It’s going to be fascinating to see what the fallout from the Silicon Valley Bank will look like. So far there hasn’t been too much in the way of commentary—at least not that I’ve seen. One major point has to be this: Some major bank failure has probably been a foregone conclusion since Jay Powell began his regimen of interest rate hikes. This can’t come as some big surprise to Powell, and it can’t help but be highly alarming for the Zhou regime.
The threatened collapse of NATO as a result of war on Russia (and China), the continuing advance of alternative economic, monetary, and military alliances outside the control the collective West (Iran, and the defection of Saudi Arabia from the West), and now with all those other threats to dollar dominance we see a major shock to the US banking system—one disaster after another. But to repeat: Powell embarked on this road with his eyes wide open. Will he buckle to pressure at this point? Time will tell. Much will depend on how manageable this failure is but, one way or another, it’s difficult to imagine that these developments will not impact the war effort.
In the meantime, here’s some food for thought from Twitter:
Some predictions building on Mark and Tom's work, especially with reference to Tom's tweet of the WSJ article:
a) This is good for De Santis and as a result bad for Trump. If the deep state has abandoned the worst globalist policies it is much easier for De Santis to present a policy platform which is acceptable to the establishment, the GOPe and the Republican base. A lot of Republicans will remain loyal to Trump but it takes some of the wind out of his sails.
b) This is good for the Clintons and bad for Obama. Obama is an ideologue committed to globalism, and his base is tge same. The Clintons like to sniff the political winds and adopt whatever policy helps them gain power. Hillary Clinton has long been a committed globalist but does anyone think she would not adopt a more sovereigntist view if it could help her win the presidency? It would be much harder for Obama to abandon globalism.
c) In foreign affairs, this hints at a more rational, interests-focused foreign policy. I think Mark said in another post that the NY banks want to make money off you but not to control you. Applying that to foreign policy, reconciliation with Russia starts to look more appealing, and the Ukraine War like a waste of money. (Of course, Russia is unlikely to trust the US for a long time, but might be willing to make a deal for disengagement if the deal helps it achieve its goals.) China is harder to call, even with a more rational foreign policy the NY banks will still want to be top dog globally, so confrontation with China will likely continue. But the current, deliberate provocation of China might end.
Increased rates have as one effect a curb on increasing deficit spending by DC; a concern is whether Congress opts for increased taxes to cover some of the gap. If Nancy still had the gavel we know how that would go ...