Saturday, March 18, 2023

#Financials Review $XLF Expect the Banking Crisis to Expand

Financials Review
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The failure of Silicon and Signature bank has surprised the majority (Americans and others), a group unaware of the historical consequences of raising rates from a HISTORICALLY low level. Is the 2023 banking crisis the beginning of a 2008-style crisis, or the tip of the iceberg to something significantly worse?

The Economy & Stock Report is a must-watch series for all subscribers. Please familiar yourself with what's unfolding, or the invisible hand and its 2×4 will be knocking at the door of your country, state, and city. Get ready for capital controls.

The banking crisis is like a tip of the iceberg. The real size of the problem, one created from artificially low interest rates for years, is hidden from public view. Zero and negative interest rates distorted investments for years. These investments (choices) are being challenged as the invisible hand raises rates across the planet.

Trading bets for lower interest rates, once considered the Fed put or sure things, are blowing up as rates rise. The repeal of Glass Steagall Act (1933) in 1998, a piece of legislation that separated retail banking (deposits) from trading/investments that few people understand or remember, has once again exposure the world's banking system. Risks that should be assumed by shareholders, are being imparted on depositors from Silicon Bank ($SIVB) to Credit Suisse ($CS). The public, even the wealthy, are just now beginning to realize that the deposits, even those covered by the FDIC are not safe. The FDIC can only backstop a fraction of the $17.5T (trillion) dollars of deposits in commercial banks.

Commercial Bank Deposits

Not all banks fail in a Depression, but many do. The fear of the unknown, a lack of transparency and trust present in all Depressions, is driving people to withdrawal funds from their bank. This fear is causing mini bank runs, mostly contained to California.

The Simpsons - on the collapse of the Silicon Valley Bank.
by u/bpra93 in StockMarket

The new Bank Term Funding Program has already deposited $30B into a struggling First Republic. The release of 10+ programs since 2020 marked the end of Quantitative Tightening (QT). The computer tracks QT or Quantitative Easing (QE) outside the Matrix for interested groups. The green highlight box returned in March, after the Fed expanding it balance sheet in a week more than it tightened since February 1 (Quantitative Easing or Tightening Chart). The Fed is worried, people.

Quantitative Easing or Tightening

QE normally triggers risk-on. Risk-on defined by higher stock, bitcoin, gold, silver, and commodity prices. Why are markets slow to respond. First, it takes time. Second, the policy choice being made is making the banking crisis worse. Every subscriber needs to understand this, and start protecting themselves.

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