Dangerous shadow banks back to the fore!

Bloomberg analysts believe that the risks of relying on shadow banks are great, and the Biden administration must educate the public about its risks

The term "shadow banking" refers to a group of opaque financial institutions or investment channels that differ from traditional banking entities. These entities offer services such as loans but face less scrutiny than conventional banks. Despite this, it is not less vulnerable to risks, as in 2008 it had already caused the worst financial crisis since the Great Depression, which was called the real estate betting crisis.

These entities stagnated for a decade and then picked up again; The value of private credit through specialized investment companies exceeded $2 trillion. While lenders such as Rocket Mortgage and United Wholesale Mortgage account for more than 75% of government-backed mortgages. The assets of non-bank brokers amounted to 89% of GDP in the United States as of 2021, compared to 74% in 2018, according to the Financial Stability Board.

The reason for the shift to shadow banks, according to the editors, is due to the failures of American banks. More than $400 billion in deposits has leaked out of the banking system. At the same time, $300 billion has been poured into money market mutual funds, which seek to compete with deposits to maintain a fixed value of $1 per share.

Another reason for shadow banks to thrive is for these banking entities to improve their performance. Money market funds were placed in Treasury bonds and the Federal Reserve rather than in riskier companies. It appears that private credit providers get a large share of their financing from long-term investors such as pension funds and insurance companies, which makes them better able to absorb losses.

But the vulnerabilities of these financial institutions are still many and could cause a major credit crunch if investors fear a debt ceiling crisis. Their holding of treasury bonds would be a big problem, recession could cause additional challenges, and mortgage defaults could overwhelm the finances of shadow banks.

That is why the Biden administration must raise awareness among Americans about the dangers of these banks, and impose special oversight on their activities through Congress. The administration should also authorize the relevant agencies and give them more powers to limit lending and impose stricter guarantees on loans in order to protect citizens from their risks.   Source: Bloomberg

The Brazilian president wants to find a third alternative to resolve the conflict in Ukraine

Brazilian President Luiz Inacio Lula da Silva said that his country believes that the third alternative to resolving the Ukrainian conflict lies in building peace.

He stressed that Brazil wants to find this third alternative, and to help start negotiations between Moscow and Kiev.

"I want to find a third alternative to resolving the Ukrainian conflict, which is building peace," the Brazilian president added, during a press conference in Lisbon after negotiations with his Portuguese counterpart, Marcelo Rebelo de Souza.

The Brazilian president also stressed that his country does not want, through its viewpoint on the Ukrainian conflict, to satisfy any party, and stressed that his country's goal is to find a way to push Moscow and Kiev to the negotiating table.

In mid-April, the President of Brazil called on the United States from Beijing to stop "heating up" the conflict in Ukraine and to move forward to find a peaceful solution to it. According to him, it is now necessary to actively search for countries that, along with Brazil and China, would be ready to act as mediators in the Russian-Ukrainian negotiations.

Earlier, the President of Brazil said that Russia is the guarantor of long-term peace around the world.

Venezuela estimates its losses as a result of US sanctions

Venezuelan Vice President Delcy Rodriguez said that her country has lost about $232 billion since 2015, when the Obama administration imposed sanctions on Venezuela.

Rodriguez added , "The impact of the sanctions can be seen in the decline in oil production. Since 2015, the losses amounted to $232 billion. Losing this amount during that period would have meant losing 99% of the income in hard currency."

The Venezuelan vice president stated that the United States imposed more than 20,000 sanctions against 35 countries and is "in a state of economic or armed war, with the whole world trying to secure its existence in the future."

Rodriguez noted that in 2015 the United States declared Venezuela a threat to US national security, after which various Western countries imposed 929 unilateral sanctions against Venezuela, 60% of which were from the United States.

She said: "In this way, an attempt is being made to destroy entire peoples, including the people of Venezuela. But this did not happen, The economic war against Venezuela meant a systematic violation of human rights and the guarantees of these rights for our people, because it leads to loss of life, food, education and health care, and means Loss of personal individual development.

And Rodriguez stressed that the private sector in Venezuela has also fallen victim to these sanctions, because it has suffered extraordinary financial losses - the logistics services for any Venezuelan businessman are much more expensive than for a businessman from Colombia, which is a neighboring country, and the reason for this is the American blockade on financial channels and preventing it. Access to purchase raw materials.