Economist Peter St. Onge says the current banking crisis is already bigger than the turmoil of about 15 years ago – and it’s far from over.
In a new video, St Onge says the impact on the banking sector has eclipsed the 2008 global financial crisis in terms of assets wiped out.
St. Onge says investors should brace for more collapses, despite the Federal Reserve saying otherwise.
“Just hours after Fed Chair Jerome Powell told America the U.S. banking system was sound and resilient, it fell off a cliff as major aftermarket regional lender PacWest collapsed over 50%.
Coupled with the collapse of the First Republic last weekend, the 2023 banking collapse has now officially surpassed the 2008 collapse, with seemingly much more to come from our ‘very solid and resilient’ banking system.”
The economist believes the collapse of the First Republic and others is likely just the tip of the iceberg. Using the banking turmoil of 2008, St. Onge predicts that hundreds of banks will fail over the next 12 months as the economy feels the wrath of last year’s aggressive Federal Reserve rate hikes.
“What’s scary here is that by 2008 the early collapses are just the beginning, the screaming prelude to a wipe out of banks scrambling to die.
In raw numbers, the 25 US banks that collapsed in 2008 were followed by a bang of a total of 440 banks over the next four years. That’s 110 (banks) per year, compared to two per year before the crisis. So we haven’t even started to see what’s coming.
Rate hikes typically take 12 to 18 months to really hit the economy, and we’ve only been at it for just under six months. So bracing for the 2008 crisis means the real storm is another year away. These are the first winds of a coming hurricane.”
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