The U.S., Europe and Japan are waiting for the number of collapsed banks on the background of the coming “terrible” recession, said well-known American investor Jim Rogers in an interview with the media.
“More banks will collapse, not just in the U.S., but in many countries. In Japan, Europe, a lot of places. You’re going to see banks collapse, which is why the next recession is going to be terrible,” he predicts.
According to Rogers, when the economy is in bad shape, “there will be people who will make mistakes” that will cause more banking collapses.
“As soon as the banks start to collapse, the government makes sure they merge. They see who is weaker, who has problems and conduct merger operations, thus squashing the situation,” he noted, stressing that the U.S. authorities “are only making things worse.”
The investor explained that Washington publicly declares its intention to prevent more failures, and so depositors are unaware that there are problems in the banking system.
“It only makes things worse. It encourages people to make more mistakes. Mistakes pile up, and bank failures get bigger and bigger, not just in the U.S. But for sure the next U.S. bank failures – and they will happen – will be even bigger,” he summarized.
Troubles in the U.S. banking sector worsened in March after California state regulators closed Silicon Valley Bank, one of the top 20 largest U.S. commercial banks. The collapse of SVB was associated with the growth of the key rate of the Federal Reserve System, which led to the depreciation of assets on the balance sheets of many financial institutions. It was also announced that Silvergate, a crypto-oriented bank, closed on March 8 and Signature Bank, a similar bank in New York, on March 12.
In May, the California Department of Financial Protection and Innovation (DFPI) transferred First Republic Bank to the Federal Deposit Insurance Corporation (FDIC), which at the same time accepted JPMorgan Chase’s bid to purchase the bank’s deposits and assets. FRB had nearly $230 billion in assets and more than $100 billion in deposits.