Credit Suisse Shares Sink as Global Fears About Banks Grow (apnews.com) 74
UPDATE: Switzerland's central bank says it will backstop Credit Suisse if necessary, according to an update from CNN.
Battered shares of Credit Suisse lost more than one-quarter of their value Wednesday, hitting a record low after its biggest shareholder -- the Saudi National Bank -- told news outlets that it would not inject more money into the Swiss bank beset by problems long before the failure of two U.S. lenders. From a report: The turmoil prompted an automatic pause in trading of Credit Suisse's shares on the Swiss market and sent shares of other European banks plunging by as much as double digits. That fanned new fears about the health of financial institutions following the collapse of Silicon Valley Bank and Signature Bank in the United States in recent days.
Credit Suisse stock dropped more than 27%, to about 1.6 Swiss francs ($1.73), in mid-afternoon trading on the SIX stock exchange Wednesday. That's down more than 85% from February 2021. The shares have suffered a long, sustained decline: In 2007, they were trading at more than 80 francs each. With concerns about the possibility of more hidden trouble in the banking system, investors were quick to sell bank stocks on bad news. Other European banks took a battering as concerns spread about the sector: France's Societe Generale SA dropped 12%, France's BNP Paribas fell more than 10%, Germany's Deutsche Bank was down 8% and Britain's Barclays Bank was down nearly 8%. Shares in the two French banks also were briefly suspended.
Battered shares of Credit Suisse lost more than one-quarter of their value Wednesday, hitting a record low after its biggest shareholder -- the Saudi National Bank -- told news outlets that it would not inject more money into the Swiss bank beset by problems long before the failure of two U.S. lenders. From a report: The turmoil prompted an automatic pause in trading of Credit Suisse's shares on the Swiss market and sent shares of other European banks plunging by as much as double digits. That fanned new fears about the health of financial institutions following the collapse of Silicon Valley Bank and Signature Bank in the United States in recent days.
Credit Suisse stock dropped more than 27%, to about 1.6 Swiss francs ($1.73), in mid-afternoon trading on the SIX stock exchange Wednesday. That's down more than 85% from February 2021. The shares have suffered a long, sustained decline: In 2007, they were trading at more than 80 francs each. With concerns about the possibility of more hidden trouble in the banking system, investors were quick to sell bank stocks on bad news. Other European banks took a battering as concerns spread about the sector: France's Societe Generale SA dropped 12%, France's BNP Paribas fell more than 10%, Germany's Deutsche Bank was down 8% and Britain's Barclays Bank was down nearly 8%. Shares in the two French banks also were briefly suspended.
Buy on the dip? (Score:4, Interesting)
And if the banks DO all fail...you likely won't miss that bit of money as that the world will be full of problems greater than anything like that could fix.
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Sounds like an easy gamble. Either make money, or the system collapses into chaos at which point money is worthless.
You missed a third option though: government and/or bigger banks step in, your shares gain nothing, AND the system chugs along under new ownership. So no money, and no dynamic chaos for you.
Re:Buy on the dip? (Score:5, Insightful)
This is an issue of banks buying long-term treasuries, typically safe and liquid assets, to generate some yield on client deposits; a typical model which is the source of money market and savings interest payments to depositors. Most banks are smart and know what to do in a rising interest rate environment and an inverted yield curve. When you read about SVB, it turns out they consistently did not take action on their long-term treasuries that were generating unrealized losses, and were stuck with a highly concentrated group of depositors that are near-term cash hungry: tech startups. And in their case, they lost 10% of the value on $20B worth of treasuries to cover withdrawals, which generated a run on nearly 40% of deposits. That's just stupid bank management. The other banks going down are also related to tech startups, primarily crypto which I imagine given the crypto implosion is also generating a desire for withdrawals in USD.
But the other big banks not only don't do this kind of thing, they are required by law to have controls in place for this exact thing, and their depositors are much more diversified. So it looks very much to me like a market trend depressing stocks on otherwise healthy banks; at some point the market will get wise again so that means an investment opportunity.
Re:Buy on the dip? (Score:5, Informative)
There's a lot of interesting factors involved in this case; as it states Credit Suisse has struggled since 2007. A key reason for this is that like most Swiss banks, they obtained most their capital from ill gotten gains and always have; everyone knows about Swiss being Nazi Germany's bankers, but that's just the high profile stuff. Switzerland always has, and still to this day banks for some of the most despicable clients on the planet, whether that's genocidal dictators, drug cartels, child abuse rings, or the more mundane criminals like tax evaders.
The whole reason the Swiss people are disproportionately wealthy, and Switzerland as a country has a disproportionately high amount of large companies for it's size isn't because of some Swiss ingenuity, Swiss craftsmanship, or their much vaunted absolute democracy. It's because they're a parasite state.
Companies like Nestle didn't get big because they produced great products that the whole world wanted, they got big because Swiss banks holding billions in stolen or otherwise ill gotten assets like Nazi war loot could lend money cheaply to Swiss companies who could then buy up foreign companies and grow through acquisition. Swiss wealth is built entirely off the back of criminally acquired wealth; they play innocent because they didn't steal it themselves, they just acted as a safe haven for it and used it to lend and help Swiss companies grow unnaturally.
The date of 2007 here is important; Swiss banks like all others around the world suffered during the financial crisis; however whilst most banks were forced to shore up their assets and make sure they were more resilient, Swiss banks faced a different pressure - in the wake of the financial crisis as governments were desperate for tax income they went after tax evaders, and that meant finally giving Switzerland the kind of threats it deserved long before then - open up your banking system to our investigators, or be cut off from global banking. This has in the following decade or so been followed up by investigations into other criminality - cartels, oligarchs, corrupt leaders and so forth, and as such it's seen a steady reduction in capital for Swiss banks that used to be safe; in the past all that ill gotten cash was safe in Swiss banks, but forcing greater transparency on Switzerland changed that. With the ill gotten cash no longer safe, Swiss banks have been forced to bank like normal banks do and rely much less on criminality (which isn't to say normal banks don't pander to some criminality, just not on the national scale of Swiss banks).
All this really is is the result of a long running correction; the Swiss people have never worked hard to produce any kind of output that justifies their wealth, they've always been able to rely on easy money from their criminal backed banking sector. This is the long tail of justice finally catching up with Credit Suisse from 2007; if it collapses I won't be too sad, it just means Switzerland will have to consider doing something other than being a parasite state, and the Swiss people will have to get off their lazy asses and actually produce meaningful output like the rest of us.
What we're really seeing here is a temporary weakness in the banking sector exposing bad banks, banks that were based on bad decision making, or funding that is no longer safe - like that obtained through criminal means. As you say, the actual proper banks, the ones that behave properly (well, as proper as a bank can behave, I know, I know, they're all shits - it's just some are bigger shits than others), are protected much more. This case is much closer to that of IceSave, which also for some time tried the whole parasite thing, though in their case it was less about banking for criminals, and more about running a kind of national ponzi scheme. Nonetheless; it was a weak bank built on unsafe foundations pretending to be one of the big boys.
"Temporary Weakness" (Score:2)
What we're really seeing here is a temporary weakness in the banking sector exposing bad banks
It's not really "bad banks" it's a rotten industry.
There is nothing temporary about an industry with over $600 billion in unrealized losses [twitter.com] across the sector.
At least, according to the FDIC....
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Not just RC. The Rothschilds were given the tax collecting business of the Hapsburgs' Empire and amassed a half a bil
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The problem wasn't unqualified buyers per se (Score:2)
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The answer is yes. This is not a 2008 situation
It is for Credit Suisse.
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This is an issue of banks buying long-term treasuries, typically safe and liquid assets, to generate some yield on client deposits
Lending money way below the rate of inflation to a government with $30 trillion in debt...just because it's normal doesn't mean it's "healthy". And I doubt any of their "assets" would look good to any sane person, their only legit business is laundering money for cartels and scamming customers with fees, the rest is lending broke people money for almost free. You wouldn't lend your neighbor $5, but go ahead and invest in a bank that lent him $500k.
So a lot of powerful people (Score:5, Informative)
And then there's the Republican party playing chicken with the US debt. It's very likely they'll back down, but they're spooking the markets. That's on purpose. They'd like nothing better than for you and me to lose our jobs and blame Joe Biden and his party for it, putting them in charge in 2024 out of spite.
Given how many powerful men are actively gunning for our jobs and trying to cause a recession, it's genuinely hard to say. The "Build Back Better" bill creates a *lot* of jobs and economic activity, and the current administration is doing a lot of good work on regulation. The laws they passed in 2021 & 2022 are lowering insulin and drug prices too, which have a large impact on overall inflation. All of this pushes back against what Powell & the GOP are doing.
So on the one side you've got the chair of the Fed & one political party trying to tank the economy and on the other side the President of The United States and another party trying to keep it growing.
It's still very much up in the air who'll win.
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Powell thinks that he can be Volcker 2.0, but what the world needs is a Arthur F. Burns 2.0.
Better to go down in history as getting it wrong by economists than actually getting it wrong.
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Warren is here for the cameras. We all know it. It's been that way since '08. She's a populist, she's not interested in the truth, but in the appearance of doing something and caring for the little guy. The truth is her class of people (both on the left and right) has created the environment for this debacle a long time ago.
Now regarding the hearing itself: 1) Powell asked her if it was better to let inflation be a scourge on the rest of the population, she did not answer. 2) Powell couldn't because the Fed
She's a school teacher (Score:5, Informative)
Warren is the closest thing to a left wing the American has, along with Bernie Sanders. We are a far right country that has been becoming increasingly extremist, at least in terms of our political leadership. That's because a combination of gerrymandering and voter suppression means that the majority opinions of the American people don't make it through. That in the our anti-democratic institutions like the Senate and the electoral college. It's understandable that you can't tell the difference between someone trying to shift the window and someone just there for the cameras when you've got what's literally a school marm up against multi-billion dollar corporations and their extremely well funded propaganda networks. But trust me there's a difference.
And yeah I know what Powell asked her and I then know what she asked him, which is that aren't there better ways to control inflation?
And don't say it's his only tool. When you're only tools a hammer you don't try brain surgery. First rule physician do no harm.
But realistically this isn't about inflation this is about crushing the nascent unionization movement going on in America right now. Jerome Powell is no fan of the American worker let alone their unions. Mass layoffs would be a great way to stop things like all those Starbucks workers who keep unionizing. If nothing else it would provide cover when Starbucks fires an entire stores worth of people who just happen to be unionizing.
But I don't understand is what you personally get out of this. I mean it's possible you're a paid shill working for a billionaire's think tank. It's also possible you just like shitposting. And finally you might own a small failing business and be hoping to prop it up with cheap labor.
Is the bottom line though if you're an employee the odds of you getting shit canned are astronomical. And if you have a small business a little bit of cheap labor isn't going to allow it to survive a recession much less a depression. Small businesses need vibrant economies to survive.
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Warren is not here to teach me something. She has proven time and time again she knows *nothing* of the industry she's up against (or she knows, but hides it very well when in front the camera). In a quiz on the financial services industry, I would trounce her. Then again, nobody said politicians should be experts. And that's fine. It's when she tries to pass for an expert that it cry foul.
You're right, monetary policy is a blunt too. The other tool out there is targeted fiscal. But successive governments o
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Did you read my post? (Score:3)
To add to that, the problem isn't printing money. Our economy is growing. We either print money or go into a deflationary spiral. No, we can't go back on the Gold Standard as much as that gives Libertarians a stiffy to think about. We produce more economic output than there is gold.
No, the problem is we printed money and gave it
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What trusts? Were those trusts not here before 2020? Did greed suddenly become a thing with covid? Is temporal correlation with bazooka style monetary and fiscal not a good indication, even for the layman who doesn't know how the economy functions?
4 companies control 80% of the beef industry (Score:2)
Then covid hit and bit hard into their profits, so they decided it was time to flex those muscles they'd been building up. On top of that we reached a tipping point when Trump gave them $6.5 trillion dollars in free money and the
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Just because you gave up on yourself (Score:2)
And if you're so smart, why aren't you rich?
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trying to cause a large scale recession
Yes and no. They are trying to keep inflation under control. A recession just comes along for the ride. Remember during Covid, governments spent like crazy to keep everything from going off the rails. If they hadn't spent in to that situation, an economic depression would have happened right then and there, and most people agree that a depression on top of a pandemic is double-plus ungood. So they spent all that money, kept interest rates low, knowing it would
I disagree (Score:2)
At some point you have to ask yourself if this is incompetence or malice and then if you check Mr Powell's education and history you quickly realize he's not this incompetent. All your left with is malice
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That is simply not true [stlouisfed.org].
Yes the blue curve is under the orange curve, so it is fair to say that wage growth is not keeping pace with inflation, or that real wages are declining after factoring in inflation. But wage growth has doubled from 3% to 6% in the last couple years during this period of high inflation.
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Nope you have already missed the boat. The opportunity to profit from all this was to take out massive credit lines while rates were low, and buy growth assets with them.
If you did that you sit back now without any worry what so ever the banks will excercise the clauses in those contracts that allow them to demand early payment, nope because that would be the 'systemic risk' you won't be forced to sell those assets and retire those markets.
The public treasury will be used to prop the bank up instead! but
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heh, massive is not a 1/2 mill to buy a house. It 100million to invest in tech startups or green energy or something.
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One conspiracy theory is that the plan is to simply wipe out all the banks in a greatest depression to make way for CBDC. Then the banks would get wiped out, but the monetary system (and your deposits) would not.
I do think central banks are interested in CBDC for just such a scenario, it makes very little sense to have CBDC and traditional fractional reserve banking at the same time.
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CBDC is Central Bank Digital Currency, to save people looking this up. Personally I don't find it plausible that central banks want to "wipe out all the banks", but YMMV*.
* Your Mileage May Vary
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I worded the second sentence poorly, I meant that I think central banks are interested in it as an emergency tool for the scenario where too many banks get wiped out. Not that they actually want to cause that to happen. So only half of the conspiracy theory.
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Not sure I'd buy Credit Suisse. The big American banks look like a pretty good deal right now though.
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Probably not. You're (from the question) an amateur. You have no reliable way of picking either a bank, group of banks (for instance in an ETF) or the price point at which to buy, or the timing. Especially not the timing.
You also (like everyone else right now) don't have any informed idea of what we are looking at. it could be a blip which prompt central bank action will resolve in a week or so with little damage. Or it could be a real credit bust on a much bigger scale than 2008.
The banks are not all
Too bad.. (Score:3)
They don't have any more Nazi gold to hide and sell.
I mean of all the banks in the world why are we shedding a tear for these enablers?
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O, that user name is just a cheap taunt? Ok, I understand now.
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Be careful what you wish for. They also gassed gay people in those camps, not "just" Jews.
O, that user name is just a cheap taunt? Ok, I understand now.
He's just upset that we haven't had a good GNAA thread in forever.
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And pacifists.
And religious minorities.
And Gypsies.
And the mentally handicapped.
And people who tried to hide or aid any of the above.
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I mean of all the banks in the world why are we shedding a tear for these enablers?
If the likes of Credit Suisse fail you'll be shedding more than tears. You'll be scavenging for food.
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I would agree with you if we would stop letting rich people do that and I've been advocating to stop letting them do it for some time, but it hasn't exactly caught on. Everybody still thinks that if you take away most of a billionaire's money leaving them a mere multi multi-millionaire and the next step
With Elon Musk? (Score:2)
Cockroaches (Score:2)
When you find one cockroach, you know there will be more. You never only find one.
How many you find is the question.
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Once again an area of Trump winning, 16-2 in terms of bank failures.
Failed Bank List [fdic.gov]
Of course I don't actually blame Trump for these since that's a partisan hack way to think about things. The economy does not in fact simply operate at the behest of the President.
Unless there's an "Economy Up" button next to the famous "Gas Prices Lever"...
Re: BRANDON'S FINANCIAL COLLAPSE (Score:2)
Presidents do have some influence with policy et al., but you are correct. The economy is larger than any one president (unless they start minting trillion dollar coins). No, this is the fault of bad economic policy over the course of decades. If anything, congress has much more blame here.
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Of course I don't actually blame Trump for these since that's a partisan hack way to think about things. The economy does not in fact simply operate at the behest of the President.
Unless the president brags about repealing the regulation that directly causes the bank failure...
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True but even then it's tricky to draw a direct line from A to B and even in this case it took years for the effect of that policy to cause significant effects.
Much like in 2008 the repeal of Glass-Steagall happened during Clinton's term but it took some odd 8 years for that to manifest into a crisis 2 Presidents later and really it was an act of Congress that undid it. It's all very messy and nuanced which means most people just want to glaze over it and blame whoever happens to sit in the chair at the ti
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https://www.senate.gov/legisla... [senate.gov]
I think it might be completely fair to cast dispersion on "Brandon's" leadship on this issue..
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For sure but at least he's admitted it...
https://archive.attn.com/stori... [attn.com]
Vice President Joe Biden revealed the vote he regretted most during a speech on the financial sector at Georgetown University Monday. He said his vote to repeal the Glass-Steagall Act in 1999 was "the worst vote I ever cast in my entire time in the U.S. Senate."
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Yes and he recently revealed how he came to support homosexual marriage rights, in high school; yet voted for DOMA while in the Senate too..
Biden says a lot of things. Either he is a habitual liar in the habit of saying whatever his current audience wants to hear (remember that was problem when the last guy to hold the office did it) or his consistently caves to outside pressure abandoning his convictions for politically expedient choices. Either way not exactly qualities we usually celebrate.
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Or a third option is that like any human his views change and grow with time, age and as culture and society changes and advances and we come to accept and regret our previous beliefs and take on new beliefs as we collect new experiences and information.
This is a thing that when it comes to people we personally know and ourselves it is valuable, redeemable and valuable. Yet when it comes to politicians we expect to always be right, never change your mind, never apologize for past wrongs.
It's crazy and it l
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Except that isn't what is happening in at least the DOMA example. Either Biden voted for DOMA when he did not believe in it or his 'evolution' on the issue came long after his time high school.
Why can't he simple be honest about it when he really reached these new conclusions. Or if you take the view he was supporting the wishes of his constituents why did not not continue to do that as VP - given how state ballot issues had gone, it wasn't a winning issue when Obergefell was handed down a decade ago..
Nop
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Well whats your end point here? We should have more honest and straightforward politicians? Great, I agree. Part of that is not holding them to somewhat ridiculous standards. So far what you've given me is one case of Biden possibly embellishing his own record probably more than he should and one case where he seemed to genuinely change his opinion. From my point of view whatever the origin of the opinion is his actions and policies on both of those reflect those current opinions, he is not saying one th
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I'm talking about this specific regulation that Trump wanted repealed.
Predicted or Shorted? (Score:2)
Let the bailouts begin! (Score:3)
And before folks start jumping in saying it's not a bailout, learn reading comprehension. Here are the two relevant parts:
The second part of the program is valuing bank's Treasuries and other securities at "par."
The Fed's rate hikes have undermined the value of the Treasury bonds that banks rely on as a critical source of capital (you can read more about that here). US banks are currently sitting on about $620 billion in unrealized losses in bonds, according to the FDIC - if any of them need access to a lot of cash quickly, they'd have to sell them at a loss - perhaps a substantial loss, like SVB did last week.
The BTLP aims to fix this problem by valuing the bonds used as loan collateral at "par." If a bank brings in a bond they purchased for $1,000 that's only worth $600 now, they'll still get $1,000 in cash.
The third part of the program is meant to instill confidence in the US banking system. These loans will be backed by $25 billion from the US Treasury. If a bank can't pay back its loan, the government will.
Note how the Fed will graciously give a bank the full face value of any bond that is sold at a loss under usual circumstances. In other words, the Fed is bailing out anyone who might otherwise suffer a loss. Must be nice to have friends in high places use someone else's money so you don't have to suffer the vagaries of capitalism.
The last part is even better. If the bank can't pay back any of the loans they take out under this program, the Treasury (i.e. the tax payers) get to foot the bill. Guess how many banks won't be able to pay back these loans?
It's time, long time, to let failed companies die. This endless cycle of bailouts using taxpayer money has to end. Let the free markets and capitalism work. We cannot, nor should not, keep these failed companies around.
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Re:Let the bailouts begin! (Score:5, Informative)
Out of assets exceeding 22,800 billion. [tradingeconomics.com] and compared to 279 billion [fdic.gov] in profits just for 2021.
I Like the Chalet Suisse (Score:2)
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Watching X-Files with no lights on, We're dans la maison
I hope the Smoking Man's in this one
stock markets (Score:2)
Banks should be DE-LISTED from stock markets to prevent fear/greed/BANK RUNS