Investor assessed the likelihood of global crisis

The banking crisis in the United States is not particularly affecting Russia and its financial sector, unless everything that happens develops into a new global crisis of the 2008 model or worse. Private investor, founder of the “School of Practical Investment” Fedor Sidorov spoke about this with “Invest-Foresight”.

Former US President Donald Trump has already compared the situation with banks in the US with the period of the Great Depression and predicted big problems for the financial sector of the country and the economy as a whole.

“And there are a lot of such statements,” the expert emphasizes. – But the administration of White House, as well as Fed, may take steps to prevent panic behavior, mass flight of depositors from deposits, etc. For now, it is difficult to say how if their efforts will be successful. Today’s lull after yesterday’s events may be a temporary phenomenon. Or the contrary: new news of the collapse of some bank will not follow, and everyone will calm down.”

However, this will still not mean that the US avoided banking crisis – the problem will simply be pushed back for a while, continues Fedor Sidorov. The fact is that banks are really a lot lost amid Fed rate hikes, their assets depreciated (investments in shares of the technological sector, cryptocoins, etc.). There is evidence that there is a total of 5 banks in the United States who own distressed assets worth two global GDP – their collapse will lead to the largest financial crisis in the last hundred years. But it is difficult to say, if it happens now or after some time, the investor emphasizes.

Technically, the main question is whether the Fed can save the banks in such a situation. If in 2008, facing low inflation, the regulator was able to add liquidity to the system (simply pouring money into banks to save them), now it is hardly possible. Fed grapples with inflation through rate hikes, printing new money in this situation means accelerating inflation.

“In fact, the emergence of a new global financial crisis is only  a matter of time. If this happens, then Russia will also be affected. Global crisis reduces production and demand. For our country, whose income depends on the supply of raw materials to foreign markets, this will be a test. But it is clearly too early to talk about this – the further development of the situation will show, how serious everything is in the US banking system”, Fedor Sidorov summarizes.

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