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Economy

The World Watches Silicon Valley Bank's Collapse And Braces For 2008 Déjà Vu

The effects of the fall of Silicon Valley Bank show the limits of the tech world, but also the current fragility of the international financial system a generation after the 2008 global financial crisis that was sparked by U.S. bank failures.

New York Stock Exchange

New York Stock Exchange on Feb 28, 2022.

Alexandre Counis

-Analysis-

PARIS — Five months after the collapse of cryptocurrency exchange FTX, which continues to shake the crypto world, it's the turn of Silicon Valley Bank, which was at the heart of U.S. start-up financing until it failed on March 10.

It is still too early to know if this new fire will spread or be contained quickly, but lessons can be drawn from the bank's failure, which looks like the consequence of the abrupt transition from the era of free money to the era of rapidly rising interest rates.

The first lesson concerns the world of start-ups.

It is surprising and distressing that this ecosystem, so quick to disrupt the models of the past, should find itself trapped by the simple fact that a traditional bank has become a must-have in Silicon Valley.

This has left the entire venture capital world on edge.


The second lesson is regulatory.

The collapse of SVB is the second largest bank failure in U.S. history, after the 2008 failure of Washington Mutual. Now, 16 years after the explosion of the subprime bubble, the SVB collapse testifies to the weaknesses of American banking regulation when it comes to monitoring local banks, which are a crucial part of the economy.

The persistent fragility of banks

The disappearance of SVB also says a lot about the state of global finance.

First, it shows the astonishing fragility of banks and the financial system as a whole.

We are all paying for years of zero interest rates.

By focusing too much on the desired effects of increasing interest rates in terms of reducing inflation, we have ignored the bad side: real carnage in the valuation of central banks' bond portfolios.

If they are forced to dispose of them, they will take colossal losses, and risk not being able to pay for it. Now, we are all paying for years of zero interest rates. The accounts had to be settled one day. That day has arrived.

The SVB episode also shows the incredible nervousness of investors.

While observers agree that the stock market's rebound this year has been suspicious, the recent news shows that they are far from calm, and that at any time they can lose confidence, panic and even cause a global market crash in a matter of hours.


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Society

Not Your Grandma's Nonna: How Older Women In Italy Are Reclaiming Their Age

Women in Italy are living longer than ever. But severe economic and social inequality and loneliness mean that they urgently need a new model for community living – one that replaces the "one person, one house, one caregiver" narrative we have grown accustomed to.

Not Your Grandma's Nonna: How Older Women In Italy Are Reclaiming Their Age

Italy is home to many elderly people and few young ones.

Barbara Leda Kenny

ROMENina Ercolani is the oldest person in Italy. She is 112 years old. According to newspaper interviews, she enjoys eating sweets and yogurt. Mrs. Nina is not alone: over the past three years, there has been an exponential growth in the number of centenarians in Italy. With over 20,000 people who've surpassed the age of 100, Italy is in fact the country with the highest number of centenarians in Europe.

Life expectancy at the national level is already high. Experts say it can be even higher for those who cultivate their own gardens, live away from major sources of pollution, and preferably in small towns near the sea. Years of sunsets and tomatoes with a view of the sea – it used to be a romantic fantasy but is now becoming increasingly plausible.

Centenarians occupy the forefront of a transformation taking place in a country where living a long life means being among the oldest of the old. Italy is the second oldest country in the world, and it ranks first in the number of people over eighty. In simple terms, this means that Italy is home to many elderly people and few young ones: those over 65 make up almost one in four, while children (under 14) account for just over one in 10. The elderly population will continue to grow in the coming years, as the baby boomer generation, born between 1961 and 1976, is the country's largest age group.

But there is one important data set to consider when discussing our demographics: in general, women make up a slight majority of the population, but from the age of sixty onwards, the gap progressively widens. Every single Italian over 110 years old is a woman.

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