ANALYSIS | Why the SVB collapse is just the start of a grim new cycle | Business

discusses how the failure of SVB Financial is a consequence of something much bigger - and how we might be facing the start, rather than the end, of a broader cycle of delinquency, default and bankruptcy. US authorities have announced the full backstopping of depositors at Silicon Valley Bank , while also implementing a new system-wide lending programme to ensure that banks can meet requests to withdraw deposits.

Policymakers have been willing to"pivot" or add stimulus at any sign of a wobble, seeking to minimise economic and market volatility. Such action has increased confidence and deeply embedded this false equilibrium in the decision-making processes of many households, corporations and even governments.

By their nature, false equilibria cannot last forever. The doubling down of easy money during and post the pandemic ultimately created inflation, which broke the condition required to maintain the false equilibrium. Beyond this, we see material imbalance in household leverage and housing markets in several countries around the world beginning to consolidate. We also see evidence of zombie companies.

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Business Maverick: S&P futures jump on SVB backstop, rate bets shift: markets wrapUS stock futures rallied more than 1.5% while the dollar and bond yields tumbled as investors digested the steps taken by regulators to shore up the American financial sector in the wake of Silicon Valley Bank’s failure.
Herkunft: dailymaverick - 🏆 3. / 84 Weiterlesen »

Business Maverick: SVB depositors will get all their money after frantic weekendSilicon Valley Bank customers have spent three tense days wondering if millions of dollars they entrusted to the now-failed bank were lost. They got their answer Sunday night: All their funds – even amounts not insured by the Federal Deposit Insurance Corporation (FDIC) – will be available. Got to keep all those Democrat voters whole 🙄🤯
Herkunft: dailymaverick - 🏆 3. / 84 Weiterlesen »