Credit Suisse CEO Seeks to Calm as Default Swaps Near 2009 Level
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Re: Credit Suisse CEO Seeks to Calm as Default Swaps Near 2009 Level
#2Good. They were massively over leveraged.
I hope they don’t get bailed out by tax payers.
Any customers with accounts should be free to withdraw, but please don’t let the company operate if they were acting recklessly
Re: Credit Suisse CEO Seeks to Calm as Default Swaps Near 2009 Level
#3Good. They were massively over leveraged. I hope they don’t get bailed out by tax payers. Any customers with accounts should be free to withdraw, but please don’t let the company operate if they were acting recklessly
It's not about "hope", it's about what is possible/will happen, in this case I don't think there is the room for governments to manoeuver anymore, i.e. they can't bail out the banks without creating 10-50x worse of the exact inflation they're trying to fight. Some may argue these governments can simply continue the exercise of holding the private banks on their own balance sheets such as in the case of Japan owning most of the issued bonds, but that comes with its own set of consequences, Japan has been stuck in stagnation and a "silent depression" (to borrow Emil Kalinowski's term) for the last 30 years. I don't think that is going to wash this time.
Re: Credit Suisse CEO Seeks to Calm as Default Swaps Near 2009 Level
#4Good. They were massively over leveraged. I hope they don’t get bailed out by tax payers. Any customers with accounts should be free to withdraw, but please don’t let the company operate if they were acting recklessly
The problem is this could be a 'Lehman Brothers Moment": the financial system is deeply interconnected. Credit Suisse failing could cause a domino effect that will spread to other banks, creating a systemic risk to the entire economy.
Re: Credit Suisse CEO Seeks to Calm as Default Swaps Near 2009 Level
#5It still confused me that these haven't been properly regulated as insurance policies...
Re: Credit Suisse CEO Seeks to Calm as Default Swaps Near 2009 Level
#6Good. They were massively over leveraged. I hope they don’t get bailed out by tax payers. Any customers with accounts should be free to withdraw, but please don’t let the company operate if they were acting recklessly
It's not about "hope", it's about what is possible/will happen, in this case I don't think there is the room for governments to manoeuver anymore, i.e. they can't bail out the banks without creating 10-50x worse of the exact inflation they're trying to fight. Some may argue these governments can simply continue the exercise of holding the private banks on their own balance sheets such as in the case of Japan owning m…
That’s fair.
But I wouldn’t fully rule out a bail out…look at the crazy policy of UK cutting taxes recently
Re: Credit Suisse CEO Seeks to Calm as Default Swaps Near 2009 Level
#7Good. They were massively over leveraged. I hope they don’t get bailed out by tax payers. Any customers with accounts should be free to withdraw, but please don’t let the company operate if they were acting recklessly
The problem is this could be a 'Lehman Brothers Moment": the financial system is deeply interconnected. Credit Suisse failing could cause a domino effect that will spread to other banks, creating a systemic risk to the entire economy.
I'm seriously starting to think that we might need to accept the systematic risk realising and clean up the table after it crashes. Extremely ugly, but pushing it forward only makes it worse and I don't think there is fixing things anymore...
Re: Credit Suisse CEO Seeks to Calm as Default Swaps Near 2009 Level
#8No post body was provided.
Re: Credit Suisse CEO Seeks to Calm as Default Swaps Near 2009 Level
#9Good. They were massively over leveraged. I hope they don’t get bailed out by tax payers. Any customers with accounts should be free to withdraw, but please don’t let the company operate if they were acting recklessly
Given how Switzerland operates, it seems impossible to imagine to me that they wouldn't bail them out. Switzerland would be a developing country without their banking sector
Re: Credit Suisse CEO Seeks to Calm as Default Swaps Near 2009 Level
#10Good. They were massively over leveraged. I hope they don’t get bailed out by tax payers. Any customers with accounts should be free to withdraw, but please don’t let the company operate if they were acting recklessly
The problem is a problem of networks. Let's say CS are insolvent, if they do go bust, then the problem is you then need to figure out all the creditors and pay them in order. It's possible you could do that eventually, and everyone else is solvent. But firstly, lots of CS counter parties are going to collapse whilst you just figure out who you're going to pay. Secondly, it's quite likely that some of the counter parties you're defaulting against are therefore themselves insolvent. But thirdly, it doesn't matter, because the market is going to go mad dropping anyone who could possibly be a counter party to CS (because CS can't pay), the result being a further collapse and contagion to other banks. So sure, you can say that customers should be allowed to withdraw, but that's not a practical solution. You're saying "I think the first people in the run on the bank should get paid".
The real problem is that this became clear in 2007, and nothing was really done to fix it.