| I think that's highly likely. Banks aim to maximize their profit margins and that necessarily means taking risks. When regulators close one loophole, banks find another one to exploit. This is a game of whack-a-mole that the regulators cannot hope to win. SVB, Credit Suisse, and Signature Bank aren't outliers. These are just the first banks to get hit by the crisis. It's almost certain that most other banks have been playing exactly the same kinds of games and betting on a low interest rate environment. Now that the inflation has risen to unacceptable levels, the Fed has no choice but to raise rates. This will translate into further chaos in the banking system. If the rates don't go up then we'll see inflation keep climbing, and this will cool investment because it's practically impossible for companies to produce any meaningful returns in high inflation environment. A company right now has to show consistent 6% growth simply not to lose money right now. Furthermore, 64% of Americans are now living paycheck to paycheck [1]. 37% of people are working two full time jobs [2]. And typical debt is around 100k [3]. So, over half the population has no savings and can barely makes ends meet while nearly 40% of people are already working as much as humanely possible. If cost of living keeps climbing a huge chunk of population will become insolvent, we'll see large numbers of people defaulting on their debt. Banks are the ones who are holding a lot of this debt, and as people start defaulting the banks will start failing. Meanwhile, overall economic activity will cool with people cutting discretionary spending in order to afford necessities. This will make companies go out of business creating mass unemployment, and further feeding into the debt crisis. Incidentally, we're right on schedule for a crash in the boom/bust capitalist cycle [4]. [1] https://www.cnbc.com/2022/03/08/as-prices-rise-64-percent-of... [2] https://www.denver7.com/news/national/more-americans-report-... [3] https://www.firstrepublic.com/insights-education/average-ame... [4] https://www.investopedia.com/terms/b/boom-and-bust-cycle.asp |