The recent collapse of Silicon Valley Bank (SVB) and New York’s Signature Bank brings to mind the financial crisis of 2008-2009 whose effects persist today: masses of low income workers who are homeless, without education or healthcare systems, drowned in heavy financial problems and under the mercy of the banks and the monopolies. The SVB collected deposits from start-up companies that received financing from venture capital and then invested in US Treasury bonds. Emerging from the slowdown in 2019 and combined with the catalytic effect of the COVID-19 pandemic, the international crisis of overaccumulation in 2020 resulted in interest rate hikes. Correspondingly, bond prices fell and the bank’s asset values declined leading to insolvency. In addition, the value of the loans the bank made and the investments in bonds fell. In this, depositors attempted to withdraw their funds but the bank was unable to meet these demands. The truth is obscured by economists, the government, and finance circles in their insistence on the differences between 2008 and the collapse of today. They insist that the collapse of small regional banks in the face of a more developed international financial system cannot lead us to another 2008.
The facts show us otherwise. We are on the verge of a crisis and one thing is certain: inability to invest capital profitably leads to the collapse of a bank. It is the expression of the overaccumulation of capital. With deposits, banks invest this money by issuing loans or buying bonds, to name a few. When the investments do not yield a return, in the case of SVB, it first materializes in the banks. So, the collapse of the bank is not the cause but the first symptom. The steps taken by the capitalist governments in recent years such as loans at low interest rates injected into the economy, known as government aid packages, combined with expansionary policies, are seen as ways out of crisis. In reality, these measures aggravate the problem of overaccumulation and when inflation begins to cut into the wages of workers, governments pursue high interest rates. Once more the workers and people are plunged further into impoverishment and forced to pay for the crises.
The overaccumulation of capital is growing. The Biden government continues to search for inflation measures and “green” policies to find a profitable outlet for capital. The collapse of SVB and the loss of deposits, despite being contained for now, cannot be viewed as an isolated issue as the bourgeois media would have us believe. The crisis of 2008-2009 did not result in any policy that would put the train of capitalism back on track. It is barreling towards a new and deeper crisis. The temporary solutions reflect that the problem is more profound. All reasoning brings us to one cause: the capitalist mode of production. As long as capitalist property and profit supplant the needs of people as the motive for production, crises will subsist, the chasm of squalor will widen for the majority and the coffers will be filled for the minority. The only solution is upheaval and the removal of the capitalist system.
