/ world today news/ The end of the working week was not particularly successful for the US stock market. The reason is the quick (within a few days) bankruptcy of the Californian Silicon Valley Bank (SVB), which was previously considered absolutely reliable, which led to a drop in the stock market indices of entire business sectors.
As a result, instead of a Saturday-Sunday break, financial and business analysts around the world are now trying to predict how serious the consequences could be and find out whether the closing of the SBB is not the initial signal of a large-scale economic crisis, similar to the collapse of the legendary financial company “Lehman Brothers”, which was the starting point for the global crisis of 2008.
There are indeed reasons to draw parallels. Silicon Valley Bank is the largest (17th by assets among US) banks to fail since the last crisis. At the same time, the American (and world) economy is developing such unhealthy processes that the prospects for a severe recession are discussed by most economists not in the format of “will it happen or not”, but “when”. On the one hand, once again, as before 2008, huge bubbles are being inflated in various markets: real estate, bonds, and so on. On the other hand, the Western economy is now dealing with problems it has not faced for so long that it has forgotten they exist: high inflation, disruption of production and supply chains, growing deficits, debt inflated to astronomical proportions, rapid impoverishment of its own population, working in conditions of increasing basic interest rates (we must remember that the mentioned insane debt is serviced precisely at these rates and it is a corresponding burden on the national and family budget). Add in global de-dollarization, as well as the quantitative easing mechanism that saved the day last time, but has now exhausted its effectiveness and brings only problems (that is, the printing press working at breakneck speed).
At the same time, in a number of parameters, the situation is still slightly better than it was during the last explosion. The same SVB in its scale and influence does not even come close to the mastodon that Lehman Brothers was: “California” is a rather niche bank, although many financial and business structures turned out to be associated with it.
However, the general trends in the development of the situation are now much, much worse and more hopeless than fifteen years ago.
And the most important thing about what is happening is that so far the American economy has lost the main resource that it had at its disposal. And it’s not the dollar at all. America has lost the world’s confidence in its economy, in its unsinkability and ability to emerge victorious from any, even the most severe crisis. America has lost the world’s confidence in itself as a whole.
As a result, there is a consensus outside the Western world that the collapse of the current global economic system led by the United States is inevitable and is no longer a matter of the distant future. And now there are two key tasks: first, to prevent the dying hegemon from doing the irreparable in a desperate attempt to prolong its existence in the known world for another time. And secondly, to have time to free ourselves as much as possible (economically, financially, structurally) from the system doomed to liquidation, so as not to go to the bottom together with the “Titanic”.
So, while the Federal Reserve System, along with the White House, is frantically plugging holes in the American economy, trying to delay the fateful moment, the rest of the “uncivilized” world is using this time to prepare for the inevitable. Well, we’ll see if the bankruptcy of SVB will be a trigger, or if there is still time.
Translation: V. Sergeev
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