TEHRAN (Iran News) –As many economists and politicians had predicted in the past that the U.S. grandeur is approaching its end and that the U.S. will not be any longer the economy number one in the world in near future, it seems their prediction is coming true and domino of economic collapse and failure in this country has just started and everyday some big banks or financial institutions are falling in this country and the alarm has been heard in the U.S.
According to recent reports, more than 500 banks across the U.S. have closed since 2001, of which most happened after the 2008 financial crisis, according to data from the Federal Deposit Insurance Corporation.
American regulators seized and then sold First Republic Bank to JPMorgan Chase on Monday, marking the second largest-ever U.S. bank collapse and the third major bank shutdown nationwide in the past two months, following the collapse of Silicon Valley Bank (SVB) and Signature Bank.
Of all the banks that closed since 2001, the largest was Washington Mutual, which closed in September 2008, during the early stage of the financial crisis. The closure of First Republic Bank is the second-largest bank closure in the United States and the largest since the end of the financial crisis.
About 70 banks across the US have closed over the past decade. The total assets of the three banks closed this year exceeded the total assets of the 25 banks closed in 2008, meaning that the scale of U.S. bank closures in 2023 is the largest in recent years.
In March this year, a study jointly released by economists from multiple universities in the United States showed that the Fed’s rate hike greatly increased the vulnerability of the US banking system. Affected by the Federal Reserve’s aggressive interest rate hikes, the value of financial assets such as bonds held by many U.S. banks has shrunk sharply, and the asset value of some banks has even decreased by more than 20 percent.
According to the study, if market confidence continues to weaken and more depositors withdraw their deposits, as many as 186 banks may become insolvent and face the risk of closure.
The Federal Reserve rate hike on Wednesday led to a deep selloff in U.S. regional banks on Thursday.
Stocks of U.S. regional lenders such as Western Alliance and Pacific West dropped over 60 percent before recouping some losses. First Horizon tumbled as much as 45 percent, its biggest intraday fall since the 2008 financial crisis. Multiple other lenders, both large and small, too were caught up in the panic.
Now, the fear is that another financial institute may soon drop. All of this demonstrates how market anxiety persists after a series of bank failures and deposit outflows.
Last week United States Treasury warned that the U.S. government will be unlikely to meet payment obligations by early June if the debt ceiling is not raised.
The date is earlier than the Treasury estimated in January, indicating that the United States financial situation is more precarious than previously thought.
In a letter to Speaker of the House Kevin McCarthy, published on Monday, U.S. Treasury Secretary Janet Yellen asked Congress to increase the government’s debt ceiling before this date or to suspend its implementation in order to prevent economic turmoil.
After reaching the borrowing cap of $31.4 trillion on January 19, Yellen informed Congress that the Treasury would use cash receipts and extraordinary cash management measures to continue making payments on debt, federal benefits, and other expenditures at least through June 5.
Previously, economists had predicted Washington’s debt would increase to the set limit by the end of early August and the collection of less-than-expected tax revenues will speed the process.
Experts believe the U.S. could default on its obligations if the debt ceiling is not raised by the summer, triggering an economic downturn that could result in a recession, create an unemployment crisis, and damage the country’s reputation as a safe haven for investors.
The economic outlook is also clouded by a deepening rivalry between Biden and Republican lawmakers, who are demanding drastic spending cuts in exchange for more government borrowing power.
For the past two months, the White House has refused to talk to McCarthy and has demanded that the Republican-controlled Congress unconditionally approve the increase in the debt ceiling.
Recent turmoil in the banking industry may have you worried about your money.
On Monday, officials announced that they closed San Francisco-based First Republic Bank, making it the third U.S. bank to collapse in the past two months. Most of First Republic’s assets are being acquired by JPMorgan.
First Republic had wealthy clients who rarely defaulted on their loans. But the vast majority of deposits were above the $250,000 limit set by the Federal Deposit Insurance Corporation (FDIC), meaning they were uninsured.
And that worried analysts and investors who were apprehensive that if First Republic were to fail, its customers might not get all their money back.
Now the question is whether money in American banks is safe or not, and many Americans are concerned about their savings in the banks that they are getting bankrupt one after the other.
If the current condition continues, the U.S. banks will not be a safe place for saving and many countries will withdraw their funds from the American banks which will accelerate the collapse of this world hegemony which is currently world economy number one and losing its place to China which is moving ahead fast to become world economy number one, and now many countries in the world have resorted to using yuan in their trades and this is a serious warning to the U.S. whose dollar loses its power in competition with its main rival China and its yuan.
So the countdown for a big economic collapse in the U.S. has begun and domestic rifts and bipolarization helps this collapse and one can expect China to replace the U.S. as the top economy in the world very soon.
