For most people — from casual observers to financial market news junkies — the recent demise of a duo of regional U.S. banks has been a shock. “How could this have happened?” concerned citizens have wondered aloud. For those of us in the industry, though, on some level, it should have been predictable. The concept of what went wrong has had everything to do with time and acceleration, rather than simply the higher interest rates that some commentators would like to blame.
Consider this analogy: if you’re riding in a car and the driver goes from zero to 60 miles per hour in a few seconds, you think, Wow, that was fast! In truth, Earth is spinning at 1,000 miles per hour and revolving around the sun at 67,000 miles per hour, and we never even feel it. However, if that constant forward motion were to stop or speed up suddenly, our planet’s residents would all feel jolted in a big way.
