Trump recently stated on social platforms that due to the current economic environment and Biden’s proposal for the worst tax increase in American history, the United States may experience a Great Depression worse than 1929. The proof is that the banks are starting to fail.
American commercial bank Silvergate (Silvergate) ceased operations and liquidated assets on the 8th. 48 hours later, Silicon Valley Bank collapsed. New York state financial regulators followed suit by shutting down Signature Bank, the largest U.S. cryptocurrency bank, the third bank to fail in a week in the U.S.
The “New York Times” reported that the reason why the US Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation closed the signature bank was to curb the huge impact of the failure of the Silicon Valley bank.
However, some US media believe that the collapse of Silicon Valley Bank has triggered a chain effect. The Associated Press analyzed that the shock wave of the collapse of Silicon Valley Bank spread all over the world. The Bank of England’s Bank of England said it was about to start insolvency proceedings for the UK branch of Silicon Valley Bank. And the California branch of First Republic Bank (First Republic Bank) has also experienced a run on in recent days.
Foreign media estimate that there are currently more than ten banks in the United States that are in a situation similar to Silicon Valley Bank, and there is a risk of bankruptcy. These include: First Republic Bank, Columbia Financial Bank and other companies, which may be the targets of the next wave of thunderstorms. There is a view that the bank deposit business is originally based on trust. Now that the first domino of Silicon Valley Bank has fallen, it is unknown how many banks will have a chain reaction.
There are also reports that the collapse of Silicon Valley Bank may not only hurt local businesses, but also affect businesses such as pizza parlors, Mexican restaurants and bicycle shops. So the bank’s collapse wasn’t just about technology.
Dai Xuefeng, president of Khan Funds, reminded that Silicon Valley Bank has many clients of innovative technology companies. “Silicon Valley Bank’s thunderstorm may not be caused by the Americans, but by the Chinese. Because powerful people in China invest in many innovative companies, the Chinese still invest a lot in small and medium-sized venture capital. Very active venture capital Gold really came from China.” He analyzed that there will be a wave of runs on small and medium-sized banks in the short term, but it will not affect large banks.
In order to avoid further expansion of the financial crisis, the US government announced that all Silicon Valley bank depositors will be able to withdraw all deposits on the 13th. And this matter will also affect the monetary policy direction of the US Federal Reserve.
Despite Biden’s assurances, U.S. banks lost $90 billion in stock value on Monday as investors worried about more bank failures. In addition, Asian banks are also tight. On the 14th, the Nikkei Average Index fell 2.2%, Softbank fell 4.1%, Mizuho Financial Group fell 7.1%, and Hong Kong’s Hang Seng Index also fell 2.4%.