Dark Forest: The Brutal Game of Modern Banking

The banking system has shifted into a state where seeking help is suicide. Regional banks that need liquidity face a choice: stay hidden and starve, or reveal their weakness and get hunted. The bigger question is whether the largest banks can break this logic before the system collapses under its own predatory incentives.

• Regional banks were told to hunt for safety. They bought Treasuries and mortgage-backed securities, exactly what the Fed encouraged. Then interest rates rose and those "safe" assets became anchors drowning them in unrealized losses.
• The trap is that asking for help signals death. When SVB tried to raise capital and sell assets at a loss, other hunters saw blood in the water. A deposit run followed. The bank's attempt to survive became the signal that it wouldn't.
• This isn't about incompetence or moral failure. These banks didn't make subprime loans or take reckless bets. They got fat on years of guaranteed conditions and now can't move fast enough in a new world. Their mistake was trusting the promise.
• The Fed can't solve this by going backward. Loosening policy to ease the liquidity crisis would resurrect inflation and burn the system down differently. Higher interest rates created the hunger, but reversing course trades one disaster for another.
• The only escape requires the strongest hunters to stop hunting and start protecting. This means coordinated action among the biggest banks to stabilize the weaker ones, but that cooperation has to hold. One defection and the dark forest stays dark.