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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.)


What If the “Scaling Cliff” Pops the AI Bubble?

September 10, 2025 • John Rubino

In just the past five years, nearly a trillion dollars have been thrown at AI data centers, chip plants, and model training. And the spending curve continues to steepen, as pretty much every tech firm and most governments enter the AI arms race.

Early AIs improved in line with the amount of computing power and new data they were fed. This led to the assumption that AI investment had a predictable rate of return (which investors absolutely love).

But with the most recent iterations of name-brand AI, that relationship has broken down. They’re not improving in line with the money being spent on them, leading a growing number of analysts to voice doubt about whether the return on this investment can be predicted going forward. This is known as the “scaling cliff.”

What If the “Scaling Cliff” Pops the AI Bubble?
No, We Can’t Time A Crisis

September 10, 2025 • Addison Wiggin

the BLS claims the healthcare and social assistance sector added +58,000 jobs per month over the past three months.

Meanwhile, ADP shows the same sector losing an average of -33,300 jobs per month. That’s a 91,300 job gap — after years when the two data services have tracked closely.

Worse, the Labor Department just revised down -911,000 jobs from the past 12 months — the largest revision in U.S. history, bigger even than 2009.

Private hiring was overstated by -880,000 jobs.

Trade, transport, leisure, hospitality — all quietly cut back. Excluding healthcare, the U.S. economy has actually lost 142,200 jobs over the past four months.

The revisions are so large they now rival the global financial crisis.

If June’s downward revision of -27,000 is counted, that’s -285,000 over two months, the worst outside of 2020.

No, We Can’t Time A Crisis
Real Estate Rolls Over

September 10, 2025 • Addison Wiggin

The housing market has been effectively frozen for three years.

That’s because, following record-low interest rates, homeowners refinanced with mortgages under 3%. Today, standing over 6%, the same home would have more than double the amount of interest each month.

Unsurprisingly, then, home prices have started to weaken as rates have remained high.

Real Estate Rolls Over
The Trump Boomerang Effect

September 9, 2025 • Lau Vegys

Every 50% tariff WILL make dollar alternatives more attractive.

Every threat WILL push BRICS members closer together.

Every sanctions regime WILL prove why they need payment systems that don’t run through New York.

You can take that to the bank.

The irony is that Trump’s sarcastic quips about “losing” India and Russia to China are starting to look less like jokes and more like forecasts. Treat countries like enemies long enough, and eventually they’ll start acting like it.

The Trump Boomerang Effect