The failure of SVB is symptomatic of a far bigger problem: a US financial system that is woefully unprepared

for the return of inflation and the concomitant normalization of monetary policy. 

Depositors, even the hotshots of America’s startup culture, can hardly be blamed for not doing the due diligence on complex financial institutions they entrust with their assets. That task falls to the Federal Reserve, which, sadly, blew it again.

Fed has now made a supervisory error of monumental proportions: It fixated on large banks and overlooked smaller regional banks like SVB, Signature, and First Republic, where accidents were waiting to happen.

In its February 2023 stress test, the Fed conceded that it needed to start thinking more broadly about different shocks, and it allowed for the possibility of a new “exploratory market shock” – still a recession, albeit one accompanied by higher inflation. 

But, buried in terse language near the end of the latest stress-test report, the Fed noted that any firm-specific exploratory results wouldn’t be available until June 2023. And there was no indication that such results would be published for smaller regional banks. Too little, too late.

So, what does this have to do with China and the escalating Sino-American conflict? For the past 20 years, a group within the senior ranks of the Chinese leadership has argued that America is in a state of permanent decline, providing an opening for China’s global ascendancy.

There is an important footnote to China’s view of a declining America. While Mao alluded to it in broad terms – a US “paper tiger … in the throes of its deathbed struggle” – this argument was first fully articulated by Wang Huning in his 1991 book America Against America. 

Based on Wang’s firsthand observations while living in the US, the book was a scathing critique of America’s social, political, and economic decay.

Stephen S. Roach Project Syndicate 24 March 2023

Står USA inför en revolutionär situation?

En bra dag för oss i Kassandra-branschen. 

Och solen skiner just nu över Stockholm

Men det är onekligen lite kyla i luften.

Englund blogg 26 januari 2010, repeat 2010

Några år senare blev Trump President of The United States.

Martin Wolf “The Crisis of Democratic Capitalism”


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