Tesla CEO Elon Musk said during part of an interview that aired Tuesday that the banking system was in “serious danger” and predicted turbulence within the commercial real estate market.
“We have a situation here where it’s not merely – it’s not the canary in the coal mine has died, but the miners are starting to die, too,” Musk told Fox News host Tucker Carlson, a co-founder of the Daily Caller News Foundation. “Silicon Valley bank collapsing overnight is one hell of a big canary, it’s more of a tooky, not like some small fry thing. I think there is a serious danger with the global banking system.”
Federal regulators shut down Silicon Valley Bank March 10 after its stock price collapsed and customers began a bank run following the financial institution’s disclosure of a $1.8 billion loss on asset sales due to high interest rates, CNBC reported.
Musk pointed out that at one point, commercial real estate was one of the safest assets a bank could have in its portfolio, but that the reduction of office space being used due to an increase in telecommuting could change that.
“We really haven’t seen the commercial real estate shoe drop. That’s more like an anvil, not a shoe,” Musk told Carlson. “So, the stuff we’ve seen thus far hasn’t even – it’s only slightly real estate portfolio degradation. But that will become a very serious thing later this year, in my view.”
Musk also predicted that house prices would head downhill due to interest rate increases by the Federal Reserve in order to fight inflation, because the higher interest rates would make some houses unaffordable for buyers.
“So, if the Fed rate is high, you have a high base interest rate, effectively the price you can pay for the house drops because you now have to pay more interest, which means that, if you’ve got a fixed monthly payment, you can now afford to buy a house for less money,” Musk said. “It effectively drops the prices of houses.”
“So if banks end up having loan losses in both their commercial and — well they’re definitely going to have loan losses in their professional portfolio but in their mortgage portfolio, this is a dire situation,” Musk said.
Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@dailycallernewsfoundation.org
Do neighborhood cats insist that your property (porch, door, flower beds) is their territory? Well,…
WASHINGTON — I can't tell you how many people I know who do not like…
One of the prosecutors working on Manhattan District Attorney Alvin Bragg’s case against former President…
Nina Jankowicz, previously the head of the Biden administration’s ill-fated “Disinformation Governance Board,” is teaming…
“Thought crimes [in George Orwell’s novel 1984] are things that some ideology deems it wrong…