2023
March
13
Monday

Monitor Daily Podcast

March 13, 2023
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Silicon Valley Bank wasn’t huge enough to be considered a “systemically important” financial institution that warrants extra scrutiny from regulators.

But we are learning that it was big enough to cause plenty of consternation when it failed.

The key explanation: Financial markets are all about confidence. One bank failure can stir wider questions, notably, “Could my bank be next?” Fear can spread. Risks that in theory shouldn’t be called systemic suddenly get treated that way.

A second large bank failed Sunday: Signature Bank, which at $100 billion in assets is about half the size of Silicon Valley Bank. Some other banks – but at present a relative few – are also facing serious investor and depositor worries.

All this explains why federal officials are doing their utmost to contain any panic.

“Your deposits will be there when you need them,” President Joe Biden told Americans Monday.

On Sunday night, federal regulators took an emergency action to make it so: They said depositors at both shuttered banks will be able to access their funds, even if the amounts are above the $250,000 that qualifies for protection by the Federal Deposit Insurance Corp.

The efforts, seen by many economists as necessary, bore immediate fruit: Despite a bumpy ride for some banks, the overall stock market held steady in Monday’s trading.

But the move also comes at a price. It’s true that there’s no direct infusion of taxpayer dollars. But in effect a risky bet by the bank, and by extension its wealthiest depositors, is getting a rescue – in the name of containing spillover to the wider financial system.

“Let me get this straight,” tweeted financial expert Aaron Klein of the Brookings Institution. “The Fed regulates SVB, allows it to blow up its balance sheet with uninsured deposits, buy low interest rate mortgages unhedged ... and then when it fails screams systemic risk and bails out their creditors.”

Yes, that doesn’t seem fair. But it’s also understandable that officials safeguard the system in times of stress. So a key challenge is figuring out how to avert financial panics today without sowing the seeds of irresponsible risk-taking tomorrow. That’s not a new problem. But it has just gained fresh urgency.


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Today’s stories

And why we wrote them

Persistent inflation has pushed America into an era of rising interest rates that millions of American workers have never experienced before. Consumers have been showing resilience, but also some signs of strain.

Venezuela is proposing to codify crackdowns on freedom of expression in the lead-up to a presidential vote. Will determination be enough to keep civil society intact? 

Sarah Matusek/The Christian Science Monitor
Jeff Dollente, a zanjero for the Imperial Irrigation District, greets the sunrise on his morning shift delivering water to farm fields in Imperial County, California, Feb. 15, 2023. The water originates from the Colorado River.

The Colorado River crisis has heightened calls for conservation. Meet one of the people responsible for delivering – and safeguarding – the river’s liquid gold.

Difference-maker

Taylor Luck
Emad Hajjaj’s satirical cartoons have cost him jobs and landed him in prison. But he draws on because “if there is something important and funny to say, then we have to say it.”

It takes courage to speak truth to power. Despite risk of arrest, political cartoonist Emad Hajjaj believes holding up a mirror to Arab society is a responsibility – and a laughing matter.

Points of Progress

What's going right

In our roundup, progress in environmental protection is made by legal means in Costa Rica and Australia. And in Bangladesh, planning for the future includes opening the capital’s first rapid transit stations.


The Monitor's View

AP
Protesters rally March 10 in Tbilisi, Georgia, against a Russian-style draft law aimed at curbing the influence of "foreign agents" in civil society and news media.

As a young democracy eager to join the European Union, Georgia was told last year by the EU to first show more harmony and less polarization in its politics. Well it certainly did that last week.

By the tens of thousands, people in the small Caucasus state turned out in great diversity, from young teens to seasoned scholars, to protest a Russian-inspired bill pushed by the ruling party to muzzle journalists and civic activists – just before an election the party fears it might lose.

“They can’t erase our yearning for freedom from our brains, they can’t rip it off our hearts,” one protester told Politico. “I’m not afraid to be arrested. No bullets, no tear gas can stop me.” The sudden burst of national unity – some 80% of Georgians want to join Western institutions – forced the Georgian Dream party to quickly shelve the measure.

Mark it up as another victory for countries near Russia – from Moldova to Mongolia – that have rejected Moscow’s autocratic methods or at least distanced themselves from Russia’s aggression in Ukraine. Attempts by President Vladimir Putin to re-create the Russian or Soviet empire are clearly up against global gains in democratic ideals, especially among youth.

“Moscow’s claims to regional hegemony were always sustained not by genuine authority, let alone respect, but a willingness to pay in blood and treasure for the appearances of empire,” writes Botakoz Kassymbekova, an assistant professor at the University of Basel in Switzerland, in Foreign Policy. “In 2023 it is no longer clear that Russia can afford this price.”

The bill that almost passed in Georgia is similar to a Russian law passed in 2012 that brands any news media or civil-society groups as “foreign agents” if they receive more than 20% of their funding from abroad. Georgia’s ruling party, which is controlled by an oligarch with business ties to Russia, perhaps hoped the measure would have blocked ballot watchers during next year’s election.

The mass protests have clearly improved the chances of Georgia becoming a formal candidate to join the EU, the country’s president, Salome Zourabishvili, told Bloomberg. “When the society is united they can defeat even the majority that is in the Parliament, and that’s what is important,” she said.

Now less polarized, Georgia has found more of its civic identity. As a 15-year-old protester told AFP, “Europe is freedom, Russia is a kind of prison.”


A Christian Science Perspective

About this feature

Even in what seem to be dire situations, leaning on God’s will instead of our own agenda leads to progress, as a woman found when her family’s business was in danger of bankruptcy. 


Viewfinder

Rolf Vennenbernd/dpa/AP
In Bonn, Germany, a helping human hand is at the ready for this grass frog, prevented from crossing the road at will by a catch fence, March 13, 2023. Volunteers have constructed hundreds of fences to protect frogs on the move as temperatures warm and the spawning season arrives. Frogs are often carried across the roads, while others find tunnels that allow them to move safely underneath on their own. The frogs return the favor by eating mosquitoes and harmful insects.
( The illustrations in today’s Monitor Daily are by Jacob Turcotte. )

A look ahead

Thanks for starting your week with us. Please come back tomorrow, when columnist Ned Temko will discuss the China-brokered renewal of Saudi-Iranian relations, and what the United States might do next.

More issues

2023
March
13
Monday
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