Eye-opening chart of the #bank #crisis. Already worse than 2008 & it only just started. The #FederalReserve creates the illusions of #prosperity with low #InterestRates that creates the inevitable financial bust that results in an #economic bust or worse, a #currency collapse. pic.twitter.com/8KABoZmnLZ
— James Turk (@FGMR) May 5, 2023
Weakness within the banking system is starting to spread, as otherwise healthy firms are now vulnerable to the fallout stemming from multiple failed banks, and as credit availability contracts throughout the economy, according to famed economist Mohamed El-Erian.
In an interview with Bloomberg on Thursday, El-Erian pointed to the recent bout of banking volatility, with First Republic Bank reigniting fears after it collapsed and was bought by JPMorgan on Monday. That marks the third bank failure in two months – a consequence of the Fed’s aggressive tightening cycle, poor financial supervision, and bad management, El-Erian said.
“Now we have stage 2, where banks that are not particularly badly managed – they have issues but they’re not particularly badly managed – are suddenly vulnerable,” El-Erian warned, pointing to regional lenders that have been struggling since First Republic’s failure this week. “The cancer within them is starting to spread, and we’ve got to keep an eye on that,” he added.
Credit conditions are also beginning to tighten, and the risks of further contraction go up as banking contagion spreads.
This week, Zerohedge AND Jim Cramer called this a new bull market:t.co/Pwvo9iiOQRt.co/5GfsaF2vqu
Bulls were doomed after that.
Trapped in an Idiocracy. pic.twitter.com/y8yYoFRq0D
— Mac10 (@SuburbanDrone) May 3, 2023
Since the pandemic ended, there has been a very uneven recovery.
And therefore there is going to be a very uneven bailout. pic.twitter.com/POq7YvZap0
— Mac10 (@SuburbanDrone) May 6, 2023
Everything you need to know about FDIC deposit insurance:t.co/VttQ6xyH95
1) 99% of all accounts < $250k, insured
2) 1% of all accounts = HALF of deposits, uninsuredGame over man. pic.twitter.com/vJHXgfdKU8
— Mac10 (@SuburbanDrone) May 6, 2023
"The worst is over" pic.twitter.com/IZ3oB8cDv0
— Mac10 (@SuburbanDrone) May 5, 2023