US economy heading for ‘train wreck,’ billionaire warns

Lazy eyes listen


According to billionaire investor Bill Ackman, the US economy is headed for disaster as the Federal Reserve raises interest rates again and the Treasury rejects full deposit insurance.

“Consider what the impact will be on lending rates and our economy when combined with the higher cost of debt and deposits due to rising rates,” Ackman wrote on Twitter on Wednesday. “The longer this banking crisis goes on, the more damage it does to smaller banks and their ability to access low-cost capital,” he added.

The billionaire’s warning comes after the Federal Reserve of the United States decided to raise interest rates by 25 basis points. The Fed raised its benchmark rate to a range of 4.75%-5% on Wednesday in order to combat inflation.

“Trust and confidence are earned over time, but they can be lost in a matter of days.” I’m afraid we’re on the verge of another train derailment. “I hope our regulators get this right,” he said.

Yellen, who had previously made reassuring remarks about protecting regional banks, stated on Wednesday that she had not considered or discussed “blanket insurance” for US banking deposits without congressional approval as a means of preventing further bank runs.

“The longer the uncertainty persists, the more permanent the damage to the smaller banks will be, and the more difficult it will be to re-engage their customers,” Ackman argued.

Following the sudden failures of Silicon Valley Bank and Signature Bank in the United States earlier this month, Western governments and central banks have sought to prevent a chain reaction of bank failures. The turmoil has also hit Credit Suisse, which has been acquired by rival UBS in a government-brokered deal aimed at restoring public trust in the Western financial system and averting a global crisis.