Part 8/14:
Today, the same conditions seem to be re-emerging:
Over-reliance on risky securities
Moral hazard driven by bailouts
Inflated asset valuations based on fragile collateral
Perpetual protection from government intervention, encouraging reckless behavior
The previous era demonstrated that once confidence erodes, the system can implode suddenly and catastrophically.
The International Ripple Effect
While these troubles are rooted in regional US banks, the repercussions are no longer confined geographically. The interconnectedness of modern finance meant European banks like Deutsche Bank and UBS, as well as Asian lenders, experienced sharp declines in their stock prices, echoing the US turmoil.