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Ripple Effect

The Next Banking Crisis Is A Failure Away

Loading ...Addison Wiggin

May 23, 2025 • 58 second read


banking systemBanks

The Next Banking Crisis Is A Failure Away

Bond yields are soaring, with the benchmark 30-year U.S. Treasury bond hitting 5.15% this week.

With yields rising, bond holders are sitting on substantial losses. Perhaps the worst of those losses are in the banking sector.

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In total, U.S. banks are sitting on over $480 billion in unrealized losses.

Remember, it took a much smaller crack in the bond market to lead to the collapse of Silicon Valley Bank, the second-largest bank failure in U.S history.

As we noted in Grey Swan Live! yesterday, unrealized bond losses may have to be realized at an inopportune time. The Federal Reserve was able to paper over those losses last time quickly, but events could quickly run out of control.

~ Addison

 

P.S. We’ve released new research on today’s markets, and how President Trump is following through on a Great Reset of the U.S. economy. This first phase isn’t pretty – we call it the Great Fire. But it could still mean some big investment opportunities now. Click here for more details.

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)


The Grand Realignment Gets Personal

January 13, 2026 • Addison Wiggin

Sunday night, Powell addressed the probe head-on in a video post — a rarity. He accused the White House of using cost overruns in the Fed’s HQ renovation as a pretext for political interference.

The White House denied involvement. But few in Washington believed it.

What followed was bipartisan condemnation of the investigation. Greenspan, Bernanke, and Yellen co-signed a blistering rebuke, warning the U.S. was starting to resemble “emerging markets with weak institutions.”

The Grand Realignment Gets Personal
A Rising Sign of Consumer Stress

January 13, 2026 • Addison Wiggin

Estimates now indicate that the average consumer will default on a minimum payment at about a 15% rate – the highest level since a spike during the pandemic lockdown of the economy.

President Trump’s proposal over the weekend to cap credit card interest at 10% for a year won’t arrive in time to help consumers who are already missing minimum payments.

Not to fret, the other 85% of borrowers continue to spend on borrowed time. Total U.S. household debt, including mortgages, auto loans, student loans, and credit cards, reached record highs in late 2025, exceeding $18.5 trillion. This surge was driven partly by rising credit card balances, which neared their own all-time peaks due to inflation and higher interest rates.

A Rising Sign of Consumer Stress
Protest Season Amid the Grand Realignment

January 12, 2026 • Addison Wiggin

There’s an old Wall Street maxim: “Don’t fight the Fed.”

This year, you could add a Trump corollary.

A wise capital allocator doesn’t fight that storm. He doesn’t argue with it. He respects it the way sailors respect the sea: with preparation, with humility, and with a sharp eye for what breaks first.

In 2026, the things that break first are the stories. The narratives. The comfortable assumptions.

Protest Season Amid the Grand Realignment
Breaking: Government Budgets

January 12, 2026 • Addison Wiggin

Total municipal, state and federal debt service costs soared to nearly $1.5 trillion in the third quarter of 2025. Debt’s easy to accumulate when rates are low. Trouble is, you are obligated to refinance them even after rates go up.

It’s also a key reason why the Trump administration is demanding lower interest rates – even if it means reigniting inflation.

Breaking: Government Budgets