Is the banking world ready to fail? – The shadow of the 2008 subprime mortgage crisis Plan on the traditional financial system in these turbulent times. While bank failures follow one another, forcing the Fed (Federal Reserve of the United States) to change gear, economists are agitated. Banks are sweating, prices are falling. Incursion into the heart of a critical period where monetary policies are being abused.
Where the Fed goes, the banks die
A rate policy that is too fast…
Something had to break eventually. With the fastest rate hike ever seen in history, driven by a very aggressive FED policy, the hitherto well-oiled gears of the banking system ended up pinching. The chart below speaks for itself.
We are waiting for corporate bankruptcies and rising unemployment, it is finally that of the banks which ended up arriving. And not least, like the Silicon Valley Bank (SVB)16And ranked among the largest banks in the United States. Far behind the giants that are JP Morgan, Wells Fargo Or Goldman Sachs. It is more important that the FED intervene, but still rate policy which she has been leading for more than a year. Constraint to act to prevent the system from collapsing. But we will come back to that.
Neither one nor two, in order to avoid the shooting of dominoes, Janet YellenU.S. Treasury Secretary, and the Fed of Jerome Powell, were forced to act. This shows how fragile the financial pyramid they have built is. $25 billion out of nowhere to pay ” fill the hole and avoid panic. A total economic countermeasure for the relationship to the strict monetary policy conducted so far. A policy that proclaims loud and clear that it wants to make money scarce in order to counter inflation. This same policy that pulls out the ticket printer at the first mishap. More comments all this started?
…which ends up breaking something: the banking system
the guilty ? The Fed rate hike whose objective until then had been very clear: to make the money disappear. Against this inflation which, after more than a year, significantly increases the cost of living for citizens. However, less money in circulation means more complicit financing for companies. Many companies, including startups in the Tech sectors, or crypto for that matter, are found to be short of investors to subsidize their business. In fact, what are they doing? They draw on their reserves. And where are these reserves? give them bench chests. those of the Bank of Silicon Valley notably.
Except that this money was not liquid, not directly available. It’s the principle of a bank, there is never a lot of money in reserve. Chose that these financial memes are not of the past before blaming the crypto sector for that matter, during the FTX crisis. Exchanges that since have initiated Proofs of Reserves. Still, savers, seeing the bank in trouble, began to panic. If there is not enough money for everyone, it is the last to withdraw who gets fleeced. By withdrawing their money together over a very short period of time, they thus provoked the self-fulfilling prophecy of a bank run. A threat that also weighs on the entire global banking system.
Bankruptcy, an anti-crypto act gone wrong?
Earlier in March, a late victim of the big bang FTX went bankrupt. There silvergate bank, a silver door with a clay handle. Now we can add the Bank of Silicon Valley SO. Even if the SignatureBank, a bank certified “preventively” by the American government. This is unheard of. Clearly, the bank was not bankrupt, but the Fed, probably endowed with a gift of clairvoyance worthy of Madame Irma, prefer to close it before the worst happens. The biggest flaw of this bank? They are known to the crypto sector. From there to consider this gesture as an anti-crypto attack orchestrated by the American government, there is only one step. Especially since its recovery would be conditioned by the fact that the buyer Waiver of any Privilege with the Crypto Industry.
This act forced the exchange OKCoin For temporarily suspend deposits in dollars. The Signature Bank is the main bank of the crypto platform.
Three bankrupt banks. Three pro-crypto banks. Is it a coincidence? Maybe yes, or maybe no. The attack would be crude. However, the fact remains that compared to a few weeks ago, cryptos find themselves with fewer and fewer banking partners. However, contrary to appearances, crypto would be far from disgusting traditional bankers.
Digital Currency Group (DCG)a crypto giant, whose subsidiary Genesis recently much talked about, needed to find new partners, for lack of pro-crypto banks yet to start. And obviously, the big banks are still jostling at the gate. HSBC, German Bank or Mercury would be positive response to the call.
Gambling: when finances are at their lowest, the taxable person pays the price
When the game no longer pleases him, finance changes the rules
Let’s go back to the failure of the Silicon Valley Bank. The problem is this for the US government: if it sticks to the rules of the game, it incurs a potential systemic risk capable of engulfing the entire financial system. end of the party Except that no, the government, in addition to being a bad player, dictates the rules. He can therefore modify them as he wishes when it suits him. Always for the benefit of the same actors: banking giants, financiers, hedge funds and billionaires. Banks have the right to fail without consequences. Not us.
If we stick to the defined rules, only the deposits less than $270,000 are not registered This is guaranteed by the FDICthere Federal Deposit Insurance Corporation. A guarantee fund provided precisely for this type of occasion. But following the bankruptcy of the SVB, and to put an end to the momentum of panic, the Fed announced that it would cover all deposits in order to avoid a panic attack and the risk of contagion to the entire system. an unjust blackmail to the famous ” too big too fail which allows the perverse mechanics of a failing system to continue. A blackmail whose repercussions are not great: as an individual or a company, you want to protect your funds? From now on, it is by installing them in one of these famous “too big to fail” banks. That’s what a senator managed to do I would say to United States Treasury Secretary Janet Yellen. In fact, we are witnessing an influx of applications for registration in the large banks, to the detriment of the smaller ones. And therefore to a probable concentration of banking players in the USA.
Of course, on the one hand, this bailout aims to protect jobs, to make businesses prosper, to avoid bankruptcies and unemployment. On the other hand, it is a pure injustice from a moral point of view vis-à-vis the rest of the population who will, in a certain way, suffer the consequences of this magic money, this unlimited monetary printing. And that Already undergoes them via inflation as we will see later.
A contagion to fear in Europe?
And despite this rescue of the State, it is now a crisis of confidence that must manage the various governments. A growing crisis of confidence. At the start of the week, it was the American banking sector which fell violently. To the point that traditional stock exchanges have temporarily stopped the listing of certain bank stocks. A ” stop button very practical, it must be admitted, to avoid having to face the reality of the markets.
A non-existent button in the crypto world and a scenario that does not pass without reminding the 2008 subprime mortgage crisis. The same reason why Satoshi Nakamoto created Bitcoin. As an echo to the very identity of this digital or, the course of this a deposit of 20% as the markets collapsed. Recalling its deep nature as an uncensorable monetary alternative and devoid of any state influence. There symbolically strong So I thought Satoshi was included in the first block of the Bitcoin blockchain in a Times article that titled that same day, January 3, 2009:
” Chancellor Alistair Darling About to bail out the banks for the second time. »
The contagion is now gradually spreading to the European banking market, as ACC 40 he’s also starting to fall apart. Bank prices fall sharply. Swiss credit first, then later BNP Paribas And Agricultural credit. The European banking system does not therefore seem as solid on its support as we are led to believe, no offense to our Minister of the Economy Bruno Lemaire. The latter shouts at wanting to razor us with a lot of ” calm down calm down “. But it is likely that the shore storm will trigger the time to listen to the sailor battered by the choppy waves.
Inflation, the price to pay for banking excesses of privileges
When Biden said he will everything necessary so that the taxpayer has nothing to pay, this is false. Because the price, on the contrary, will be very high. There silver magic creation will have to be repaid one way or another. A payer not them consumers are they first victims. Increase in rents, real estate prices, basic necessities, food in general, in short the cost of living.
unite forced fiscal austerity Also, constrained by the obligation to repay the interest of an ever-increasing state debt. A capital inevitably amputated each year which causes the progressive decline of our public services: hospitals, courts, schools, universities… Infrastructures already in a critical state, devoid of means and financial support from the state . Too bad when you think that these same billions are springing up out of nowhere to help a banking system mired in its own sin of greed.
unite price increase Remains imperceptible over the years, but we can no longer hide that inflation is slightly regulated and remains at levels of 6% to 10% after a now more. Do you know that if inflation is maintained at 10% over 5 years, 40% of the assets placed in your Livret A will disappear up in smoke? Swallowed up by rising prices.
In the game of money, States dictate their rules, modify them at will to keep their little system alive. And in the end, it is the taxpayer who pays. But one day, they will have to make a choice. Decide between the death of their currency or the death of the markets. Are we on the verge of a crash in our economy or is this just a passing scare awaiting an even greater cataclysm? No one knows, but the banking boat pitches, hesitates. In these troubled times, affording a lifeboat is far from a bad idea. And the bitcoin buoy is still within reach of the backstroke.
