Last night, the once-giant regional bank of the United States, Silicon Valley Bank, plummeted 99% on its last public trading day, with its stock price ultimately falling to $0.40.

From its initial stock price of $106 to now less than $1, the market value of this banking giant has virtually vanished into thin air.

Similarly experiencing a significant drop was Signature Bank, with an even lower stock price, closing at only $0.13.

Undoubtedly, in the coming period, perhaps more banks or even other sectors will see sharp declines or even bankruptcy. An economic recession in the United States is almost a foregone conclusion.

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Ultimately, Americans and U.S. businesses will foot the bill for the Federal Reserve's reckless interest rate hikes.

01, The Giant Vanishes

Silicon Valley Bank, once a component of the S&P 500 index, had already experienced a certain degree of decline in its stock price the day before bankruptcy, but it was still as high as $106. No one could have anticipated that on its last public trading day, the stock price would fall to $0.40.

Now the bank has gone bankrupt, and all its deposit and loan business has been taken over by First Citizens Bank. The bank's stock will be traded over-the-counter in the OTC market in the future.

Silicon Valley Bank could be said to have gone bankrupt overnight. Before it was announced to be taken over, Silicon Valley Bank was still trying to save itself. On one hand, it was selling off assets it held, and on the other, it was preparing to issue more shares. But in the end, due to a run by major clients, it suffered from insufficient liquidity, leading to bankruptcy.

Before it, Silvergate Bank had just gone bankrupt, and after it, Signature Bank also declared bankruptcy.The wave of bankruptcies in the American banking industry may not have come to an end, for a very simple reason: the Federal Reserve's previous aggressive interest rate hikes are still ongoing, and the U.S. federal interest rates remain at high levels.

The bond market crash that led to the bankruptcy of Silicon Valley Bank has not concluded; on the contrary, what we have seen so far is just the beginning. Initially, it was the U.S. Treasury bonds that fell, but now investors are actively selling U.S. bank bonds, and the significant decline in the bond market is spreading.

02. The United States is footing the bill

U.S. Treasuries have long been considered a safe-haven asset for investors, but ironically, they have also become one of the causes of the U.S. crisis.

This is a backlash effect of the United States' misuse of the dollar hegemony to exert dominance.

In response to the outbreak of the pandemic, the U.S. maintained ultra-low interest rates and introduced large-scale stimulus plans, which also led to high inflation. To curb inflation, the Federal Reserve raised interest rates. However, the aggressive rate hikes resulted in a decline in the value of bonds held by banks, causing significant losses and exacerbating the banking crisis.

Data shows that by the end of 2022, the loss in bond value of U.S. banks increased to $220 billion, intensifying the crisis in the financial system. Although only a few banks have gone bankrupt so far, the overall loss in bonds has turned more banks into hidden icebergs beneath the surface.

03. China is faring better

The recent trend in the U.S. stock market has fully demonstrated that the situation in the United States is worse than that in Europe.

As of last night's closing, stock markets in European countries have seen a slight increase. Germany's index currently stands at 15,142 points, which is not far from the previous high of 15,700 points, and it is only about 6% away from the all-time high of 16,290 points.In relative comparison, the U.S. stock market is in much worse shape. Last night, the three major U.S. stock indices fell again, while U.S. Treasury yields continued to rise, indicating that the selling of bonds is ongoing.

China's performance, on the other hand, appears to be much better. Last night, Alibaba's stock surged by 14.3% in the U.S. stock market, leading to a general rise in Chinese concept stocks. The China Golden Dragon Index rose by 3.5%, outperforming the Nasdaq Index by 4 percentage points.

Additionally, Tencent increased by 8%, Baidu by 4.7%, and Li Auto by 6%.

This not only indicates that the U.S. is facing difficulties but also suggests that China's economic recovery is far exceeding expectations, with global capital actively purchasing Chinese assets across various markets.