The events happening in the world make me think of the idea about "unintended consequences". So this Californian bank SVB went bankrupt. One cause is the concentration of their securities in US Treasuries. Who would imagine this could happen when a bank is holding super safe asset like the US government Treasuries. However the problem is not about risk, it's about the price. Apparently when the Fed embarks on its continuous rate hike, the price of the existing treasuries drop. In the case of SVB it has to liquidate its holding of Treasuries at a loss when bank depositors withdraw their money. This puts the bank in an unfavourable financial position which makes depositors concerned hence resulting in a bank run.
Then there is the Covid pandemic that gives rise to hosts of unintended and unexpected consequences. The focus on fighting the pandemic has led to delay in treatment of other medical problems thus increasing morbidity and mortality risk. Yet another problem that resulted is post Covid labour shortage arising from changes in preferences and attitude; with workers no longer tolerating low pay and long working hours. Not all consequences are unwelcome though. Having tasted the experience of working from home workers now demand less working hours in the office. Unfortunately the world will also have to manage tons of plastic waste from test kits etc.
When Russia attacks Ukraine, Putin obviously did not envisage that it will also result in a global food crisis; or did he but didn't care. The supply crunch affects food prices the whole world round and cause severe food insecurity in some countries, risking starvation among millions. To be fair to him he actually thought the invasion of Ukraine would be fast and swift.
All these events perplexed me. I wonder whether Putin feels guilty over the unintended consequence of his move.
"The law of unintended consequences pushes us ceaselessly through the years, permitting no pause for perspective."- Richard Schickel
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