The Impact of Bank Failures and Disintermediation

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Early signs of economic unraveling are appearing. The federal corporation that insures bank deposits is woefully underfunded. The Fed is under pressure to pivot away from its inflation fight.

Warren Buffett famously observed, “There’s never just one cockroach.” Let’s review what we know with an eye toward what might happen next. The following topics are today’s headlines.

Bank failures

Silicon Valley Bank and Credit Suisse have failed due in large part to losses in their bond investments caused by rising interest rates. This combines with last year’s stock market loss to put pressure on the Fed to pivot. See the section below on the Federal Reserve.