#205 Doodh Ka Doodh, Paani Ka Paani

<p><strong>Global Policy Watch: Bailout Pe Bailout Pe Bailout</strong></p><p><em>Insights on global policy issues relevant to India</em></p><p><em>— RSJ</em></p><p>Where do I start this week? </p><p>Maybe with a spot of self-promotion. Pranay and I were guests on the popular Hindi podcast <em>Puliyaabazi</em>. I have been a long-time fan, so it was nice to be a guest there. Pranay usually co-hosts this with Saurabh and Khyati, but this time, he was on the other side. I felt a bit like Uday Chopra, who is only in the film because he is the producer’s brother. Anyway, I think a good time was had by all as we covered a wide variety of topics - Enlightenment and why it didn’t happen in India (short answer: there wasn’t any need, really), why we write this newsletter (<em>majboori</em>) and the usual quota of Bastiat, Smith and Rorty (showing off). </p><p>Do listen if you have time (of course, you do).</p><p>Moving on. </p><p>Here is a quick run-through of what’s gone on since my last post. Another US regional bank, Signature Bank, stared into the abyss with depositors making a run to withdraw their money as analysts looked around for large unrealised losses sitting on banks’ balance sheets. Fed officials spent their weekend hawking the other failed bank, Silicon Valley Bank (SVB), to potential buyers. But who in their right mind will buy out a troubled bank in these times? More so after all the trouble that the likes of JP Morgan Chase had buying out such banks during the financial crisis of 2009. </p><p>Running out of options, the Fed, the Treasury and the Federal Deposit Insurance Corporation (FDIC) announced an unprecedented bailout of all depositors of SVB and any other bank that will be in a similar hole in future. Simply put, FDIC will guarantee all deposits and not just those below $250,000 for which there’s insurance. To be sure, the equity shareholders and those holding unsecured corporate bonds won’t be bailed out. They will lose their shirts. So, this isn’t a repeat of the 2009 bailouts. The Fed then went