From Bad to Worse: How the 2023 Banking Crisis Surpasses the 2008 Meltdown
According to economist Peter St Onge, the current banking crisis is larger in scale compared to the events that occurred approximately 15 years ago.
It is evident that the crisis is far from reaching its conclusion. St Onge recently emphasized in a video that the banking sector has suffered greater losses in terms of assets than during the Global Financial Crisis of 2008.
St Onge advises investors to anticipate additional collapses, even though the Federal Reserve has made statements suggesting otherwise. In response to Federal Reserve Chair Jerome Powell’s affirmation that the “US banking system is secure and robust,” the sector experienced a significant downturn. Notably, the stock of PacWest, a prominent regional lender, declined by more than 50% in the aftermarket.
In addition to the recent collapse of First Republic, the 2023 bank collapse has officially exceeded the 2008 collapse in terms of wiped-out assets. This irony arises from our supposedly “sound and resilient” banking system.
According to St Onge, the collapse of First Republic and other banks merely represents the tip of the iceberg. Drawing parallels with the 2008 banking crisis, he predicts that hundreds of banks will fail in the next 12 months as the economy experiences the consequences of the Federal Reserve’s aggressive interest rate hikes over the past year.
READ MORE: Banking Industry in Peril: Disturbing Projections and the Fragile State of American Banks
What adds to the concern is that, based on the events of 2008, these initial collapses are only the beginning—a prelude to a substantial reduction in struggling banks.
In raw numbers, the 2008 collapse saw 25 US banks fail, followed by an alarming total of 440 banks over the subsequent four years. This equates to an average of 110 banks per year, compared to just two per year before the crisis. Thus, we have yet to witness the full extent of what lies ahead.
Typically, interest rate hikes take 12-18 months to significantly impact the economy, and we are currently only six months into this period. By aligning it with the 2008 crisis, the real storm is not expected to hit for another year. The present circumstances are merely the initial indications of an impending hurricane.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
