According to recent reports, President Biden said they would find accountable those responsible for the SVB collapse. It was a very funny statement because it was their government policies which had led to this disaster. Silicon Valley Bank, which recently collapsed, burst because the US forced banks to buy their debts at tier 1 capital and then debase it.
Regulators blew the final killer blow in the SVB collapse
Recently, regulators have forced industries to concentrate their banking and generate banks with undiversified client portfolios by draconian AML/KYC/ risk modelling, which is very dangerous for bank solvency. If you put these two together, you will have a doyen bank with a godlike customer base of lauded VC with their miracle unicorn investee companies, the golden children of the American economy, and you end with a 5-star disaster.
It was all about the evil crypto demon corrupting the US financial system until the Silicon Valley Bank collapsed. It was Silvergate all the way; then Silicon Valley Bank, the eighth largest bank in the US, collapsed because its customer base was VCX, who were suddenly not bringing in deposits, whose investors were also banked there and were buying their deposits with abandon.
However, the killer blow was the regulators had long since told banks to buy their flipping government debt or else it would be triple AAA and never defaulted. It means the government wants the bank’s reserves to be made from it. Except when they increase the interest rates, they crush the value of those assets but threaten to collapse those banks who have followed those instructions and rely on those bank solvents.
UK pension industry has the same condition.
Recently, Biden said they would find accountable those responsible for the SVB collapse. However, the statement is very funny because it’s their policy which leads to this disaster. In the SVB collapse, the government regulator were the only ones who blew the final blow by forcing banks to buy their flipping government debts.
This also happened in the UK pension industry, which nearly collapsed in September. Rising interest rates destroyed their bond positions, which was why the BOE stopped it to the tune of 100 billion USD to rescue the citation.
What are your thoughts on the new US government policies, which are talking banks and exchanges to failure? Which bank next do you think will join the failure list? Let us know in the comments below. And if you found our content informative, share it with your family and friends.
Also Read: Michael Burry warns that the current banking turmoil is similar to the panic of 1907.
