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.
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 ...
Yes, and Powell categorically stated in his recent testimony that the Fed would not be taking Congress' spending into account in its policies, IOW, would not be accommodating in that regard.
The "20's" are shaping up to be a very momentous decade.
Covid scam, election scams, NATO vs Russia (via UKraine) resulting in shifting world alliances and polarity, and the as predicted financial collapse or "crazy wild restructuring" (depending on how burnt you get by that).
Paul Volcker didn’t destroy the US economy. I paid 13% on a 30-year FRM and made it through just fine. About a year’s worth of pain but we came out great on the other side. Until, like, 2008
This is all way too complicated for my shallow economic intellect to figure out, but for those who think Powell is saving us from the globalists, won't his higher interest rates policy achieve their goal anyway: the destruction of the US economy?
Not so sure. Reading around the net, there are also a lot of savvy commentators who are saying that it's a no-win situation. Rates had to rise but that the economy isn't strong enough to take the damage of higher interest rates. Pain AND destruction. Now I'll go off and check 3 more economists and get 5 more opinions! :)
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 ...
Yes, and Powell categorically stated in his recent testimony that the Fed would not be taking Congress' spending into account in its policies, IOW, would not be accommodating in that regard.
Someone suggested Elon should buy it. What are the pros and cons?
The "20's" are shaping up to be a very momentous decade.
Covid scam, election scams, NATO vs Russia (via UKraine) resulting in shifting world alliances and polarity, and the as predicted financial collapse or "crazy wild restructuring" (depending on how burnt you get by that).
Paul Volcker didn’t destroy the US economy. I paid 13% on a 30-year FRM and made it through just fine. About a year’s worth of pain but we came out great on the other side. Until, like, 2008
Those were the days! Working in NYC and paying 13-1/2 on a crappy place in NJ. Unable to save diddly.
I felt lucky, I had friends paying 16%
This is all way too complicated for my shallow economic intellect to figure out, but for those who think Powell is saving us from the globalists, won't his higher interest rates policy achieve their goal anyway: the destruction of the US economy?
No. Those rates are attracting capital to the US. It will force restructuring of the US economy--no doubt painful--but not destruction.
Not so sure. Reading around the net, there are also a lot of savvy commentators who are saying that it's a no-win situation. Rates had to rise but that the economy isn't strong enough to take the damage of higher interest rates. Pain AND destruction. Now I'll go off and check 3 more economists and get 5 more opinions! :)
Thanks for helping me out, chaps. I agree that that crazy borrowing, printing and spending has to stop.
Very good analogy, Rascal. There are no easy options; only less horrible ones.