Remember the Banking Crisis?

Here Comes Stage II [The Daily Reckoning] March 19, 2024 [WEBSITE]( | [UNSUBSCRIBE]( Remember the Banking Crisis? Portsmouth, New Hampshire [Jim Rickards] JIM RICKARDS Dear Reader, Most of us recall the banking crisis of March to May 2023. It began with the collapse of the little-known Silvergate Bank on March 8. This was followed the next day by the collapse of the much larger Silicon Valley Bank (SVB) on March 9. SVB had over $120 billion in uninsured deposits. Bank deposits over $250,000 each are not covered by FDIC insurance. Those depositors stood to lose all their money over the insured amount. This would have led to the collapse of hundreds of startup tech businesses in Silicon Valley that had placed their working capital on deposit at SVB. There were also much larger businesses such as Cisco and at least one large cryptocurrency exchange that had billions of dollars on deposit there. Those businesses would have taken huge write-downs based on the size of their uninsured deposits. On March 9, the FDIC said that indeed the excess deposits were uninsured, and depositors would get “receivership certificates” of uncertain value and zero liquidity instead. By March 11, the FDIC reversed course and said all deposits would be insured. The Federal Reserve intervened and said they would take any U.S. Treasury securities from member banks in exchange for par value in cash even if the bonds were only worth 80% of par (which most were). The Mother of All Bailouts That Sunday night they also closed Signature Bank, a New York-based bank with crypto links. The damage wasn’t done. On March 19, the Swiss National Bank forced a merge of UBS and Credit Suisse, one of the largest banks in the world. Credit Suisse was on the edge of insolvency. Finally, on May 1, First Republic Bank, with over $225 billion in assets, was ordered closed by the government and sold to JPMorgan. It was the mother of all bailouts and seemed to leave stock market investors unfazed. The issue was, and is: Once you’ve guaranteed every deposit and agreed to finance every bond at par value, what’s left in your bag of tricks? What can you do in the next crisis that you haven’t already done — except nationalize the banks? [The "X" Chip]( [Click here for more...]( This AI microchip is so powerful… It’s powering NVIDIA’s success… And the future of AI itself… Which will send the current Wealth Window into OVERDRIVE… Positioning one stock for a 10,000% run in the coming years. [Watch This Video For The Full Details]( After five bank failures in two months and a trillion-dollar bailout by the government, the crisis seemed over. But that was false comfort. I wrote at the time that the crisis wasn’t over, that it was just halftime. Investors are relaxed because they believe the banking crisis is over. That’s a huge mistake. History shows that major financial crises unfold in stages and have a quiet period between the initial stage and the critical stage. When Slow-Motion Crisis Turns Real-Time This happened in 1994 when the spring bond market massacre seemed contained in the summer only to explode into the Mexican Tequila Crisis in December. It happened in 1997–98 when the Asian financial crisis calmed down in the winter of 1998 only to explode into the Russia-LTCM crisis the following August and September. It happened during the Global Financial Crisis when the original distress in August 2007 that seemed contained was followed by the failures of Bear Stearns, Fannie Mae, Freddie Mac and Lehman Bros. from March to September 2008. The average duration of these financial crises is about 20 months. This new crisis began 12 months ago. It could have eight more months to run, if not longer. On the other hand, this crisis could reach the acute stage faster. That’s because of technology that makes a bank run move at the speed of light. With an iPhone you can initiate a $1 billion wire transfer from a failing bank while you’re waiting in line at McDonald’s. No need to line up around the block in the rain waiting your turn. In other words, the second stage of the crisis could erupt in even more dramatic fashion sooner than later. This slow-motion crisis can become a real-time crisis very quickly. [ALERT: U.S.A. Declares “Act Of War” On China.]( According to the New York Times… The White House recently declared an “Act Of War” on China. It’s all here… …in U.S. Docket No. 220930-0204: [Click here for more...]( This government document CHOKES OFF China’s access to the world’s most important technology… …and it could have a direct and immediate impact on your wealth. Friend, let me be perfectly clear: The White House BANNED China from securing this devastating technology… But YOU can still potentially make a fortune from it. See how to prepare for this “Act of War” — and the technology behind it… [Click Here ASAP]( The Dollar Itself Is at Stake In addition, the regulatory response is faster because they’ve seen this movie before. That begs the question of whether regulators are out of bullets because they’ve already guaranteed almost everything so they don’t have more rabbits to pull out of the hat. This could be the crisis where the panic moves from the banks to the dollar itself. If savers lose confidence in the Fed (we’re almost there) not only will the banks collapse, but the dollar will collapse also. At that point, the only solution is gold bullion. It’s also important to distinguish between individual bank failures and a systemic banking crisis. When individual banks fail, the depositors and creditors are usually protected but stockholders can get wiped out. In a systemic banking crisis, the contagion goes from bank to bank quickly, and the entire system has to be rescued with some combination of blanket deposit guarantees and unlimited QE. In the worst case, you either have to shut the banks (which FDR did in 1933) or nationalize them which some countries have done from time to time. Is Stage II Here? Either a single bank failure or a systemic crisis could happen at any moment. The actual trigger is a bit mysterious and mostly psychological because the fundamental problems have been there all along. Well, it seems that the quiet period is over and we are entering Stage II of the banking meltdown. New York Community Bancorp (NYCB) had taken huge losses of over $2 billion in February on its commercial real estate (CRE) portfolio. It had been teetering on the brink ever since. On March 6, it was bailed out with $1 billion of new capital raised by former Treasury Secretary Steven Mnuchin and Ken Griffin’s Citadel hedge fund. NYCB may have been bailed out, but it’s the canary in the coal mine. Its failure means billions more in CRE losses are buried on bank books all over the country. The bottom line is Stage II of the crisis is here, and the effects will be devastating to financial institutions and the stock market as a whole. We may not be able to prevent the crisis, but we can see it coming and prepare accordingly to preserve our wealth. Step one is to get gold. That will see you through the storm. Regards, Jim Rickards for The Daily Reckoning [feedback@dailyreckoning.com.](mailto:feedback@dailyreckoning.com) P.S. I’ve talked a lot about [“Biden Bucks,”]( or the looming central bank digital currencies. It’s just a matter of time until they become reality. Well, I’m afraid that once Biden Bucks fully roll out… [all hell could break loose.]( I don’t want to sound alarmist, but we could see a breakdown of society as riots break out nationwide. And you need to know the exact steps to ensure you and your family are protected in case it happens. That’s where I believe I can help you. I’ve created a [“Crisis Survival Guide”]( that I’m making available to all of our readers today. This short 54-page document has everything you need to know to protect yourself and your family in times of crisis. Things like what foods to stock up on now, staying safe during periods of rioting and looting and more. Inside I break down all of the coming threats you face and how to prepare. [>> To see how to download your copy, click here now.]( Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:feedback@dailyreckoning.com) [James G. Rickards] [James G. Rickards]( is the editor of Strategic Intelligence. He is an American lawyer, economist, and investment banker with 35 years of experience working in capital markets on Wall Street. He is the author of The New York Times bestsellers Currency Wars and The Death of Money. [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your The Daily Reckoning e-mail subscription and associated external offers sent from The Daily Reckoning, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@dailyreckoning.com. This address is for feedback only. For questions about your account or to speak with customer service, [contact us here]( or call (844)-731-0984. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. 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