This time is probably not different.

Last May I wrote a post titled "This time is different?" based This Time is Different, authored by Carmen M. Reinhart, chief economist of the World Bank Group, and Kenneth S. Rogoff, previous chief economist of the IMF and professor of economics at Harvard.

With the collapse of SVB and Signature Bank, I am revisiting that post, along with the 3-point bank-crisis checklist.

These are the 3 items required (some but not all) to create a banking crisis.

1. Capital Flow Bonanzas.

Check. I actually think the Capital Bonanza chart that I cited last time was not great.

Source: https://www.yardeni.com/pub/tics.pdf

2. Equity and Housing Price Cycle (the boom and the bust)

Check. House prices, as well as rents, were sent lower in late 2022.

3a. Overcapacity Bubbles: Tech

No more IPO market. Tech shares decimated in 2022.

3b. Overcapacity Bubbles: Financial Industry

This number has started to deflate since mid-2022. Which is exactly what happened pre 2008 GFC.

Now we #2 and #3 of the biggest bank failures in history happening within 48 hours of eachother.

If it looks like a banking crisis - it probably is one.

I would love to hear the author's takes!