If you look at the recent bank problems, where are they focused? Crypto and VC startup tech. Both of these areas are bloated with mal-investment, ranging from NFTs to the 13th food delivery app that nobody needs. They also tend to create high salaried jobs for engineers and execs. If these bank failures are in fact relatively contained to their respective sectors, I can’t help but seeing a chill cast through cryptoland and speculative tech as exactly the type of outcome the Fed wants to achieve. Now many of the people working in those jobs will be forced into positions at more established companies and subject to the cost management constraints of typical corporate America.
Of course, the FDIC will likely step in to cover their own ass for being asleep at the wheel, but I find speculation that this event will somehow “scare“ the Fed into slowing down rate hikes off the mark. This sort of thing is exactly what the Fed wants, to wring out excesses in the system and marginally weaken the labor market.
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