Quote (ofthevoid @ 17 Mar 2023 00:23)

Big banks pledging 30 billion in deposits to help out First Republic. Between this news and the Bank Term Funding Program being setup, we'll be fine.

Quote (ofthevoid @ 19 Mar 2023 18:48)

Interesting developments happening. So for those that might not know or haven't been following this, outside just some tech/crypto focused banks this spread to Credit Suisse which is considered a G-SIB (globally systemically important bank) which had over 530Bn in swiss francs in assets in 2022. Credit Suisse, which for years has been plagued by various scandals (money laundering, insider trading, etc) has lost significant value, in last 12 months stock is down 75%.

Fast forward to what's happening now. Depositors suspecting stress, have started to pull out deposits from Credit Suisse out of fear, as a result the Swiss government agreed to loan them $54Bn to prevent it's collapse. Now over the weekend, Swiss government basically forced UBS, which is the largest Swiss bank about 2x the size of Credit Suisse to buy Credit Suisse. Initial offer from UBS was 1Bn when current market cap is ~7Bn for Credit Suisse. Credit Suisse said no and now UBS raised the offer to around ~2Bn.

So basically, investors are about to get wiped out and maybe get like 30 cents on the dollar for Credit Suisse of already what's left over. In 2007 their market cap was 90Bn and now it's being sold for 2Bn This shit is pretty crazy. We're seeing 2008-esque repercussions happening in real time.

Quote (Black XistenZ @ Mar 16 2023 05:50am)

For once, LibRight is not the butt of the joke in a politcal compass meme^^



Even liberal leaning sources have already pointed out that the Trump deregulations on trains are not the culprit for the recent derailments.
https://www.washingtonpost.com/politics/2023/02/27/so-far-trumps-rollback-regulations-cant-be-blamed-ohio-train-wreck/

None of the SVB saga would have happened if not for the excessive covid lockdowns and the "haha money printer go brrrr"-approach of the time. Or if the FED and the Biden admin had taken the signs of an inflation surge seriously in time instead of bloviating about "transient inflation". And the Western decision to answer Russia's invasion of Ukraine with an economic war which predictably fueled inflation even further also needlessly contributed to the current financial environment where there's bubbles, fragility and recession angst everywhere.

The crash of SVB is mostly on a series of catastrophically misguided big-picture policy decisions in recent years, rather than a failure of regulation. For instance, note that the balance sheet of SVB almost doubled between 31/12/2020 and 31/12/2021:
https://i.imgur.com/Zs1idvj.jpg
https://d18rn0p25nwr6d.cloudfront.net/CIK-0000719739/4b031df0-621a-429e-95ec-1ba5f88b029d.pdf
https://ir.svb.com/financials/annual-reports-and-proxies/default.aspx

Realistically, even without the 2018 cutback on banking regulations, there would only have been at most 1 stress test in which SVB's shaky fundamentals would have been noticed - and even that would only have happened if the stress test had included a scenario of sudden, runaway inflation and correspondingly aggressive interest hikes by the FED - a scenario which seemed completely outlandish less than 2 years ago.

Quote (Black XistenZ @ Mar 19 2023 06:51pm)

Doesn't necessarily have to imply an imminent meltdown of the financial markets - Credit Suisse had been in crisis for quite some years now. Just as in the case of SVB, the troubles of CS don't automatically apply to other banks. This is different from 2008 in that every bank had bad loans on the books back then, so that the collapse of Lehman Brothers and Washington Mutual wiped out the trust between banks across the industry. By contrast, the issues plaguing SVB and CS are specific to these particular banks.

When central banks ended the era of ultra-cheap money by reversing interest rates, economic casualties had to be expected. The crux is preventing contagion across the financial system. In 2008, the erosion of trust spread like wildfire because large swaths of the global financial system had engaged in the same kind of bad lending. Looking back at our current situation: I will start getting worried when a bank collapses which had neither engaged in egregious malpractice like SVB, nor been in perpetual crisis like CS.

Quote (dro94 @ 19 Mar 2023 21:45)

I think what void is getting at is if they're buying Credit Suisse for 2bn, then it's not just a liquidity problem. They must have made some really bad investments.

Quote (dro94 @ 19 Mar 2023 16:45)

I think what void is getting at is if they're buying Credit Suisse for 2bn, then it's not just a liquidity problem. They must have made some really bad investments.