Not long before that, Viet Hustler had warned about the risk of twin crisis linked between public debt risk and banking financial sector risk: When bond yields rise high, the balance sheet value of banks decreases, prompting bank run from depositors (see old article here and in-depth analysis below). The Silicon Valley Bank (SVB) event, from one of the banks honored as the “best” in the US to the brink of bankruptcy within 48 hours, has confirmed this latent “twin crisis” risk.
Whether banking crisis can be avoided largely depends on the FDIC's resolution approach for SVB, the way banks and authorities reassure the crisis.
This week's macroeconomic article from Viet Hustler will focus on analyzing potential risks to the financial system and “twin crisis” to the economy from the SVB event last week.
