Asia Times/Alexandra Digby, Dollie Davis and Robson Hiroshi Hatsukami Morgan/5-2-2023
“US banking crises are rooted in a system that rewards excessive risk-taking and short-term gains over wider system stability.”
USAGOLD note: The failures of SVB and First Republic had to do with illiquid, under-water bond holdings that could not be tapped to meet a run on the bank. That problem isn’t going anywhere. (Bank managers thought they were making a safe acquisition.) The problem Asia Times cites is a second generation problem that has to do with the investment risks – including loans portfolios. The two together could turn out to be a volatile brew for 2023.
