We will be meeting in the private dining room at 5280 Burger and Taproom, 7032 Wood Hollow Dr. This month’s topic is:
What’s ahead for the global banking/investment economy and consequently governments?
Last month two banks, Silicon Valley Bank and Signature Bank had to be “bailed out” with quick action by the Federal Reserve to stabilize the situation. There were other regional banks – like First Republic – “teetering on the brink” of financial failure and had to also be rescued. Finally, there was the global banking situation with Credit Suisse being taken over by UBS, while in Germany investors were watching Deutsche Bank. Many thought that HSBC may also be vulnerable, impacting the economies in Asia.
There are several factors that may have contributed to the crisis. In the U.S., under the previous administration, banking restrictions imposed after the 2008 crisis were removed for mid-sized regional banks. There was the role of “start-ups” and the “crypto sector” dominating a bank’s assets, and finally the Federal Reserve’s policy of raising interest rates to reduce inflation. Similar situations also held for the global banking community. The pandemic, the cost of the War in Ukraine, and the disruption of global supply chains – especially food and energy – were all contributing factors at the international level. In the UK, the implications of Brexit continue to be “a shock to the UK economy” and in the EU there is the economic stress of “shadow banks” (non-banking financial institutions). And last, there is still the “contagion risk,” where one institution or region could drag down the global economy.
The head of the IMF (International Monetary Fund) has said that “the global economy faces risks to financial security because of the turbulence in the banking sector.” So, what’s next? How should this be addressed by the Federal Reserve in the U.S., and by institutions in the rest of the international banking community? After all, it is a global economy.
Please join us for what will be a very interesting discussion.
For more details contact:
Ellen Murry: ellen@wacaustin.org
Polina Anastassieva: polina@wacaustin.org
