The big news is the collapse of the banking system and the serious cracks appearing in the whole financial system. After the record 2-day demise of Silicon Valley Bank (SVB), a $44 billion dollar company less than 18 months ago, which is now all but bankrupt, the question on everybody’s lips is, “Is our money safe?”
The answer is probably no, but luckily for the Central Bankers and authorities, not enough people know about fractional reserve banking for there to be mass panic.
Rising inflation created by the reckless spending of Governments around the world fighting to control a widely exaggerated flu virus and locking up the world in the process not once but multiple times, has consequences. One of those consequences is being felt now in the fastest hiking of interest rates since the 1970s.The Federal Reserve has not introduced higher rates gradually to combat inflation, they’ve literally thrown the kitchen sink at it.
A near 500 basis point rise in 12 months after an almost zero interest rate policy for 14 years, was never going to go unnoticed. And nowhere has it been noticed than in the bond markets.
Unfortunately for the many banks who bet heavy on what they thought were low-risk, long duration US Treasuries and 10-year UK gilts, their assets have been crushed. As depositors demand their money back, the world is waking up to the fact that most of the banks are technically insolvent. And so the run on the banks and contagion effect has begun.
Signature Bank collapsed shortly after SVB, then Credit Suisse was bought out by UBS for a few peanuts and a can of coke, and now Deutsche Bank is rumoured to be up the proverbial creek without a paddle.
We unpack it all in this 30-minute broadcast, including the outlandish opportunities that always present themselves during times of such uncertainty and fear.
MP3 Version: Banking Crisis, What’s next?
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