financial system. most important thing we have to do in that regard is make sure the threat by the speaker of the house, the default on the national debt is off the table. for over 200 years, america has never, ever, ever failed to pay its debt. we pay our bills, and we should do so without reckless hostage taking from some of the maga republicans in congress. frank, if you could explain the consequences if we do default. looking at the wall street futures just now, fluctuating as we weigh the possible default, and also the fed raising rates. we don t want to understate how big of a deal this is. janet yellen s letter warning he could hit the limit june 1st, so much earlier than expected. last week, we saw a lot of estimates, the consensus estimates saying we ll reach it in july, giving lawmakers more breathing room. it is a big deal, the possibility of the u.s. to default. time is not on our side when it
he s putting out there that he thinks this may be it for a while in terms of bank failures. i know big investors, mayor money management firms that are looking at balance shoots, particularly regional bid size banks, there s at least two dozens of these types situations out there. does that mean that they will be dropping like flies? probably not. this takes some time to work out. but you do have among about two dozen regional banks the same sort of problems that you had at first republic, silicon valley, signature. number 1 that they bought as sets capital that they need to keep on their books when the fed was printing money. they bought it at high levels, treasury bonds and with the fed raising rates, a lot of those are now below par. so if they re below par, if you had to sell it now, you ll take a loss. that s one problem. the other problem that they have
world, so the worry is this is a domino that will develop. just recently, professor, will this impact the trajectory now of interest rates? as you say, the governor of the central bankin the governor of the central bank in the united states, jay powell, will have to discuss the situation this weekend. the thinking was that rates would continue to rise. continue to rise. markets are already pricing continue to rise. markets are already pricing in continue to rise. markets are already pricing in rate - continue to rise. markets are already pricing in rate cuts i already pricing in rate cuts later in the years. it looks certainly that most of the things the fed have been saying are unlikely to be true. we saw unemployment rising today by 0.2, which is worrying. markets are not going to expect to see the fed raising rates. inflation is already coming down, and the danger is, there was always a danger when the fed said, it s fine, we can raise rates, all of the architecture is fine, an
could portend for the future. let s go to los angeles and find kelly o grady. reporter: yes, the bank haven for start-ups is no more, the second biggest bank collapse in u.s. history. let s recap what started it all. svb s spiral began wednesday, its start-up clients had been withdrawing more cash than usual amidst the fed raising rates and a chilly fund raising environment. the tech community got jumpy, the stock was in freefall, and investor warned it might be in real trouble. that caused a bank run. in other words, a ton of clients simultaneously tried to withdraw funds. by thursday s end, customers had pulled out $42 billion of deposits leaving a negative cash balance of $958 million. california regulators deemed svb incapable of operating and shut it down. the fkic fdic assured goes depositors they will redeem
would continue to rise. markets are already pricing in rate cuts later in the year. it looks certainly that most of the things the fed have been saying are unlikely to be true. we saw unemployment rising today by 0.2, which is worrying. markets are not going to expect to see the fed raising rates. inflation is already coming down, and the danger is, there was always a danger when the fed said, it s fine, we can raise rates, all of the architecture in place is fine, and now this is the first step suggesting that isn t true. that was professor danny blanchflower. the man nominated prime minister in china has been formally elected by the parliament. he is the former party leader in shanghai and a close ally of president xi, he is considered pragmatic and