Why We’re Headed for the Mother of All Financial Crises

You Know What Else Fails on a Dying Planet? Banks.

Image Credit: Bloomberg

It’s the question on a lot of minds right now: are we headed towards another financial crisis? Let me answer it. We’re already in one — we just don’t recognize it yet.

What do I mean by that? Earlier this week, I explained what really killed Silicon Valley Bank. No, it wasn’t any of the standard explanations proffered (I can’t believe I used that word) by pundits. It was climate change. Yes, really. Why did Silicon Valley Bank go bust? Because interest rates soared, while it had invested in long-term US government bonds…the safest asset in the economy. Not anymore. Why did interest rates soar? Because prices are skyrocketing. Every week, month, day, they seem to reach new peaks — especially for the basics, food, water, energy, medicine. Why are prices soaring? Because our planet is dying.

It’s pretty simple when I explain it that way — even if Wall St types will scoff. That’s OK — they’re not exactly out there fighting for the future of anything except their own wallets, and I doubt most of them even grasp how fast and hardclimate change is hitting us.

And that’s the point. What will the 2020s be remembered for? This was the era when the mega-scale impacts of climate change arrived, and they hit our civilization like hammer blows. Regions and states burned. Rivers ran dry. Entire countries flooded. Harvests began to fail. And of course there was a pandemic, which, too, is an effect of climate change — as animals flee for the poles, a striking and terrible finding, zoonotic flow increases.

This wasn’t small scale stuff anymore, which could easily be denied. Hey, guys, it snowed more this year! Just weather! This was mega-scale, civilization-altering stuff. Impacts at a grave scale. Let’s take the example of something most people don’t know, which is textile prices. Why are they soaring? Tried buying clothes or bedsheets lately? Because harvests are failing, in this case, notably, for cotton. Why are harvests failing? Well, for one, Pakistan is the one of the world’s largest textile suppliers — and a third of it was underwater this year thanks to a mega-monsoon. It’ll take years to recover, if it ever does, because, well, there’s probably another mega-monsoon on the way when the rains fall this year.

This is the scale we’re talking. Just like that — snap! — and entire nations, regions, states are taken offline now. And yet these impacts are only just beginning. And do you know what all that’s going to do? Cause wave after wave of financial crisis.