The truth is that it is not easy to know where we are . Not how many unemployed there are, not if FAIL is a long way off, not if the level of confidence will hold a tweet… Banks, even tiny, make the system tremble. A FAIL is fixed faster and better… but it also happens at great speed.
Capitalism changes so fast that it cannot even keep track of itself. The bankruptcy of US and Swiss banks was repaired at full speed and everything is calm or almost… but that phrase is from two minutes ago… Tense calm and expectation, panic has not spread… or yes. Just as there is the doomsday clock for the atomic theme (knock on wood if you find it) a confidence level meter should work: the confidence meter, which would also be a doomsday clock.
Each individual entity or company feels the digits to see if they are still alive. Each bank, small or large, creates teams of accountants and 24-hour social media alerts. The SVB is the first bankruptcy accelerated by Twitter and Whatsapp. Cryptocurrencies shine again. There is even a millionaire guru (Balaji Srinivasan) who has bet that in 90 days bitcoin will reach $1M.
Panic is waiting. One finger on the red button and the antennae extended. For the moment the scare has stopped… which of them? The system breathes and is even glad to be alive. Zombie or alive? When there is no CRACK like the one in 2008 –which, on the other hand, could happen at any time–, the immediate thing is unleashed euphoria and innovation: let the money flow, that is, digital notes that circulate 24×7. Inventions, derivatives of derivatives, mysterious acronyms only for insiders, algorithms and somethingScams (who invented the fabulous word preferred?).
When confidence drops, the game is a little more expensive, but that too, like everything else, is a source of business and an excuse for new bets. Networks can change everything in seconds . The institutions of the United States have rescued all the clients of the bankrupt banks. On a weekend There was a cap of $250,000 guaranteed, but that would have left out most of the SVB clients (97% had more than that amount), so the best, fastest and most effective way to avoid sparking the entire system , rescue everyone. Yepa. With a little conceptual trick and working all last weekend the scare was patched up. Also Credit Suisse .
The banking system is the system. There is no other. Even the missiles for Ukraine have stopped. The ammunition does not arrive. Nothing is coming. Logistics circulates, like everything, through a bank, in the shadow, in the light or in the intermediate zone. A network of banks that don’t even know how they are doing. There are so many criteria, so many organizations, so many ways to measure the health or the ruin of a bank or of any object… Unemployment, for example. Nothing matches. All measurements oscillate in huge ranges. Confidence is flan on a motorcycle.
In the USA, after the SVB crack, etc. it is clear that the multiplicity of regulators and supervisors , apart from the very variety and confusion of the banking world, are unmanageable. And that they have done it quickly and well: they have shot by elevation. They have declared everyone systemic and rescued every last customer. Of course, this has been able to trigger the spread of panic and it will be expensive in general (unreturned ransoms), but they have acted quickly. Bankrupt on Friday, patched on Monday . Or so they say.
Then the Deutsche Bank has jumped, which is now known to have been known for years to be bla bla. The question is if we are in a Bang Bank, in a Big Bang Bank or a long time to go… or on Monday everything will be OK again.
The banks are power first, the states are their auxiliaries. The central banks are the ones in charge: raising and lowering the price of money and lending to other banks at zero percent are their levers. Now, in a delirium typical of the chaos moment, they activate both at the same time: they raise the price of money and announce new streams of liquidity ( Draghi ‘s phrase has stuck). According to experts, both levers are contradictory, so the combined use reflects the world as it is/is not.
Banks are bankrupt by definition, by law, although if all the depositors wanted to withdraw their money at the same time, the states, the insurance companies (triggered), the theoretical funds, the high regulatory and supervisory institutions that neither regulate nor find out. Trump eased control over non-systemic banks (you can see that this word is also fallacious), but they don’t watch the big ones either. Unless this debacle is a stress test, a real drill to check the health of the system on the fly. We will know later.
The unleashed power of finance is manifested in the creation of its own language, hermetic jargon that not even its own high priests understand, metaphysics that replaces the original metaphysics, already forgotten . The methods of science do not penetrate the jungle of finance which, paradoxically, is supposed to work with numbers. The banks have created their own vocabulary to wrap and dizzy the indecipherable operations. All the creativity that is lacking in the arts has been transferred to finance. It is a complete poetics, a theology whose dogmas are changed every ten minutes at the risk of imponderables, sensations, inventions, algorithms… exuberant irrationality, etc. Finances are Goya’s Caprichos… and sometimes the black paintings of the Quinta del Sordo.
With the disappearance of ideologies and religions, this empire of finance has emerged, which at least does not deceive, it is money, papers, digital notes. The lyric RSC ODS… has remained for the old industry, that is, things. The pure, immaterial financial world is quite sincere: it doesn’t even resort to such incantations.
Banks and states create money and pass it from one to another in the cloud without touching mortals, except when it falls on them in the form of derivative fringe: mortgages, pufos, percentages, inflation, corralitos… and that rain of percentages would be the weight of history on the life of each one.
The good thing about this madness is that there are rules… although nobody knows them and they are renewed so quickly -creative disruption- that there is no time to apply them. May the golden calf of Wall Street have mercy on us, amen.