold documents and submitted the required materials to the Office of the Attorney General (OAG) asserting attorney-client privilege.
The OAG issued a ruling on August 12, ordering Houston ISD to release the records and stating that attorney-client privilege did not apply.
Houston ISD filed a lawsuit in Travis County on September 11, looking to block the emails from release.
California Gov. Gavin Newsom has repeatedly slurred a federal judge by name, echoing President Trump’s history of diatribes against judges even before the current Democrat started copying the former Democrat’s social media style and insulting nicknames.
The perceived contender for the 2028 Democratic nomination for president may cluck his tongue again when he sees the latest order from U.S. District Judge Roger Benitez in a lawsuit against The Golden State’s alleged mandate on school districts to hide from parents their children’s asserted gender identity at odds with sex.
The President George W. Bush nominee ordered state Attorney General Rob Bonta and the California Department of Education to “show cause” on why they should not be sanctioned for “misleading” Benitez so he would remove them from the suit by teachers who allege their school district muzzled them and parents of “gender incongruent children.”
The state defendants’ motions to dismiss and opposition to the plaintiffs’ motion for summary judgment claimed that CDE had “withdrawn and conclusively replaced” an FAQ page that contained the challenged policies, which they claimed was the “only basis” for being named defendants and thus made the case moot, Benitez wrote.
“However, evidence demonstrates that the CDE may have merely moved the challenged content of the FAQ page to a new, required ‘PRISM’ training module,” as documented by the plaintiffs’ lawyers at the Thomas More Society, the judge said, ordering state defendants to explain their behavior Nov. 17 in court.
“From day one, officials from the local school district all the way to the governor’s mansion have tried to deflect responsibility” but “have now been caught not only lying to California taxpayers but attempting to mislead the Court to escape accountability,” TMS Executive Vice President Peter Breen said in a statement.
Based on early voting and some voting day results, no candidate secured over 50 percent of the votes cast, so the two highest vote recipients will move on to the runoff election, the date of which remains to be set by Gov. Greg Abbott.
The North Texas Senate seat was vacated when former state Sen. Kelly Hancock (R-North Richland Hills) resigned and was appointed by Abbott to fill the vacancy as the Texas Comptroller of Public Accounts.
Snip.
Wambsganss was endorsed early on in the race by Lt. Gov. Dan Patrick, who has vocally opposed expansion of casino gambling in Texas. She has also received support from Texans United for a Conservative Majority (TUCM), which opposes gambling expansion as well. Texans for Lawsuit Reform, a group not frequently on the same side of an electoral battle as TUCM, has also supported Wambsganss.
The Substrate startup has been doing the rounds in the news lately, thanks to its proposition of making chips using particle accelerators and X-rays instead of conventional EUV lithography, claiming it can eventually have angstrom-sized features at only $10,000 per wafer—in U.S. fabs, no less.
Oooo, where to begin? IBM tried experimenting with x-ray lithography in the 1980s and 90s, and found the rays were too energetic to use because they damaged wafers.
And technically, semiconductor equipment manufacturing already has particle accelerators: they’re called ion implanters and they’re used for gate dopants. Axcelis (formerly Eaton Semiconductor) and Applied Materials (both companies I worked for in the 1990s) make good money selling them, and there are a whole bunch of limits-of-physics reasons why you can’t use them for lithography. (Historical trivia: Applied Materials used to have their own in-house designed ion implanters, but their current offerings trace back to a competitor named Varian they bought in 2011.)
Those are bold claims, and an article by Fox Chapel Research (FCR) is seriously questioning whether they pay off.
The write-up is the first of two parts, and takes aim at not just the seemingly outlandish technological claims, but also at the track record of the venture’s founders, as well as the overall messaging on Substrate’s website. The start-up is backed by various investment funds, namely but not only Founders Fund, of whom Peter Thiel is part of.
The report says the founders are James and Oliver Proud, who reportedly have no experience in the semiconductor industry, nor do any of the investor funds. James’ latest venture was apparently the Sense sleep tracker, a product that had its inception on Kickstarter to the tune of $2.5m, but didn’t materialize until funding rounds raised over $50m. After release, the tracker was found to be borderline useless by reviewers and drew many comparisons to a scam.
ClowfishTV floats an interesting theory: A lot of those “AI-related” layoffs are just companies using that as an excuse to purge the woke from the ranks.
For more than half a century, Delaware stood as America’s corporate capital, renowned for its business-friendly laws, respected Chancery Court, and consistent legal rulings. But in recent years, leftist activist lawmakers and politicized judges have undermined that very foundation, sparking an exodus of major companies seeking stability and fairness to more welcoming states like Texas and Nevada.
On Wednesday morning, Coinbase joined the growing exodus, announcing on its website and in a Wall Street Journal op-ed by Chief Legal Officer Paul Grewal that it is moving its state of incorporation from Delaware to Texas.
“For decades, Delaware was known for predictable court outcomes, respect for the judgment of corporate boards, and speedy resolutions,” Grewal wrote in the op-ed.
However, he pointed out that recent inconsistent Chancery Court rulings and reliance on ad hoc legislative fixes do not create a sustainable business environment.
“Our decision to leave is about ensuring more predictable opportunities for the company, our shareholders, our customers and the new on-chain ecosystem we’re building,” he noted, adding, “Texas offers efficiency and predictability, in part thanks to recent corporate-law reforms that enhance governance flexibility and legal predictability.”
Grewal concluded, “Delaware wasn’t always the go-to choice for companies. At one point it was New Jersey, and before that New York. We’ve reached another inflection point in corporate law. The more states that can credibly attract companies, the better—and we’d like to see Delaware step up to stay in the mix. But as for Coinbase, you can find us in Texas….”
The exodus list from Delaware increases:
Tesla: Moved to Texas.
SpaceX: Moved to Texas.
Trump Media & Technology: Moved to Florida.
Dropbox: Moved to Nevada.
TripAdvisor: Moved to Nevada.
Roblox: Moved to Nevada.
Pershing Square: Moved to Nevada.
The Trade Desk: Moved to Nevada.
AMC Networks: Moved to Nevada.
Madison Square Garden Sports: Moved to Nevada.
Fidelity National Financial: Voted to move to Nevada.
So was a Delaware judge letting Elon Musk know how much he hated him for supporting Trump worth it?
“750-meter-long Chinese bridge partially collapses just weeks after opening.” From a landslide, but I’m betting the usual Chinesium/tofu drugs construction quality didn’t help…
At its Midlothian Data Center, alongside a number of state officials, Google announced a $40 billion data center infrastructure investment in Texas.
Sundar Pichai, CEO of Google and its parent company Alphabet, said that the investment will go toward the construction of three data center campuses located in Armstrong and Haskell counties.
Armstrong County is southeast of Amarillo. Haskell County is north of Abilene. Both counties have a whole lot of nothing there.
“They say that everything is bigger in Texas – and that certainly applies to the golden opportunity with AI,” Pichai stated.
“This investment will create thousands of jobs, provide skills training to college students and electrical apprentices, and accelerate energy affordability initiatives throughout Texas.”
Gov. Greg Abbott said the new Google AI data center announcement is “a Texas-sized investment in the future of our great state.” U.S. Sens. John Cornyn (R-TX) and Ted Cruz (R-TX) were also in attendance, along with Congressman Jake Ellzey (R-TX-06) and a number of other local officials.
“Google’s $40 billion investment makes Texas Google’s largest investment in any state in the country and supports energy efficiency and workforce development in our state,” Abbott added. “We must ensure that America remains at the forefront of the AI revolution, and Texas is the place where that can happen.”
Google has already officially broken ground on two other data centers in the state: one in Midlothian in 2019, and the other in Red Oak in 2023. The technology company has since announced further investments into data and cloud infrastructure to the tune of $2.7 billion.
This most recent announcement of a $40 billion investment will focus on building out infrastructure to support the three new data centers. Some of that investment includes building up new and existing energy storage facilities, advanced water use operations, and partnering with universities to offer technology training and education.
My reservations about Google’s AI notwithstanding, that will offer a bunch of real jobs for real Texans…assuming the AI bubble doesn’t burst before they get built.
Speaking of tech firms in trouble, video game maker Ubisoft (makers of Prince of Persia and Assassin’s Creed games) has not only postponed an earnings report, they’ve suspended stock trading. I can’t recall a single instance where that was a good sign. The last time we mentioned Ubisoft, they were pissing off Japanese gamers for including a black samurai in one of their games…
Ian McCollum looks at the new Rideout Arsenal Dragon, a low-bore-axis, lever-delayed pistol. It’s funky looking and has some interesting features, including complete non-tool disassembly. However, the price point would make it way too expensive to consider even if I had a job, he experiences several firing malfunctions testing it (though it is a prototype), and I fear the tiny little tabs it uses may not hold up under heavy use. Still a pretty interesting design.
Here’s hedge fudge manager/university professor Patrick Boyle goes into detail of just how it went down.
“Silvergate’s importance in the recent crypto boom is possibly best described by a now-deleted testimonial from the bank’s website: ‘Life as a crypto firm can be divided up into before Silvergate and after Silvergate.It’s hard to overstate how much it revolutionized banking for blockchain companies.’ The testimonial was written by a millennial who still lives in his parents’ basement playing video games and has had some recent run-ins with the law. His name is Sam Bankman Fried.”
“If we go back ten years, Silvergate was a small San Diego based real estate lender that transformed itself into the go-to bank for the crypto industry.”
“Silvergate invited in crypto entrepreneurs and asked them what problems they were trying to solve and how the bank could be helpful. After this, the bank transformed itself and grew rapidly. It went public in late 2019 at a share price of $13, and a year later the stock price had risen by 1,580% as it became a key interchange point between dollars and cryptocurrencies.”
“Major Silverlake clients included Paxos, bitFlyer, Kraken and also innovators in atonal rock music – Mars Junction…” [This is an inside joke. Mars Junction is the band of Cameron & Tyler Winklevoss, AKA the WInklevoss Twins of Facebook investing controversy] “…who also had some involvement in the Crypto industry. FTX and Alameda were also big customers.”
“The bank’s growth mirrored the growth of the crypto industry, and it declined alongside that industry too, announcing in a regulatory disclosure earlier this week that it plans to wind down operations in the face of ‘turmoil in digital currency markets.'”
Last week Silvergate had announced that they would be unable to file an annual report with the SEC on time due to a weakening in their capital position. They announced that they might be forced to close at that time, blaming growing problems, in part on pending investigations into their operations. The filing confirmed that Silvergate is being investigated by the US Department of Justice.”
“Customers rushed over the last few months to pull money out of Silvergate. In January they reported that customers had withdrawn more than $8 billion, forcing them to sell held-to-maturity assets to fund the run, accruing losses on the sale of those securities of $718 million dollars.”
Why was Silvergate so important in the world of crypto? Well, people who trade cryptocurrencies often want to use dollars to buy crypto, or they want to sell crypto and receive dollars and the dollar side of those transactions is where things get bogged down. If you are transferring large sums of money to buy crypto, you need to deal with the US banking system, who might ask you a lot of questions relating to anti money laundering regulations. Crypto people hate questions like this. Similarly, if you just sold some crypto and want to deposit the dollars you received, most banks will have a long list of questions about the source of your funds, and there is a really good chance that they will simply refuse to do the transaction. It is going to be a struggle for a US regulated financial institution to show their regulator that they have done enough due diligence to be sure that your funds are not the proceeds of crime. And the last thing a bank needs is to be accused of money laundering; they would rather just simply not deal with suspicious transactions.
“For this reason, stablecoins like Tether and Terra exist – or existed.” If you weren’t paying attention, the value of theoretically stable Terra crashed hard last year.
“If you can convert your dollars into crypto once, you can then buy stablecoins that are supposed to always be worth a dollar, and then instead of buying and selling crypto, with actual dollars you buy and sell crypto with dollar-denominated stablecoins, your money can stay ‘on chain.’ The problem with that, is that you have to trust the stablecoin issuers, and they, for some reason, don’t always seem trustworthy. They won’t really tell you where the money is.”
“They’ll sometimes announce that they are going to be audited by a top 12 auditor (I’m not really sure what a top 12 auditor is – but when you hear that – you know you are getting number 12 on the list), and you start to wonder if Friehling & Horowitz made that list.” Friehling & Horowitz were Bernie Madoff’s auditors.
“If you have deposited your dollars with a crypto exchange or a stablecoin provider, they still need to deposit them somewhere. They need a bank too. Now (of course), another way of dealing with this banking issue, might be to lie to your bank about what your account is being used for (SBF and the team at FTX did that), but the technical term for ‘lying to your bank’ is Bank Fraud (as Sam Bankman-Fried just found out) – and you can get in trouble for that.”
“There was significant demand for a “crypto friendly bank” and Silvergate was willing to fill that role, when no other bank was willing to take that risk. Silvergate weren’t just crypto friendly either, they built their own payments network called the Silvergate Exchange Network to (according to their marketing documents) enable the efficient movement of U.S. dollars between participants 24 hours a day, 7 days a week, 365 days a year.”
“As you might imagine, Silvergate (being the only bank that would deal with them) attracted a lot of big crypto customers, as these customers were able to open up accounts without lying too much.”
“Silvergate dealt with most of the big players in the industry and they were an actual US regulated bank with excruciatingly detailed audited financial statements and capital regulation. This meant that your money was safe at Silvergate, unlike at the other venues we just went over.”
“The beauty of dealing with these crypto customers, crypto exchanges, [was] that because you don’t have any real competition in this space, you don’t really have to pay them any interest on their deposits. You could take the billions of dollars they deposit with you, put it all in treasuries, and you get to keep all of the interest. You’ll probably have to spend some of the profits on lawyers to keep the regulators at bay, but overall you might have a profitable business. But that’s boring right? And no one gets involved in crypto for a boring life…”
“They had a product called SEN Leverage direct lending, where they would lend people money collateralized with bitcoin. Exchanges could also borrow dollars collateralized with bitcoin for corporate treasury and other business purposes. In January, they announced that total SEN Leverage commitments were $1.1 billion dollars and that all of their SEN Leverage loans ‘continued to perform as expected, with no losses or forced liquidations.’ So, as crazy as that business might sound, it was not really the source of their problems.”
“As of September, 2022 their balance sheet showed about $11.4 billion of ‘securities,’ meaning bonds: Treasury securities, mortgage-backed securities, agency bonds and so on and $1.4 billion of ‘loans,’ meaning the Bitcoin loans and some other real-estate lending. They had $13.2 billion worth of deposits at the end of September, most of them being from crypto companies – so non-interest paying deposits, the best kind.”
“The problem for Silvergate was that when FTX was exposed as being insolvent, crypto investors were considerably less willing to leave their cash on exchanges.”
“They asked for their money back from the exchanges, meaning that the crypto companies had to ask for their money back from Silvergate, so Silvergate was faced with a good old fashioned bank run – driven not by a loss of faith in Silvergate, but by a loss of faith in crypto exchanges. By the end of December, noninterest bearing deposits at Silvergate fell from $13.2 billion dollars to just $3.9 billion dollars.” Yowzers! It’s hard to expect any bank to survive an outflow of 2/3rds of their deposits in such a short period of time.”
“There is a good chance that if you had an account at a crypto exchange, that exchange banked with Silvergate, and if you closed your account and cashed out, the cash came from a deposit at Silvergate.”
“There were other FTX related problems too. When prosecutors started looking into the collapse of FTX, their attention was drawn to their banker – Silvergate, for hosting accounts connected to Sam Bankman-Fried. Now, a big problem for Silvergate, was that – with their money all tied up in bonds or lent out, Silvergate had to come up with around 9 billion dollars to pay out these withdrawals.”
“Their accounts show that by the end of December they had sold half of their bonds and had controversially borrowed $4.3 billion from the Federal Home Loan Bank of San Francisco, a government institution that is in place to give short-term secured loans to banks that have a short-term liquidity problem.” That, and the FTX connection, attracted the attention of Washington D.C.
In September Silvergate had shown 3.1 billion dollars’ worth of bonds as being “held to maturity” and 8.3 billion dollars’ worth of bonds as being available for sale. The difference between these two classifications (from an accounting perspective) is that the available for sale bonds have to be marked to market – or held on the books at their fair market value, while the “held to maturity” bonds could be marked at their cost price. By the end of December there were no “held to maturity” bonds left on the balance sheet, meaning that they had either been sold, or reclassified as available for sale. One way or another, interest rates had gone up a lot in 2022, and these bonds were worth a lot less than they were being carried on the balance sheet at.
So they might have skated by if rising interest rates hadn’t wrecked their mark-to market.
The sale resulted in a loss of $751.4 million during the fourth quarter of 2022 and in addition, the company recorded a $134.5 million dollar impairment charge related to an estimated $1.7 billion dollars of securities it “expects to sell in the first quarter of 2023 to reduce borrowings.” This is because reclassifying some of the bonds to “available for sale” meant that they now had to be marked to market and that the loss had to be recognized under GAAP accounting rules. Silvergate also had to write down a $196 million dollar investment in “certain developed technology assets related to running a block-chain-based payment network” that it had bought in January 2022. So, all in, there was a net loss of over a billion dollars in the fourth quarter of 2022.
“Bank capital requirements are ‘risk-based’ and need to be kept above 4% to be ‘adequately capitalized’ and above 5% to be considered ‘well capitalized.’ Different types of assets have different risk weights, and this is done to keep deposits safe.”
“A bank that makes a lot of mortgage and business loans might have a capital requirement of around 8%, and assets like bitcoin have a 100% capital requirement, meaning that a bank would need to have $100 of capital for every $100 of bitcoin on its books.”
“In September Silvergate was fine, as despite the Bitcoin loans, most of their money was in high quality bonds that had zero risk weights. But when their deposits went out the door and they had to sell assets and realize a billion-dollar net loss, they were left in a situation where an additional $19 million-dollar loss would but their capital below 5% and they would no longer be considered well capitalized.”
“Last week Silvergate announced that they had sold additional debt securities in January and February to repay the company’s outstanding advances from the Federal Home Loan Bank of San Francisco and that they ‘expect to record further losses related to the other-than-temporary impairment on the securities portfolio.’ These additional losses they said would ‘negatively impact the regulatory capital ratios of the company and could result in the bank being less than well-capitalized.” And that’s when Brunhilda strode on stage to give her farewell.
“This announcement caused the stock price to half that day and according to Bloomberg caused Coinbase, Galaxy, Paxos and other crypto firms to announce that they would stop accepting or initiating payments through Silvergate. These customers leaving were the final nail in the coffin, as they reduced deposits even further.”
“A bank run, on a real bank, caused by crypto related losses and crypto volatility.”
“Matt Levine at Bloomberg argues that one way to think about the rise and fall of Silvergate is that the crypto boom was at its heart a low-interest-rate phenomenon. People started speculating in crypto because interest rates were below the rate of inflation, and so Silvergate was hugely exposed to interest-rate risk simply because of its exposure to its crypto customers.”
“Rising interest rates caused the deposits to evaporate at the same time as the assets backing those deposits fell in value. Levine argues that (with hindsight), Silvergate’s risk management – a year ago – should have been laser-focused on the risk of rising interest rates crushing both its assets and its customers, and it should have hedged that risk one way or another.”
I know all this is long and a bit detailed and technical, but I wanted to point it out as an example of how a cascading chain of events (much like the Piper Alpha disaster) caused a failure, mainly how massive fraud on the basis of one crypto space player and rising interest rates ended up bankrupting a real bank in the real world.
(1) If he wins, Biden will almost certainly sign off on ending the filibuster to pack the courts and add two new states for a permanent Democrat majority that will leave the Constitution behind.
(2) Trump may have announced that he’s about to reveal that the Democrats, from Obama on down, engaged in a coup against an American president.
France has accused Turkey of sending Syrian jihadists there to fight for Muslim Azerbaijan. Remember that Turkey killed over 1.5 million Armenians during the rise of the Young Turks as part of the dissolution of the Ottoman Empire, so the bad blood there goes back a long ways.
Quick conclusion: Relative to the number of infections fewer people have died in the US than in Australia. So for all the talk about not letting us have a US style health system, it has performed relatively better than ours did. True, Australian base levels of health are higher than US levels. Relatively fewer people got infected here than in the US. (We can argue about why that happened in the comments – probably policy errors in themselves at the State level in the US). Once infected, however, it looks like the chances of survival was higher in the US.
“Clare Bronfman Becomes First NXIVM Sex-Slave Trafficker to Get Jail Time.” Namely six years and nine months. You know it’s a crazy year when you don’t have time to pay attention rich, powerful weirdos being tried for running a sex cult…
Coinbase SJW babies: We have to be woke! Coinbase CEO: There’s the door.
The Texas House District 148 battle features a fight between a Hispanic Republican against a Democratic candidate with even more ties than usual to communism. “During a July 2018 presentation, “The Art and Science of Building the Communist Party,” Chairman of the Houston chapter of the Communist Party USA (CPUSA) Bernard Sampson boasted that his club had placed four communist party members on the Texas ballot, including Morales-Shaw who he specifically identified as a member of his group.”
I think the explanation for plummeting viewership is fairly obvious, even if Strauss would rather not talk about it. Conservative America is disgusted with the NBA, and therefore is tuning it out. We’re disgusted with the way the league kowtows to China and even more disgusted with the embrace of the radical BLM movement by the league and its players.
I didn’t watch a minute of the playoffs this year and rarely even checked the scores. Not because of what many of the players think about the police and about America, in general, as slanderous as those views are. And not even because players made pro-BLM gestures before the games began.
My problem was what was allowed, indeed encouraged, during the games. I will not watch any sports event during which the preaching of politics or ideology occurs.
I guess I’m not alone.
Conservative America’s divorce from the NBA is a sign, I think, of things to come. Unless corporate America steps back from its embrace of woke leftism, we are going to have to divorce ourselves from large swathes of it. To the extent feasible, we may have to divorce ourselves from many of America’s public schools. And so forth.
New South Korean mini nuclear reactor that can’t melt down approved for use in the United States. First plant is scheduled to come online in Utah, but not until 2029. Faster, please.
And here’s the post I was tempted to write: “Fuck You WordPress, Yet Again (Block Editor).”
Ireland’s Supreme Court rules that Subway bread isn’t. You would think that if it used that much sugar it would taste better. Then again, I’m not sure I’ve bought a Subway sandwich since the heyday of the $5 Footlong era…
