If you’re banking on the economy to improve fuel prices for your aircraft, now is not the time to hold your breath. Not to add too much fuel to the fire, the following points touch on several worldwide issues that affect our 2023 predictions for jet and other alternative fuels.
Ongoing Issues With U.S. Banks
In early 2022, many individuals expressed uncertainty about banks offering larger loans to startup companies while also using cryptocurrency in their regular operations. A possible outcome of that fear was that when the time came, there wouldn’t be enough liquidity to truly secure those funds.
As many have seen recently, this fear came to light through several bank closures like Silicon Valley Bank and Signature Bank. These banks were known for being tech-friendly by combining high lending with higher interest rates. However, their balance sheets and the startups they lent to simply couldn’t keep up.
Furthermore, the use of social media means news such as predicted bank closures spread more rapidly than ever, ultimately causing massive panic. Many quickly withdrew their funds from Silicon Valley Bank, totaling about $42 billion. This resulted in a total loss of $28 billion as the company sold as many bonds as it could to cover some of its deposit costs. Their total negative cash balance? $958 million. Without a potential buyer in tow, Silicon Valley Bank closed its doors for good.
Shortly afterward, customers of Signature Bank withdrew $10 billion in deposits in fear of its closure. As a result, Signature Bank became the third-largest bank failure in U.S. history.
Because of instances such as these, liquidity will likely be a big issue for the remainder of this year. Meaning, you can probably expect the economy to be dicey moving forward.