“What we’re facing right now is really serious,” Pomboy, founder of economic research firm MacroMavens, said on Friday in a Fox News interview. “We are on the brink of a 2008-style financial crisis.”
Pomboy made her assessment in the wake of Friday’s shutdown of Silicon Valley Bank (SVB) by federal regulators – the second-largest failure in US banking history. SVB’s collapse came on the heels of this week’s closure of cryptocurrency lender Silvergate Bank, as well as the bankruptcies last fall of crypto firms FTX, BlockFi, and Three Arrows Capital.
President Joe Biden’s administration has responded by trying to allay concerns over a broader crisis. Treasury Secretary Janet Yellen issued a statement on Friday declaring that the US banking system “remains resilient, and regulators have effective tools to address this type of event.”
Pomboy was unconvinced, mocking Yellen for an “absolutely insane” focus on “diversity, equity and inclusion” at a time when rapid increases in interest rates by the US Federal Reserve are exposing the fragility of the nation’s debt-laden financial system.
“Look, you don’t raise rates in record fashion on an economy toting record leverage at maximum speculation and expect no consequences,” the economist said. “This was clearly going to happen, and now we’re seeing the weak links in the chain break. The areas where speculation was most rampant and most egregious are clearly coming down.” She added that years of excessive risk-taking are “coming back to bite them hard” and predicted that the situation will “devolve very rapidly.”
Republican presidential candidate Vivek Ramaswamy argued that just as in the 2008 financial crisis, which stemmed partly from the federal government’s push to ease credit standards in low-income communities, SVB’s failure may have been fueled by politics. In SVB’s case, a focus on so-called ‘sustainable finance’, or ESG, may have contributed to bad lending decisions, he said. “When we don’t learn lessons, history repeats itself.”
Billionaire hedge fund manager Bill Ackman warned that SVB’s failure may trigger runs on other troubled banks, causing a 2008-like chain reaction as “the dominoes continue to fall.”
The source of this content is RT (rt.com), an international news channel that is publicly financed by the Russian Federation. To learn about Corruption Ledger's stance on freedom of speech and press, click here.
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