The banking crisis is far from over, says economist James Rickards. While the Fed can claim the rescue of First Republic Bank was not a bailout, Rickards draws a parallel between this rescue and the 1998 rescue of hedge fund Long Term Capital Management. The only difference is that this rescue is “all debt and no capital.” “That means it’s not really a rescue; it’s just a cash bandage…They just delayed the day of reckoning, that’s all,” says Rickards. Financial analyst Christopher Irons also believes it is only a matter of time until something breaks as a result. “I strongly continue to believe we have not seen the last—or even the beginning, really—of the volatility we’re in store for as a result of rate hikes,” Irons said. JPMorgan reported that half a trillion dollars in deposits have been withdrawn from the “most vulnerable U.S. banks” since the collapse of SVB, now making it even more difficult for households and businesses to get loans.
The Daily Reckoning/James Rickards
Aftershock!
Anyone who thinks the banking crisis is over has never lived through one. This is my tenth, starting with Herstatt. And this one is just getting started, despite all the happy talk that the crisis is over.
Let’s dive in…
The litany of recent bank failures has become all too familiar. It began in early March with the bankruptcy filing of Silvergate Bank. Silvergate was not just another commercial bank. It was a traditional FDIC-insured bank, but it was also heavily involved in the cryptocurrency world.
Continue reading, here.
Quoth the Raven/Christopher Irons
Everyone Is Just Pretending Nothing’s Wrong
Even if the stock market holds up, something is going to have to break in a big way.
This is about the simplest way I can try and explain how I feel about the state of the economy and markets, delivered to you honestly and devoid of detail, as someone who truly neither has the patience nor the attention span to dive into the intricacies of the Eurodollar system or the path printed money takes during QE or QT.
You can read the full article, here.
Business Insider/Carla Mozée
Why the struggles of mid-sized US banks could be bad news for the Main Street economy
Silicon Valley Bank’s spectacular crash threw the spotlight on deposits flowing out of regional banks, and those shrinking money pools stand to make it even more difficult for American households and businesses to get loans.
Around $1 trillion in deposits have been withdrawn from the “most vulnerable US banks” since the Federal Reserve began raising interest rates in March 2022, JPMorgan said in a research note published late last week. Half of that amount came out after SVB blew up about two weeks ago, it said.
You can read the full article, here.
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