A dire reality

Officials across time zones are scrambling to stop the spread of the panic from SVB’s collapse. [View in browser]( [Bloomberg]( California has a reputation for setting global cultural and political trends, but the collapse of Silicon Valley Bank shines an unflattering light on the Golden State, which has an economy similar in size to Germany. As Hollywood stars were picking up Oscars in Los Angeles, officials in Washington were pulling all-nighters to convince markets opening in Asia that the second-largest bank failure in US history wasn’t a sequel to the movie they saw in the 2008 financial crisis. Key reading: - [SVB’s Failure Exposes Lurking Systemic Risk of Tech’s Money Machine]( - [SVB Fallout Spreads Around World From London to Singapore]( - [Biden Says Those Behind SVB Bank ‘Mess’ Will Be Held Accountable]( - [California Braces for Further Flooding as Residents Evacuated]( - [US Backstops Bank Deposits to Avert Crisis After SVB Failure]( The scramble across time zones to stop the panic spreading comes just as US, UK and Australian leaders are headed to California to finalize a major deal on nuclear submarines as they seek to counter an increasingly assertive China. California is home to companies at the forefront of tech innovation. Yet its glamor and power sit uneasily alongside increasingly jarring homelessness and income inequality, and the devastation caused by recent climate disasters in the shape of fires and floods. A series of tech layoffs has only served to raise the alarm on the state’s true condition, a Democrat stronghold that plays a critical role in every election cycle and that will be a key focus for politicians and fund-raisers as the 2024 presidential race kicks into gear. President Joe Biden called the bank’s failure a “mess” and vowed to bring those responsible to account. Although SVB was only a regional bank, it had branches from China to Sweden and connections that ran from Napa Valley’s wine country to the City of London. It billed itself as a one-stop shop for tech visionaries remaking the world. Even in a state whose economic success is famously fueled by California dreaming, SVB’s collapse offers a timely reminder that regulation matters. — [Karen Breslau]( A man rides through floodwaters in Watsonville, California, on Saturday. Photographer: Josh Edelson/AFP/Getty Images Coming Soon: Understand power in Washington through the lens of business, government and the economy. Find out how the worlds of money and politics intersect in the US capital. [Sign up now for the new Bloomberg Washington Edition newsletter](, delivered Mondays, Wednesdays and Fridays. And if you are enjoying this newsletter, sign up [here](. Global Headlines Security focus | Xi Jinping started an unprecedented third term as China’s president with fresh vows to ensure stability and strengthen Communist Party leadership, as he faces a future of slower growth and [greater confrontation]( with the US. He pledged to oppose foreign interference in Taiwan, a veiled reference to increasing American support for the democratically elected government in Taipei. - New Premier Li Qiang touted trade ties with the US and questioned the need for decoupling, a sign that Beijing may be [trying to put a floor]( under simmering tensions with Washington. - Xi [plans to meet]( Russian counterpart Vladimir Putin in Moscow as soon as next week, Reuters reported, in line with reports for months that he may visit in March.  - [Here’s what we learned]( from China’s National People’s Congress. Gathering tycoons | Putin plans to see top Russian business leaders in the Kremlin this week for the first time since he launched his invasion of Ukraine, sources say. The March 16 gathering comes as the government, struggling to [cover rising spending]( with the war in its second year, steps up pressure on companies to pay more in taxes. - Click [here]( for our rolling coverage of the war in Ukraine. The UK is buckling under the strain of anemic economic growth, labor strikes and record hospital waiting lists, evoking fears that it may face stagnation [worse]( than Japan’s infamous “lost decade.” A Bloomberg analysis of official data and Bank of England forecasts shows growth will average 0.8% a year between 2016 — when Britons narrowly voted to leave the European Union — and 2025. That’s below the average 1% in Japan from 1992 to 2001. Muscle flexing | Putin’s war in Ukraine may be raging thousands of kilometers to the south, but in the [remote Arctic]( there is a close watch on Russia’s military activities. [Natalia Drozdiak]( and [Danielle Bochove]( report from an increasingly important region for energy, trade and security, one where Russia, the US, China and others are vying for greater control. Best of Bloomberg Opinion - [SVB Collapse Shows Fickleness of Crypto Money: Andy Mukherjee]( - [Squaring the Circle of Same-Sex Marriage in Japan: Gearoid Reidy]( - [Long-Dated Oil Prices Are Too Low for Comfort: Javier Blas]( Nuclear subs | Biden will host the UK and Australian leaders in San Diego today to announce plans for a new fleet of nuclear-powered submarines. The unveiling of designs for the subs intended for Australia is a milestone of the Aukus partnership established in 2021 to check China’s increasing assertiveness in the Asia-Pacific. But, as this piece [explains](, doubts about the project remain. - Prime Minister Rishi Sunak will offer a [nuanced]( approach to relations with Beijing in the latest iteration of the UK’s foreign policy priorities, facing down demands to characterize China as a strategic threat. Explainers you can use - [Bank Runs in the Digital Age Are Speedier, More Viral]( - [What the US Is Doing to Avert a Bank Crisis and Why]( - [How Malaysia’s 1MDB Scandal Shook the Financial World]( Awkward ally | Once described as Europe’s indispensable nation, Germany is becoming a [disruptive]( influence across the continent. From putting a brake on an EU push to phase out combustion-engine vehicles to hindering efforts to reform the bloc’s budget rules, the smallest partner in Berlin’s three-way coalition, the Free Democratic Party, is desperate to make its voice heard, and riling European allies in the process. Bloomberg TV is relaunching Balance of Power at 5pm to 6pm ET weekdays with Washington correspondents [Annmarie Hordern]( and [Joe Mathieu](. You can watch and listen on Bloomberg channels and online [here](. News to Note - Pakistan’s former premier Imran Khan is seeking [permission]( from the High Court to skip a hearing where he would have been formally charged for failing to disclose proceeds from selling state gifts when he was in power. - North Korea said it fired two cruise missiles from a [submarine]( and issued a new threat to “mercilessly punish” the US over large-scale military drills with South Korea starting today. - India’s government has [opposed]( giving legal recognition to [same-sex marriages]( as the Supreme Court begins landmark deliberations today on petitions seeking equality for the LGBTQ community. - UK Chancellor of the Exchequer Jeremy Hunt’s budget preparations have been [upended]( by the rush to limit damage from SVB’s collapse as Treasury officials race to finalize a support package for the country’s tech sector. - The EU may not get a chip plant from Taiwanese companies if it continues to [refuse to engage]( Taipei in trade talks, the government-backed Central News Agency said in an editorial today. Thanks to the 75 people who responded to our quiz question and congratulations to Ron Sachathep, who was the first to name Argentina as the South American country that has become an unlikely haven for Russians fleeing their homeland. And finally ... The sight of Israeli hedge fund managers joining tens of thousands of protesters waving an Israeli flag, shouting “Shame!” and “De-mo-cra-cy!” highlight the waning investor confidence in the country sparked by the government’s plan to slash the power of the judiciary. [Ethan Bronner]( and [Marissa Newman]( report on the fight that is [tearing Israel apart](, pitting leaders from business to the military to the tech sector against Prime Minister Benjamin Netanyahu’s right-wing administration. A protest against proposed judicial reforms in Tel Aviv on March 9. Photographer: Kobi Wolf/Bloomberg Follow Us Like getting this newsletter? 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