The current liquidity crisis within the banks will pass, says Jefferies,
but a credit crisis may soon be upon us.

Contagion fears following the collapse of Silicon Valley Bank (SVB) should
fade thanks to measures from the US Federal Reserve, Treasury and Federal
Deposit Insurance Corporation (FDIC).

The measures should provide easy access to liquidity, ensuring the current
deposit flight does not lead to further failures.

However, credit tightening and demand, the broker says, points to a credit
crisis, not similar to ones previously witnessed on Wall Street, but a
“Main Street” crisis, where small businesses find access to credit
restrained.

https://www.proactiveinvestors.co.uk/companies/news/1009539/credit-crisis-is-coming-says-jefferies-1009539.html

Regional banks, which have been lending to small businesses since the
pandemic, will be far more limited in their ability and willingness to do
so.

The Fed’s Senior Loan Officer Survey shows credit standards have been
tightening since the third quarter of 2021 and was at their lowest level
since the final quarter of 2020 at the start of this year, highlighting
there was a credit problem before the failures of SVB, Silvergate and SBNY.

Jefferies said that when the dust settles, it is likely smaller regional
banks will have a smaller deposit base, and it is unlikely they will be
able to attract most of their old customers back quickly.

Similarly, loan demand also turned negative according to the Senior Loan
Office Survey, in the second quarter of last year, just as the Fed began
raising rates.

Demand for loans is approaching recessionary levels, according to the
broker, and it expects it will fall further as rates offered to smaller
businesses increase.

While larger companies will be able to withstand a broad pullback in the
availability of bank loans, small businesses will not have access to the
same sort of alternative funding sources and will likely suffer.

### - quoted from above: (albeit stating the obvious)

"...credit standards have been tightening since the third quarter of 2021
and was at their lowest level since the final quarter of 2020 at the start
of this year, highlighting there was a credit problem before the failures
of SVB, Silvergate and SBNY."

some even saying/suggesting that the above 3 banks collapse is/was a
direct result OF that lingering credit problem, is/was symptomatic of it?

the point being, that the whole system is (and always has been basically)
hanging by a credit-thread all along anyway! the whole of society only
advancing VIA credit alone, so if/when anything ever goes awry with that
payment system - which is basically a house of cards - then the whole
thing starts shaking & wobbling + threatening to fall over!

every part of it being interdependent upon every other part only so many
problems/threats to it can be coped with at any one time without placing
everything else in jeopardy too?

and which, after already several shocks to the system via the 2008 credit
crunch, austerity, covid, the war in europe, an energy crisis + a cost of
living crisis, and now a liquidity crunch et-al... this then is exactly
what we see happening: the whole system lurching & groaning!

that while, even so, it still seems to be treading enough water to remain
afloat, it's kinda doubtful it can take too many MORE shocks of a similar
nature huh...

so everything's kinda up in the air, ya know?

(and where she lands nobody knows, place yer bets!)