US banking crisis now bigger than the 2008 financial crisis – but the real storm hasn’t hit yet: Economist Peter St Onge
Economist Peter St Onge says the current banking crisis is already bigger than the turmoil we saw around 15 years ago – and it’s far from over.
In a new video, St Onge says the fallout in the banking sector has now eclipsed the 2008 global financial crisis in terms of assets wiped out.
St Onge says investors should prepare for more collapses even if the Federal Reserve says otherwise.
“Just hours after Fed Chairman Jerome Powell told the US that ‘the US banking system is solid and resilient,’ it fell off a cliff as major regional lender PacWest collapsed over 50% in the aftermarket.
So along with the collapse of First Republic last weekend, by assets, the 2023 banking collapse has now officially surpassed the 2008 collapse, with apparently much more to come from this “very healthy and resilient”[ads1]; banking system of ours.”
The economist believes that the collapse of First Republic and others is probably only the tip of the iceberg. Using the 2008 banking crisis as a benchmark, St Onge predicts hundreds of banks will fail over the next 12 months as the economy feels the wrath of the Federal Reserve’s aggressive rate hikes over the past year.
“The scary thing here is that by 2008 the early collapses are just the beginning, the screaming prelude to an extinction level of banks crawling away to die.
In raw numbers, the 25 US banks that collapsed in 2008 were followed by a drumbeat of a total of 440 banks over the following four years. That’s 110 (banks) per year, compared to two per year before the crisis. So we haven’t even begun to see what’s coming.
Interest rate hikes typically take 12-18 months to really hit the economy, and we’re barely six months in. So lining up against the 2008 crisis means that the real storm won’t even hit for another year. This is the first breeze of a coming hurricane.”
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