The Crisis Has Gone Global | Banks Are Desperate For Cash!
By Sean Foo
The US banking crisis is now triggering a treasury dump by foreign central banks as a dollar shortage is brewing. This is bad as banks are pre-empting yet another spree of bank runs as depositors flee away with their money. The incentives to keep money in the banks just aren’t there and if this continues, we could be in for a deadly credit crisis which might grind the economy to a halt! Here’s what you must know.
Here’s what others had to say:
It’s amazing how I grow with this channel. And also grow educationally thank you Sean congratulations already on your 100k milestone
I keep my “millons” in SberBank of Russia and enjoy a basic 4.8% in monthly additions. We, russians, are now de facto isolated from dollars, so of course I expect some bank-related bad news and trouble but not to the point of bank run. Imagine that: my account grows 0.4% every month and, say, gas stays the same 50 cents a litter. Not bad for a country of 90s survivors.
The world needs a dollar crash like someone binging on rotton seafood needs to have diarrhea.
Spot on Sean. This financial battle within and without is a fascinating chess duel between east and west, which when viewed upon closer domestic focus is a lesson against federal profligacy and asinine political ideology instead of sound management.
Nick Finds Gold
ANZ Bank CEO (Australia) “Banking turmoil has potential to spark global crisis”.
Great video, Sean! I think I am more concerned about foreign banks than more US banks. I definitely get the impression that the US is preparing for possible economic warfare and taking steps with global money supply. The US deals with domestic demand for the dollar and international demand for the dollar. The possible threat of massive dedollarizing is just too scary. Even in normal times various countries have made mistakes and found themselves to be US Dollar poor. What is going on now could make the monetary environment even more challenging for countries needing dollars. International liquidity will probably get worse, but I don’t think the US has much choice.
Japan deserves a medal for bravery. They see the catastrophe coming like a run-away train and they still standing there. Wish my country had a friend like that.
Yes, agreed with your analysis:
1) More Countries will be dumping lower interest bearing US Treasury Bonds and keep Liquid.
2) The demand for USD will definitely increase with further lost of confidence in the US + EU Banking System and their Recession.
3) New US Treasury Bonds will definitely have to pay up to 6% to be attractive as the overnight repo rate is so attractive and risk free.
4) More Bank Depository will investigate in overnight market repo rather than putting their money in banks or even in shares as risk free.
5) Short term fixed deposit rate for 3-6 months will go higher to attract deposits.
6) Economic slow down in US + EU will drive down the demand of oil, especially from now to October due to warm seasons.
Good job Sean. Perhaps you can help enlighten us on the derivative time bomb that some commentators have mentioned in passing but not able to break it down for the comprehension of common folk like me. You can probably do a better job as you make things easily comprehensible. Thanks in advance.
You should look into health of Japanese banks. Japan is known for holding a lot of US Treasuries. I am sure they all have dropped in value significantly due to the rise in interest rates.
China could help by giving out cheap loans denominated in USD to European countries that are short of US dollars.
But the repayments could made in euro or RMB.