Trending Now
We have updated our Privacy Policy and Terms of Use for Eurasia Group and its affiliates, including GZERO Media, to clarify the types of data we collect, how we collect it, how we use data and with whom we share data. By using our website you consent to our Terms and Conditions and Privacy Policy, including the transfer of your personal data to the United States from your country of residence, and our use of cookies described in our Cookie Policy.
{{ subpage.title }}
U.S. President Joe Biden delivers remarks after the collapse of Silicon Valley Bank (SVB) and Signature Bank in Washington, D.C., March 13, 2023.
SVB collapse: Don’t say the B-word
US President Joe Biden on Monday addressed the nation to assure Americans that, whatever the fallout from the collapse of Silicon Valley Bank, their deposits and the entire banking industry are both "safe."
US markets responded with mixed signals to Biden's speech. On the one hand, stocks initially tumbled over fears that other regional banks might soon crumble too (banks in general took a hit because high-interest rates are really hurting their bottom line). On the other, non-bank stocks closed in the black due to growing chatter that next week the Fed might hold off on further rate hikes to give the financial sector some breathing room.
The situation remains fluid, and it's still too early to say whether the so-called "backstop" measures taken by US authorities will be enough to stop the risk of SVB's insolvency infecting other regional banks.
For more on how we got here, read our explainer Q&A with Eurasia Group’s Celeste Tambaro here.
Meanwhile, the more uncertainty, the louder the calls will get for Biden to do something more. Perhaps even (gasp!) the B-word: bailout. That would be very bad news for the president, who knows that bailouts are politically toxic. So toxic, in fact, that opposition to them brings together odd bedfellows like Sen. Bernie Sanders (I-VT) on the democratic-socialist left and Rep. Thomas Massie (R-KY) on the libertarian right.
For Sanders, SVB's collapse is a direct result of the Trump administration's 2018 push to deregulate smaller banks, as if we had learned nothing from 2008 — not to mention the savings and loan crisis of the 1990s. For Massie, the culprit is the Fed for keeping interest rates too low for too long, which spurred the rise of piggy banks for venture capitalists like SVB, and then for raising rates to tame inflation.
Sanders and Massie agree that bailouts create a moral hazard by encouraging banks to gamble with people's money. In this case, though, what US regulators have done is bend the rules for SVB depositors, including many tech companies.
Yet, what if the Biden administration needs to consider a bailout to prevent a financial meltdown? It's pretty clear how Sanders and Massie will vote, but other lawmakers might need to make a tough choice. And if both parties are too scared of their flanks, political paralysis is all but assured.
What do you think? Let us know here and we might include your response in an upcoming edition.
Will Joe Biden make America 2010 again?
Joe Biden's got a new slogan for his campaign -- but can he get Bernie Sanders and Elizabeth Warren to support it?
Watch more PUPPET REGIME.
Will the US stave off depression? Will Biden unite Democrats?
Ben White, Chief Economic Correspondent for Politico, provides his perspective on the news in US politics: Is the US doing enough to fight off a prolonged recession or depression?
I'd say the Fed, the central bank is doing enough with its giant programs that it has rolled out over the last couple of weeks. Congress did a good job with the first $2 trillion package. Needs to do more in help for small businesses, States and localities, and hospitals. So, no partisan fighting, more passing of bills.
What does Joe Biden need to do to unite the Democratic party now that Bernie Sanders is out?
I don't think he has to do a ton, there's a lot of unity to beat Donald Trump. And a lot of the hard core, Bernie Dems are in blue states like New York and California. That said, it would be good if he reached out to them on health care and the environment in ways that don't alienate moderate suburban swing voters.
Is the new OPEC oil deal to cut production a big win for Trump and the US economy?
Well, it's something of a win, although 10 million barrels cut does not match the drop in demand. Oil prices stop their tanking, but they're certainly not rising. So, I'd say a moderate win for Trump, a moderate win for the US economy, but not a blockbuster
Someone old for president!
Our puppet 2020 contenders find common ground on the key attribute the next U.S. president should have. Here's a hint: It involves moth balls and hard candies.