Following this week’s collapse of First Republic on Monday, the second largest bank failure in the history of the United States, PacWest Bancorp, whose shares began to slide in its aftermath, stands on the verge of collapse. On Thursday, PacWest Bancorp’s stock price dropped more than 39%, a sign of a lack of confidence in the bank. It is widely believed that the bank’s collapse is imminent.
First Republic’s collapse terminated in an acquisition designed to merge with J.P. Morgan Chase. The Federal Deposit Insurance Commission guaranteed billions of taxpayer dollars for the acquisition, signaling yet another opportunity for the government to guarantee socialism for the rich, providing ample welfare to J.P. Morgan Chase.
On Wednesday, the Federal Reserve raised the interest rate a quarter of a percentage for the 10th consecutive time. The interest rate is now at a range of 5% to 5.25%, the highest range since the 1980s. In response treasury yields slide. U. S. government bonds, for instance, fell from 3.438% to 3.401% on yields for notes benchmarked to 10 years.
The more than 39% drop in PacWest Bancorp share value signifies a loss equivalent nearly to half of the share’s value prior to First Republic’s collapse. On Thursday trading on PacWest Bancorp’s shares were halted after PacWest shares slipped more than 50% in intra-day trading, while, at a certain point, having fallen more than 85% year-to-date.
Former Federal Reserve presidents Robert Kaplan and Dennis Lockhart described the developments as “worrisome.” The two presidents warned that the crisis is far from over as the credit phase of the crisis, which is “normally more serious,” has yet to begin, as reported on Bloomberg.
The loss of more than half of PacWest shares is likely to guarantee its collapse on Friday when trading opens in the morning. It is expected that emergency measures to halt trading on its stock are likely to be implemented throughout the day tomorrow.
PacWest Bancorp’s status as on the verge of collapse confirms our analysis. Our analysis is that none of three bank failures, Silvergate, Silicon Valley Bank, or First Republic, are reflective of the end of the currently so-called “banking crisis.” However, it is not 2008. It is true. Jamie Dimon, the chief executive of J.P. Morgan Chase, is right. Dimon immediatelly announced at the conclusion of the deal to acquire First Republic that “First Republic is not 2008.”
The truth of the statement, however, is not its contemporaneity. It is in what it portends.“First Republic is not 2008” but the eventual outgrowth of the 2008 financial crisis. Jamie Dimon’s acquisition of First Republic is not Jamie Dimon’s acquisition of Washington Mutual. It is not merely because of the differences in these two banks, whose quantitatively vast sums of money recommend a qualitative differentiation. It is, rather, the state of the economy. It is far different from the state in which the former proceeded the latter acquisition.
In 2008 the United States did not face a 31.8 trillion dollar deficit. In 2008 the United States did not face a worsened state of the dollar. The United States’ debt is at an unprecedented level. The status of the dollar as a world reserve currency is terminated. The current crisis is marked by the effect of these two processes on the development of the financial markets, especially regional banks like PacWest Bancorp.
Jamie Dimon’s defiant cry against any comparison with 2008 is not therefore the expression of ignorance over the root causes of the crisis; he is acutely aware of the sudden need to deny any relation to the 2008 financial crisis. It is rather an expression of a profound sense of self-delusion. Dimon’s attempt to convince himself of the non-existence of contradictions, such as those continuing to exert pressure on the economy, is explained by Karl Marx.
As Karl Marx stated, “Crises exist because these contradictions exist. Every reason which they [the apologists of capitalism] put forward against crisis is an exorcised contradiction, and, therefore, a real contradiction, which can cause crises. The desire to convince oneself of the non-existence of contradictions, is at the same time the expression of a pious wish that the contradictions, which are really present, should not exist (Theories of Surplus Value, Book II [Amherst, New York: Prometheus Books, 2000], p. 519).
PacWest Bancorp is not the first. It is certainly not the last. It appears that a ripple effect is echoing throughout the market “focusing on the weakest links and looking for banks that are vulnerable” and going from “the weakest bank to the [next] weakest bank,” one analyst told the Financial Times.
The warning signs for many more regional banks are beginning to appear throughout the market. Regional banks whose shares are falling include Zions Bancorp, whose stock has dropped more than 10% as of 3 p.m. ET; Comerica, whose share values dropped more than 11% and, finally, KeyCorp, whose stock has declined more than 6%. The shares for First Horizon Bank and Western Alliance Bancorp, were down about 34% and 30%. PacWest Bancorp, whose stock market price has lost almost half of its value, is by far the leader among regional banks for eventual collapse.
As these consecutive failures arise from the eventual outgrowth of the 2008 financial crisis, none of its principle contradictions are being resolved through any of the policies or measures the demiurges of American’s domestic monetary policy put in place or implement throughout the economy.
These crises are roughly (1) the outcome of the prolonged decay and decline, several decades in the making, in the global position of the United States; and (2) as the result of a new period of systemic crisis and revolutionary class struggle within the US and internationally. These two contradictions, which gave rise to the 2008 financial crisis, are being exacerbated.
The policies that the Federal Reserve have sought to put in place or implement in the years since the 2008 financial crisis have merely set the stage for the emergence of its consequences in a new scene. The contradictions, which have given rise to these consequences such as the dramatic failure of regional banks, continue, albeit to a devastating turning point.
The turning point for these contradiction is none other than the Ukraine war. The United States is actively engaged in an expensive, protracted, proxy war with Russia, one of Europe’s longest standing superpowers, whose history of military prowess from the time of Catherine the Great to the present day is epic.
It is sufficient to highlight just one of Russia’s wars to emphasize just significant Russia’s history of warfare truly is. Napoleon’s Russian campaign of 1812, which resulted in the complete annihilation of Moscow, is so significant that scholars have spent years studying the event.
So magnificent is the interest in the event that thousands upon thousands of professional studies have been written on the subject. In his famous biographical research into the life of Russian czar Alexander I entitled La Russia il y a cent and: le règne d’Alexandre 1er, vol. 3 (Paris, 1925), whose massive bibliography runs to forty four pages, K. Waliszewski notes how no less than 4,000 of these entries are for the war of 1812 alone. Given the fact that his book was published in 1925, there have likely been countless more studies dedicated to the subject.
In the face of the epic history of Russia’s history of warfare, it seems in comprehensive that military “experts” (not a single one of which appear to be versed in Russian history) actually expect American workers to believe that the fourth Ukrainian army NATO forces have been training for a Spring counteroffensive at the Grafenwöhr military base (i.e., the former training grounds of the Nazi’s) is capable of “defeating” Russia on the battlefield. The complete lack of regard for history exposes a latent degree of insanity in their thinking.
The 14 Challenger tanks, whose three streams of logistics for munitions, fuel or repairs, differ, for instance, so markedly from its existing arsenal of Soviet era tanks that the impending counteroffensive’s success cannot but meet sudden doom in debacle of logistics, if not a complete lack of strategy. The Spring counteroffensive is unspeakably condemned to a mortal catastrophe. A comparison of the Leopard I to the Leopard II provides death defying confirmation of the nightmare that awaits Ukrainian armed forces on its lines of communication for any impending battle with Russia.
The collapse of the Ukrainian armed forces in an impending battle against Russia portends the entrance of a NATO Member States’ military force directly into the conflict. The entrance of a NATO Member States’ military, be it Poland, many of whose soldiers already serve as mercenaries in the Ukraine war, or the United States, whose citizens serve as military contractors right now in Ukraine, signifies the outbreak of World War III.
Against the turmoil in the outgrowth of the 2008 financial crisis, workers must unite in a single call for control over the economy.