Big trouble is brewing in America’s little banks as panic spreads. US banks are on a ‘bumpy’ path as troubles deepen at First Republic, following the collapse of Silicon Valley Bank and Signature…“
““This is going to be pretty bumpy going forward,” Mohamed El-Erian, chief economic adviser at Allianz said in an interview with Bloomberg. “People are doing something that probably is not rational but is totally understandable – they’re moving deposits.
“That dynamic isn’t going to stop over night, neither are the losses that are being incurred.””
Midsize U.S. banks reportedly ask the FDIC to insure all deposits for two years.“
“A coalition of midsize U.S. banks, Mid-Size Bank Coalition of America (MBCA), has asked regulators to extend FDIC insurance to all deposits for the next two years, Bloomberg News reported on Saturday citing an MBCA letter to regulators.”
US banks want socialism for themselves – and capitalism for everyone else.“
“…as demonstrated again this past week, American capitalism needs strict guardrails. Otherwise, it is subject to periodic crises that summon bailouts. The result is socialism for the rich while everyone else is subject to harsh penalties: bankers get bailed out and the biggest banks and bankers do even better. Yet average people who cannot pay their mortgages lose their homes.”
Before Collapse of Silicon Valley Bank, the Fed Spotted Big Problems.“
“The bank was using an incorrect model as it assessed its own risks amid rising interest rates, and spent much of 2022 under a supervisory review… In 2021, a Fed review of the growing bank found serious weaknesses in how it was handling key risks.”
Silicon Valley Bank’s collapse will not be a one-off – a banking crisis was long overdue…“
“As Dhaval Joshi of BCA Research pointed out last week there are three classic signs that a recession is coming in the US: a downturn in the housing market, bank failures, and rising unemployment… “Banks tend to fail just before recessions begin,” Joshi says.”
Credit Suisse sold in cut-price deal to avert banking crisis.“
“The 167-year-old lender, which was valued at more than £65bn at its peak, has been taken over by arch-rival UBS in a £2.6bn deal just hours before financial markets opened, amid fears of panic if the bank’s value slid further when trading began.”
Credit Suisse: Bank rescue damages Switzerland’s reputation for stability.“
“…Credit Suisse is a “too big to fail” bank. In theory, it had the capital to prevent this week’s catastrophe. Also in theory Swiss financial regulators and the Swiss National Bank keep an eye on those systemically important banks and can intervene before disaster strikes… the very people who should have acted to prevent Credit Suisse’s meltdown were asleep at the wheel.”
Two major banks in Europe look to regulators to stem contagion risk.“
“At least two major banks in Europe are examining scenarios of contagion in the region’s banking sector and are looking to the Federal Reserve and the ECB for stronger signals of support, two senior executives close to the discussions told Reuters.”
Stocks slide as Credit Suisse rescue fails to stem rout.“
“Banks led stock markets lower on Monday and safe havens such as bonds rallied as a weekend deal to rescue Credit Suisse and promises of liquidity from central banks could not stem fears that a bigger crisis is brewing in the financial system.”
Wait 10 Seconds, Lose $1 Million in Markets Rocked by Volatility…“
“There have been many wild weeks in the history of finance but few in recent memory quite like this one. As jitters rapidly spread about the health of the banking sector from the US to Europe — a concern that had barely registered for most investors just days earlier — markets shook.”
Fed and other central banks try to head off crisis by keeping dollars flowing.“
“The US Federal Reserve and several other major central banks announced a coordinated effort Sunday night to boost the flow of US dollars through the global financial system with the aim of keeping credit flowing to households and businesses.”
Americans are knee-deep in medical debt. Most owe hospitals…“
“The researchers say their findings show the ineffectiveness of federal policies, which provide tax exemptions for nonprofit hospitals provided they give some amount of financial assistance to those who cannot pay for care.”
Price hikes are double whammy for pet owners who are crushed by inflation.“
“As head of PAWS Atlanta, Joe Labriola can get a good sense of the region’s economic well-being from the day-to-day activity of the city’s oldest no-kill animal shelter. Through the course of the past year, it’s become increasingly clear to him that people in the area are struggling under the weight of inflation and economic uncertainty.”
Thérèse Coffey’s ‘eat turnips’ message leaves bitter taste after UK’s biggest grower gives up…“
“AW Mortier, near Alderton in Suffolk, had a near monopoly on the few turnips available in supermarkets but gave up in September last year because of stores’ unwillingness to pay higher prices to make up for rising costs of energy and fertiliser.”
Paris police ban gatherings on key sites as French pension protests grow.“
“Police in Paris have banned gatherings on the central Place de la Concorde as thousands of demonstrators continue to protest across France against Emmanuel Macron’s decision to force through a change to the state pension age without a parliamentary vote.”
France Will Take Steps to Avoid Fuel Shortages, Minister Says… Unions are creating risk of fuel panic, Lescure says…“
““We showed in the autumn that we’re capable of acting when it’s necessary to do so. We’re not going to let 65 million French and a whole country be blocked by a few dozen individuals, because that’s what were talking about.””
Portugal protesters march in anti-poverty demonstrations.“
“Thousands of people have marched in the Portuguese capital Lisbon, calling for higher wages and other measures to help tackle poverty and the rising cost of living. The march on Saturday, called by the CGTP, the country’s main trades union confederation, came a day after a national strike by civil servants in support of higher wages.”
Violence escalates as protestors take to Israel’s streets for 11th week in a row.“
“An estimated 260,000 demonstrators took to the streets of Tel Aviv, Jerusalem, and several smaller cities including Haifa, Netanya, and Herzylia last night according to estimates by Israeli broadcaster Channel 13. The protestors were joined by key opposition figures…”
Lebanese juggle dizzying rates for devalued pound amid economy crisis.“
“When Caroline Sadaka buys groceries in the Lebanese capital Beirut, she keeps her phone in hand – not to check her shopping list but to calculate the spiraling costs of goods now priced at volatile exchange rates that vary by store and sector.”
What chicken feet tell us about daily life in Egypt.“
“For many people, items that were previously basic staples such as cooking oil and cheese have become unaffordable luxuries. Some products have doubled or tripled in price within months. “I eat meat once a month, or I don’t buy it at all. I buy chicken once a week,” says Wedad, a mother-of-three in her sixties…”
Uttar Pradesh power strike [India] casts shadow on law and order situation…“
“The non-availability of electricity has disrupted health services in Rae Bareli as AIIMS and other hospitals are without power… In Varanasi, residents took to the streets due to the continuous and prolonged power cuts. Similar reports are coming in from other districts.”
India cuts internet to 27 million as Punjab police hunt Sikh separatist…“
“The internet shutdown – which affects everyone in the northern Indian state – was extended Sunday by the government to midday Monday under a law that allows the connection to be cut to “prevent any incitement to violence and any disturbance of peace and public order.””
Court cancels Imran Khan’s arrest warrant after clashes in Pakistan capital.“
“A court in Islamabad has cancelled Imran Khan’s arrest warrant after intense clashes between police and the former prime minister’s supporters outside the judicial complex. Khan officially appeared before the court in Pakistan’s capital on Saturday…”
South Africa braced for ‘national shutdown’ [today] called by radical opposition…“
“Police have called up reserves and reinforced security around government buildings and key infrastructure hubs ahead of a planned protest by the country’s third-biggest party, in an effort to avoid a repeat of South Africa’s worst post-apartheid violence two years ago.”
North Korea’s Kim calls for nuclear attack preparedness against US, South Korea.“
“North Korean leader Kim Jong Un called for the country to stand ready to conduct nuclear attacks at any time to deter war, accusing the US and South Korea of expanding joint military drills involving American nuclear assets, state media KCNA said on Monday.”
You can read the previous “Economic” thread here. I’ll be back tomorrow with a “Climate” thread.
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Many of these failed institutions have issued large bonuses to the very executives that intentionally created this crisis and copied the 2008 program knowing there would be a bailout….
Seems to me they know where is headed and grabbing as much as it can before it’s too big to save…
Nate Hagen thinks this isn’t the big one just yet….but another step in that direction…
Good luck everyone…we are getting close…glad I’m old now just turning 65 ..it’s a good time to be…
Enjoy your remaining time….
I read that eligible Credit Suisse staff will still be getting their bonuses, although you suspect many of them won’t have jobs for much longer, so swings and roundabouts.
One of the things to emerge from this debacle is that regulatory oversight is clearly not as robust as claimed, even if banks are better capitalised than they were in 2008 – and better capitalised doesn’t count for much once investors and depositors are irretrievably spooked. Also, the real locus of risk is supposed to be NBFI’s. God knows what is brewing there!
I am intrigued to see what the central banks do next, as they are now even more impotent in the face of inflation. Perhaps they’ll just have to keep rates more or less where they are and hope for the best. Looks like we’re neck-deep in Tainter’s complexity quicksand now.
Hope you have a happy 65th, Vince.
Thanks for the Birthday wish and doing fine..
Thought this was cute green washing by Chevron
We’re pleased to work with Bunge and Chevron to bring a new option in the southern U.S. that will deliver solutions for farmers to increase productivity and sustainability on their acres, as well as contribute to the need for renewable and less carbon-intensive fuel options,” said Chuck Magro, CEO, Corteva Agriscience in the announcement.
….Peter Meyer, grain and oilseeds economist with S&P Global Commodity Insights, says until recently, not a lot of people expected “Big Oil” to join forces with “Big Ag,” but the latest announcement from Corteva is further proof that these types of partnerships will continue to gain steam as the demand for renewable diesel grows.
Posted this one at OFW…didn’t know if you’ll see it there
Even before one has engaged in any EROEI number-crunching, the very idea of using industrial agriculture, which exists on a platform of fossil fuels, to grow canola to then convert into “green” biodiesel, is an affront to common sense. And clearly there is little or no benefit to the environment there.
However, if importing sufficient heavy crude becomes geopolitically tricky in the future then I can imagine there is some [edit; marginal] utility in the US being able to use home-grown biodiesel in blends.
Funny you mention “neck deep” in Tainters complex collapse. I was just finishing up his book yesterday a.m. and thought how prescient in how he spoke about vacuums and other countries scooping up beleagured countries and thought of the banking system. He also lists at the end some of the ultimate causes of collapse including financial which gave me a chuckle. Yes we are definitely rearranging deck chairs here it seems.
Elsa, thank you for commenting. Tainter is brilliant. I haven’t read it, as I now have the attention span of a fruit fly thanks to all the time I spend on the web and social media, but I gather that Craig Dilworth’s “Too Smart for our Own Good: The Ecological Predicament of Humankind” complements his work well.
Just from the big people’s world of banking crisis to animal shelter crisis….
The financial system is so full of internal contradictions that I have given up since the 2008 banking crisis and Adam Tooze’s study ‘Crashed’.
I’ll wait for his next analysis in a few years 🙂
I worked one day a week at the large animal shelter in my department until a few years ago ( the covid crisis). I have a licence to ‘ work with fighting staffords and police dogs belgian shepherds/malinois.
In addition, we had a kind of intermediate shelter here ‘ at home ‘ of mostly dogs diverse…. And if you are once known ‘ as the pied dog’ 🙂 you will see a lot of them passing by.
Well Covid and everyone else who had to sit at home in France made sure the pets were unstoppable! And then came the inflation recession with as also stated in your article explosive price increases in terms of pet food, not to mention the prices at vets. A pet as a ‘companion animal’ became unaffordable.
I have a good contact with my vets and therefore get a basic price when I come in for a check-up with a lost dog or cat. Just last week with lost discarded hound….
Ah well what to say…. as I write this down ‘ Ms black’ is stabbing a sterlised (very exceptional) stray cat we have been keeping here since December….
Jeannette my wife and I have solemnly promised each other that this will be the last and that certainly applies to our stray Welshterrier who must be about 17 by now. We are too old for that now.
I have honestly lost my ‘human/animal optimism’ a bit in all these years….. but that goes for more ‘ ideals’ 🙂
But to speak with Bertolt Brecht …. ‘ as long as you don’t become bitter’
Good for you, Zip, taking in the waifs and strays. The situation is exactly as you report it here in the UK, too. Animals were bought in unprecedented quantities to alleviate the tedium of Covid lockdowns and then…
I must confess that my favourite way to wind down these days is to watch the Dodo and similar channels on YouTube. They show brief, feelgood stories about mistreated animals rescued, restored to health and given loving homes. It shows the best of human nature, even as it indirectly also shows the worst; this sort of thing:
Love that video! I love my two puppers! Understandable why you watch those, Panopticon. Lately I’ve been watching extreme sports involving skiing, kayaking, rock climbing, etc. something for a brief time to take my mind off of our rapidly unfolding collapse.