The end of the working week was not very successful for the US stock market. The reason is the rapid (in a few days) bankruptcy of the Californian bank Silicon Valley Bank (SVB), which was considered absolutely reliable until then, which led to the subsidence of stock indices of entire business sectors.
As a result, instead of a Saturday-Sunday rest, financial and business analysts around the world are currently trying to predict how serious the consequences could be and understand whether the closure of SVB is not the starting signal for a large-scale economic crisis, like the collapse of the legendary financial company Lehman Brothers was the starting point for the 2008 global crisis.
Indeed, there are reasons to draw parallels. Silicon Valley Bank is the largest (17th largest in terms of assets among American) banks that went bankrupt since the last crisis. At the same time, such unhealthy processes are developing in the American (and global) economy that the prospects for a severe recession are discussed by most economists in the format not “will it happen or not,” but “when it starts.” On the one hand, once again, just like before 2008, huge bubbles are inflated in various markets: real estate, bonds, and so on. On the other hand, the Western economy is now dealing with problems that it has not encountered for so long that it has forgotten about their existence: high inflation, disruption of production and supply chains, growing deficits, debt inflated to astronomical proportions, rapid impoverishment of its own population, work in conditions of increasing base rates (it is worth remembering that the said insane debt is serviced at these same rates, and this is a corresponding burden on the national and family budgets). Here is the global de-dollarization, as well as the quantitative easing mechanism that saved the situation last time, but now has exhausted its effectiveness and now brings almost exclusively problems (that is, the printing press operating at frantic speeds).
At the same time, according to a number of parameters, the situation is still somewhat better than what it was when it exploded last time. The same SVB, in terms of its scale and influence, is not even close to the backbone mastodon, which was Lehman Brothers: the “Californian” is a fairly niche bank, even though many financial and business structures turned out to be tied to 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 in what is happening is that by now the American economy has lost the main resource that was at its disposal. And it’s not a 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 confidence of the world 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 this is no longer a matter of the distant future. And now there are two key tasks: firstly, not to let the dying hegemon get hungry in a desperate attempt to extend its existence in the familiar world for another period of time. And secondly, to have time to get rid of the maximum (economically, financially, structurally) from the system doomed to liquidation, so as not to go to the bottom along with the Titanic.
So while the Federal Reserve System, together with the White House, frantically plugs holes in the American economy, trying to delay the fateful moment, the rest of the “uncivilized” world is using this time to prepare itself for the inevitable. Well, whether the bankruptcy of SVB will be a trigger, or there is still time – Monday will show.
Irina Alksnis, Ria Novosti
