With the collapse of two major financial institutions in the United States and the struggling financial sector of the country, adding to this malaise, the Federal Open Market Committee enacted the first of what would be eight interest rate increases. Meanwhile, in my opinion, a shroud of pessimism has hung over the United States for nearly a decade. Politically, economically, and culturally and independent of socioeconomic class, gender, race, or geography, a majority of the population lacks a positive outlook on life in general. Meaning, Americans are quickly becoming a pessimist nation because of multiple factors and the way politicians in that country are pushing forward agenda of dividing people in the name of political affiliations, religion, ethnicity etcetera – possibly pretty soon, the US shall become an epicenter of internal riots and even civil war.
Recent trouble in the banking sector in the US has been painful for both Wall Street and Main Street, with the most recent notable example being the collapse of both Silicon Valley Bank and Signature Bank. It may be stated here that in the United States, for the last two decades, on an average two banks have been failing every month. But of course, those failed banks were neither famous not important like Silicon Valley Bank in particular.
People are showing Covid-19 mainly as the reason behind financial crises throughout the world, including the US. But in reality, those recent collapses of Silicon Valley Bank and Signature Bank were not results of Covid-19. Those did not happen overnight. The American economy is in a silent destruction mode, which will continue to kill many banks and financial institutions in the coming months, while there will also be issues such as massive unemployment and shortage of basic needs, including edibles – which shall push Americans towards resorting to crimes. Number of burglaries, kidnap, robbery, murder, rape and other types of crimes shall continue to grow. Of course, US President Joe Biden’s involvement in a proxy war in Ukraine against Russia is the key reason behind America’s declining economic conditions.
Meanwhile, Pentagon has openly admitted stating Team Biden has shipped so much US ammunition to Ukraine that the American stockpile has become depleted to the point that there is not nearly enough ammo for direct war with Russia or a potential military conflict or even war with China. Under such circumstances, US President Joe Biden needs to at least double the country’s defense budget immediately, ignoring other issues such as the ongoing economic crisis, inflation and poverty.
Regarding Silicon Valley Bank, a bank whose balance sheet looked good, had a high concentration in treasury bonds, which was matched by a client base that came mostly from the tech industry. As the pandemic receded, demand for tech dropped, triggering large-scale layoffs and causing customers to withdraw more than usual. At the same time, new account openings dried up, forcing the bank to sell its bond holdings at steep losses. Panic ensued, triggering a classic bank run which necessitated the intervention of the government to avert wider contagion. Several other smaller banks folded along the way, such as Signature, but the real shock came with the lingering troubles at Credit Suisse, a 167-year-old institution.
The United States is facing several challenges, including a slowing economy, record deficits leading to political showdowns, and the 2024 presidential election. The growing rift with China and Russia will likely create economic frictions.
Europe is also facing challenges, including a resource-sapping conflict, widening social upheavals, and an ongoing banking crisis.
In brief, Europe and the US are in acute financial challenges while a large number of countries have started moving out of dollar-based transactions mostly because of Western sanctions on Russia and a few other countries. This process of de-dollarization has already rattled America’s top policymakers. But possibly, the entire world has already become too tired of bullish, thuggish and senseless behaviors of the United States and its European allies.
