Financial Crisis Warning: US Bank Collapse Exposes Fragile Global System

US bank stocks plunge, raising concerns about America's $34 trillion debt. Is a global financial crisis coming due to globalization?
Silicon Valley Bank Collapse

Massimo Fini examines the recent upheavals in the American banking sector, highlighted by the dramatic fall of New York Community Bank and the collapses of Silicon Valley Bank, Silvergate Bank, and Signature Bank. Fini points to a systemic problem of unsustainable debts, driven by high-cost loans to individuals for living expenses, education, and healthcare—contrasting with systems in places like Cuba. These banking failures, though significant for small to medium-sized institutions, underscore a larger issue within the vast American debt landscape, now surpassing $34 trillion. The article critiques the endless cycle of debt and credit, forewarning of an imminent financial breakdown similar to historical crises, yet intensified by today’s global economic interconnectedness. Fini contrasts the current global economic agenda with a call for a shift back to prioritizing human life over the “sinister Trinity” of Economy, Technology, and Advertising, advocating for a reassessment of our societal values and the foundational systems.

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USA, Banks in Freefall: All’s Well, But Watch Out for Globalization

by Massimo Fini

About ten days ago, the shares of New York Community Bank plummeted by 40%. This collapse was preceded by those of the once-fabulous Silicon Valley (which isn’t so fabulous anymore, as people are leaving due to its high cost), Silvergate Bank, and Signature Bank. The pattern is always the same: banks provide usurious loans to citizens, who need them to pay rent, buy a car (not just any car, mind you, but the enormous ‘aircraft carriers’ that Dino Buzzati found so scandalous and outrageous in the post-war era) or cover university tuition fees (which are continuously rising because in the USA, unlike in places like Cuba, education and healthcare are not free), and at some point, they are no longer able to honor these debts. This is the Lehman Brothers mechanism we all remember, as it spilled over into European countries, including Italy. The collapse of New York Community, Silicon Valley, Silvergate, and Signature would not be alarming in itself, since these are small to medium-sized banks, if it did not fit into the colossal American debt that amounts to 34 trillion dollars and is set to increase even more. The US government has attempted to limit its public debt, a futile effort because, as Yankee specialists themselves tell us, economic rules are like laws of nature that no decree can stop. The US debt to foreign countries is close to 8 trillion dollars (800 billion with China), but there are also countries, European and otherwise, that are indebted to the USA. Everyone is indebted to everyone else, creating a massive amount of credit and debt that projects into a future so distant, hyperborean, as to be practically nonexistent. Sooner rather than later, this falsehood, that is, mistaking the financial-credit system for material economic goods (the “real economy”), will collapse on us. But the Americans continue undeterred. For them, it’s very easy to settle the debts of their own companies with 391 billion dollars, thus dismantling European competition.

It’s good to remember that the two major financial crises of the last century (Wall Street 1929, Lehman Brothers 2008) came from America. However, while the Wall Street crisis of ’29 could be somewhat mitigated by European countries (I will remind you of the creation of the IRI, Industrial Reconstruction Institute, by Mussolini and other containment measures) because the world was less globalized and each Western country could act for itself and by itself, now globalization, excuse the repetition, is global. At a WTO meeting in 1998, Bill Clinton stated that globalization was not a political fact but an economic one, and Fidel Castro said, “Opposing globalization is like opposing the law of gravity.” This is true if we place the Economy and its siblings, Technology and Advertising (the latter being the real protagonist of the entire system), at the center of our interests. Everything must conform to the needs of this sinister Trinity. But the same would happen if we placed a pin at the system’s center; everything would have to conform to the pin. Instead, it would be wise, I believe, to put humans back at the center of the system and relegate Economy and Technology to the marginal role they had before the Industrial Revolution. In the Middle Ages, despite all its limitations and sometimes even horrors (the Holy Inquisition, for example), human life was at the center.

I watch Sky Tg 24 Economia in the evening. Famous economists, major financiers, and politicians involved in the sector participate in a whirlwind of theories, theses, hypotheses, and conjectures that, despite the host Andrea Bignami’s skill, leave the viewer baffled. However, one thing becomes clear: these individuals, and not only them, are discussing with a Sword of Damocles hanging over their heads that will sooner or later fulfill its duty. Deus dementat quos vult perdere [God makes mad those whom he wishes to destroy] or, to put it more lightly with Giorgio Gaber: “We are all becoming idiots.”

Il Fatto Quotidiano, March 20, 2024


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