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A medical worker administers a nasal swab to a patient at a coronavirus disease (COVID-19) testing center
Hard Numbers: COVID hospitalizations, fiery moves, banking job cuts, traffic jams
21.6 & 7: Data from the CDC and Canada’s government show that, since last week, COVID-19 hospitalization rates have risen in the US and Canada by 21.6% and 7%, respectively. The Canadian number seems low, but it follows an 11% increase the week before, putting hospitalizations 20% percent higher than they were last year. Both countries are seeing increases in positive cases – early signals that a fall COVID wave could be approaching while updated booster shots are still weeks away.
13: Following the wildfire summer from hell and the smoky conditions of the past two years,13% of Canadians say they would consider relocating to a place that feels safer, according to a new Angus Reid survey. Many have seen their health problems worsen because of the poor air quality during this record-breaking wildfire season.
2: The Royal Bank of Canada, the Toronto Stock Exchange’s most valuable company, is cutting 2% of its workforce – despite making Q3 profits that towered over the other Big Six banks. Following an earlier cut in May, it has just announced that it will cut another 2% of its workforce this quarter. It cites overhiring and the need to set aside capital for potential credit losses due to rate hikes.
199 vs. 236: This could drive folks crazy. Drivers in Toronto spend 199 hours a year in rush hour traffic, and in New York City, they can expect to spend a whopping 236 hours stuck idling each year. Hollywood star Tom Cruise recently criticized Toronto’s traffic during an interview for his “Mission Impossible” (he shot the movie there) tour. But, according to this study by the UK’s Nationwide Vehicle Contracts, Cruise’s mission would’ve been even more impossible in the Big Apple.
Larry Summers explains the banking crisis
On GZERO World, Ian Bremmer and former US Treasury Secretary Larry Summers discuss a range of topics, including the global banking system, the impact of AI on the labor market, and a controversial solution for rebuilding Ukraine.
Summers, an expert on inflation, provides valuable insights into recent bank failures that have caused concern among investors worldwide. He discusses whether the current situation constitutes a banking crisis, explores the role that inflation is playing in contributing to the banking problems, and makes predictions about the duration of the current financial turmoil.
He and Bremmer also touch on the impact of AI on the labor market, with Summers warning of significant changes that will cause profound shifts in traditional hierarchies and ways of thinking, which may make influential groups uneasy.
Summers also offers a provocative solution for rebuilding Ukraine: seizing frozen Russian assets.
Note: this interview was featured on an episode of GZERO World with Ian Bremmer on April 3, 2023: The banking crisis, AI & Ukraine: Larry Summers weighs in
Medieval Italy, the Peruzzis & the world's first bank run
Bank runs. Market volatility. Panic in the streets. When I say we’ve been here before, I don’t just mean 2008 or 1929. One of the earliest recorded bank runs dates back to the 14th century. Italian city-states like Florence and Venice sat at the crossroads of trade routes between Asia and Europe and were financial hubs. In the early 1300s, the “Peruzzi” family quickly became one of the most powerful and wealthy in Florence, through a highly profitable textile trade that focused on imported English wool.
As their wealth grew, so did their banking network, extending throughout Europe and even to England’s King Edward the Third. King Edward at the time was embroiled in a series of expensive wars with France, which the Peruzzi's increasingly bankrolled. Unfortunately, King Edward’s appetite for battle and glory was bigger than his purse, and when he failed to pay his debts in 1345, the Peruzzi bank took a massive financial hit.
Word soon got back to Florence about the deadbeat English king. Depositors panicked, rushing to withdraw their florins before the Bank of Peruzzi ran out of funds. A bank-run ensued and, soon after, the House of Peruzzi was ruined.
The reason you’ve probably never heard of the Peruzzi's until now has quite a bit to do with the Florentine family that rose to power soon after their fall. The House of Medici [meh·duh·chee] became one of the wealthiest and most powerful families in Renaissance Europe in part by learning from the Peruzzi’s mistakes. Where the Peruzzi's focused heavily on speculative investments and individual clients (ahem, Edward the Third, ahem), the Medicis diversified their portfolio across a range of industries and regions, which protected them from risk and market volatility.
Fast-forward to today and the same pitfalls that the Peruzzi’s faced exist for modern banks that rely on overextended credit and speculation. I mean, what is crypto if not today’s version of English wool? And whether you’re the House of Peruzzi or Silicon Valley Bank, one thing is clear. Stay the heck away from the King of England.
Watch the GZERO World episode: The banking crisis, AI & Ukraine: Larry Summers weighs in
The next economic crisis Larry Summers is worried about
On GZERO World, Ian Bremmer and former US Treasury Secretary Larry Summers discuss the policy response to the recent banking crisis involving Silicon Valley Bank and the Biden administration's actions.
Summers rates the government's move to step in and guarantee depositors in SVP positively but expresses concern over the high cost of the SVB bailout.
He also worries about the real estate sector, particularly the office building sector and corporate lending to mid-size businesses.
Watch the GZERO World episode: The banking crisis, AI & Ukraine: Larry Summers weighs in
Is your money safe? Larry Summers on the banking crisis
Banks, in many ways, are the backbone of the economy, but when Silicon Valley Bank and Signature Bank recently failed, it raised some tough questions about the stability and regulation of financial institutions. On GZERO World, Ian Bremmer and former US Treasury Secretary Larry Summers dive deep into the crisis and explore the complex factors that led to the banking turmoil.
Summers explains that the failures of these banks were caused by a combination of factors, including an increasingly digital world with high interest rates, risky investments, and long-term bonds that decreased in value as interest rates rose.
This led to depositors becoming alarmed about the security of their money and quickly moving it to other banks that offered higher returns. The banks' inability to manage these withdrawals sparked fears of a bank run and ultimately led to government intervention.
Summers also criticizes the management of Silicon Valley Bank for their "incompetence" and the Federal Reserve's regulation for not “stopping the accident that was waiting to happen.”
“In many ways, the financial system is like an anesthesiologist," Summers remarks, "nobody much notices a job that they're doing until something screws up."
Watch the GZERO World episode: The banking crisis, AI & Ukraine: Larry Summers weighs in
Ian Explains: Banking turmoil and the panic pandemic
There’s talk of another surge. We're talking, of course, about…banking.
Much of what’s driving today’s banking drama—resulting in the most significant government intervention since the Great Recession—is a virus more contagious than COVID-19: panic, Ian Bremmer explains on GZERO World.
It all started with the US government's takeover of Silicon Valley Bank (SVB) to prevent a $42 billion bank run. This move, coupled with the FDIC's closure of Signature Bank, sent shockwaves across the market, resulting in the most significant government intervention in banking since the Great Recession. Panic soon spread across the Atlantic, with Credit Suisse's shares plummeting by 30% and Switzerland's largest bank, UBS, hastily buying its struggling counterpart in a bid to calm the markets.
But will the public and private intervention be enough to contain the panic virus, or is this just the first wave of many to come? Only time will tell.
Watch the GZERO World episode: The banking crisis, AI & Ukraine: Larry Summers weighs in
The Graphic Truth: Who holds the most global wealth?
Swiss authorities are investigating the mega-acquisition of Credit Suisse, the country's second-largest bank, by UBS, its largest. The deal, worth a measly $3.5 billion, would reportedly make UBS the world's top bank wealth manager, with over $4 trillion in assets under management.
Both Credit Suisse and UBS manage assets that are well beyond their institutional size because they are mostly global banks that invest on behalf of wealthy global clients. But the merger won’t turn them into one of the world’s biggest banks by assets – the size of what a bank has on its balance sheet.
If a bank goes belly up, what's vulnerable are not the assets but rather the deposits, which are normally insured by governments up to a certain limit, and the role of managing investments can easily be taken over by another wealth manager. We take a look at the world's top five banks by overall assets compared to the amount of wealth they invest for their clients.
The banking crisis, AI & Ukraine: Larry Summers weighs in
The recent spate of bank failures has caused significant turbulence in markets and left investors jittery across the globe, from Silicon Valley to Switzerland. But is this a sign of a systemic banking crisis or of a more fundamental flaw in capitalism? In an interview with Ian Bremmer on GZERO World, former US Treasury Secretary Larry Summers provides an in-depth analysis of the situation.
Summers is critical of the management of Silicon Valley Bank and the federal government's intervention, which failed to prevent the banking turmoil. He also expresses concerns about the real estate sector, particularly when it comes to office buildings, and corporate lending to mid-sized businesses.
The conversation also delves into the impact of artificial intelligence on the labor market, with Summers cautioning that AI will "bring about significant changes" that will “profoundly alter traditional hierarchies and ways of thinking,” which may threaten influential groups. It’s even probable, he tells Bremmer, that we’ll see “restrictionist and protectionist policies that limit our ability to benefit from these technologies or slow down [their development].”
Summers also proposes a contentious solution to rebuild Ukraine: seizing frozen Russian assets.
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- Ian Explains: Banking turmoil and the panic pandemic - GZERO Media ›