After the collapse of Silicon Valley Bank and Signature Bank, the collapse at First Republic Bank reinforces fears that the entire US banking system is under attack. As in previous cases, it is looking for a buyer. The Federal Deposit Insurance Corporation has invited giants such as JPMorgan Chase, Bank of America and PNC Financial Services Group to bid. But they still didn’t make it before the Asian markets opened. No matter how fast they rushed.
Source: mediacratia.ru
The story of First Republic Bank resembles the previous ones. Wealthy clients, high number of uninsured deposits. Early in the year – the outflow: over $100 bln were withdrawn. Into the hat that was quickly put on Wall Street, only $30 bln were poured. By the end of last week First Republic was worth $557 mln. In November 2021 it was valued at $40 bln.
First Republic is one more victim of the ride of unprecedented generosity launched by Biden, which makes the financial system of the USA dizzy to the point of nausea. The series of bank failures is directly caused by a sharp rise in interest rates. This is how the Federal Reserve is fighting “Bidenflation”, the galloping inflation of the Biden-era.
“No serious economist” thinks uncontrolled inflation is coming, Biden told reporters in June 2021, just months after unveiling his $1.9 trillion post-pandemic rescue plan for America. The day before the US president signed off, inflation was 1.7%. By the end of the year, as helicopter covid checks poured out on the economy, inflation had reached a 40-year high. More than 10% per annum.
The Federal Reserve is aggressively raising interest rates in an attempt to keep up with the ever more depreciating dollar. And the value of government bonds, in which many banks invested as ultra-secure, collapsed, creating a pernicious mismatch between assets and deposits. Depositors began to withdraw their money.
The US saw the biggest drop in commercial bank deposits since 1934. That year was the height of the Great Depression. People’s economic behaviour is similar too. Asked what they would do with $10,000, every fifth American, if they have it, promises just to put it under his mattress. They say they’ll be safer in this whole “fire” thing.
“This is different, don`t call it a recession,” the US president reassures himself and others. But common sense and figures are against Biden. GDP has fallen for two quarters in a row. Real wages for Americans as a whole are $10 a week lower than they were when Biden came to power.
Literally everything has risen in price and continues to do so. On the eve of summer holidays, Americans are already being prepared for exorbitant prices. The price of airline tickets has risen by 10%, hotels by a quarter, car rentals by one and a half times. Polls show that only 16% of US residents rate the economy as good. 3/4 are preparing for things to get even worse.
Even an energetic and talented politician would need a special set of skills to ride out this perfect storm. But instead of the energetic and talented in the White House it’s Joe Biden, who seems as if he hasn’t come out of the covid remote he liked so much. “Extraordinary” populist decisions and led to the current state of affairs.
The US economy stepping on the rake of inflation is the cause of worry for nine out of ten American voters. They put rising prices, a drop in their own purchasing power above other concerns. The 80-year-old president’s anti-record 37% approval rating is less about the rating and more about the diagnosis. For which one can only blame oneself.
Neither Ron DeSantis, Donald Trump, Robert Kennedy, China or Russia are the White House head’s main rivals in his battle for the next four years in the Oval Office. Joe Biden’s main rival in the 2024 election is named Joe Biden.
Valentin Bogdanov, RT
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