Our recent post investigated the failure of Silicon Valley Bank (SVB). Bank regulation is designed to make failures like it rare and contained events, and the performance of the U.S. banking system following SVB’s failure provides a test of the regulatory framework. Did bank regulators miss SVB early warning signs? In February 2023, KPMG, SVB’s … Continue reading A Stress Test for U.S. Bank Regulation
Author: Michael Parkin
Silicon Valley Bank Shut Down
When the business day ended on March 9, 2023, Silicon Valley Bank had cash payment obligations that exceeded its cash reserves by close to $1 billion. The following morning, depositors attempted to withdraw $42 billion, a quarter of the bank’s total deposits. SVB couldn’t get the cash to pay its depositors and the Federal Deposit … Continue reading Silicon Valley Bank Shut Down
Leaders and Followers: Are Central Banks on Track to End Inflation?
In March 2021, the inflation rate in the United States was comfortably inside a range of 1 and 2 percent per year, considered to be price stability. One month later, the U.S. inflation rate exceeded 4 percent, and then increased to more than 8 percent. Inflation took off in most other economies too. What do … Continue reading Leaders and Followers: Are Central Banks on Track to End Inflation?
Bank of Canada Says Labor Market Can Weather a Slump Without a Jobless Surge
The Bank of Canada is raising interest rates to return inflation to target, and Governor Tiff Macklem says Canada’s red-hot labor market can weather an economic slump without seeing a major surge in unemployment—Reuters, November 10, 2022 What is Canada’s inflation rate and what is its inflation target? Statistics Canada reports Canada’s inflation rate every … Continue reading Bank of Canada Says Labor Market Can Weather a Slump Without a Jobless Surge
Fed Jacks Up Interest Rates Again, Hints at Smaller Increases Ahead
The Federal Reserve raised interest rates by three-quarters of a percentage point on November 2 and said fighting inflation will require further rises, yet at a slower pace in what has become the swiftest tightening of U.S. monetary policy in 40 years.—Reuters, November 3, 2022 What is monetary policy tightening? Monetary policy tightening is raising … Continue reading Fed Jacks Up Interest Rates Again, Hints at Smaller Increases Ahead
Avocado Prices are Skyrocketing
Nov 4, 2019 Observing the rise of the toast-spreading popularity of avocados and the timeless love of guacamole, our team at Econ Eye thought it would be worthwhile to look at the market for avocados. In August each year, the Californian avocado crop winds down and the Mexican crop takes over. But if Mexican production … Continue reading Avocado Prices are Skyrocketing