Silicon Valley Bank: Crypto Risk

What looks remarkably similar to that of the 2007-09 banking calamity the closure of Silicon Valley Bank should awaken many to the dorsal fin that masks an even greater risk just below the surface.

“…banks that are openly favoring transacting in this monetary medium (which, by the way, has no direct conversion via the IMF) exposes conventional banking system to an entirely new ‘Off Balance Sheet’ (OBS) risk….”

When Congress signed-off on the Gramm-Leach-Bliley Act (1999) in effect they incinerated the containment vessel that confined Banks to the business of Banking; Congress’s reckless disregard for unfettered vice opened the U.S. banking system to the lottery of speculative gerrymandering. Yes, it won’t be long before the likes of a Sen. Warren or Sanders will attempt political points only to expose themselves for their unabashed ignorance and lack of fitness, on every level.  They’ve both expressed support for the toxic dirigible known as “ESG,” a sickness and risk so extreme it would seem appropriate for the U.S. Congress to find it entirely, and fashionably, seductive.

The yet fully quantified risk created by the addition of cryptocurrency, and banks that are openly favoring transacting in this monetary medium (which, by the way, has no direct conversion via the IMF) exposes conventional banking system to an entirely new “Off Balance Sheet” (OBS) risk and an entirely new marketplace entirely outside the regulatory powers and the markets they condition. Yes indeed, yet another Black Swan Risk that any intelligent person understands but even fewer would dare acknowledge. More remarkable is that while these Banks will work to escape the regulatory boundaries they will quickly, like scalded hounds, bay at the well of government coffers when the loss of their personal gains trigger bail-out fever.

Why then do offshore interest become a quick solution? It is inevitable that an offshore enterprise (including “Shadow Banks”) would step in and make a token gesture meant to calm the fears of the general public but the fact remains, as we’ve seen before, the use of an offshore entity is a convenient tool for concealing backroom deals whether it be from the Federal Reserve, the IMF or BIC who move to provide various guarantees all outside the watchful eye of any government/taxpayer oversight. Case in point being the estimated 8-13 trillion dollars that went offshore during the 2007-09 period ostensibly as part of the “Troubled Asset Relief Program.” Whether used to cover the losses of OBS write-offs, or to sure up Shadow Bank and/or global markets liquidity the fact remains these massive expenditures have never been reconciled, traced, tracked or do they appear on any Central Banks records. Perhaps the lack of curiosity, on this fact alone, is precisely why no one ever worries about Government Debt or if it will ever be paid down or off. (Note: There’s a remarkably simply way to deal with it, so simple it is that it’s also quite frightening.)

So long as Congress remain sidelined on the subject of banking regulations, derivative risks and now the wildly speculative cryptocurrency markets the global financial markets will increasingly become more and more volatile with Bank failures becoming more frequent; a rather sound argument can be made that explains how a bankrupting of the current Global Financial System makes a swift switch to a completely Digital Global Banking/Currency Systems seem the perfect savior from all, it is claimed, that ails the global economy.

Here’s what we do know; there is an element of curious benefit existing in the current climate where large sums of debt can easily be extinguished under the cover of interim Margaret Volatility unfortunately for the average household overwhelmed by debt and falling disposable incomes no such person debt extinguishment privilege exists.

Curtis C. Greco, Founder