I see my taxes will be put to good use this year.
Credit Suisse CEO Seeks to Calm as Default Swaps Near 2009 Level
11–20 of 29 posts
Re: Credit Suisse CEO Seeks to Calm as Default Swaps Near 2009 Level
#12Good. 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…
> Japan has been stuck in stagnation and a "silent depression"
I think that's what's in store for us here in Europe anyway.
We have no reasonable young workforce anymore (in term of numbers, that is), the competitive advantage provided by cheap Russian energy is gone forever, we didn't really get on the IT bandwagon, or, more exactly we slipped off it by the late 2000s (I'd say), the euro is not the world reserve currency and I could add some more. I honestly fail to see how Europe can avoid Japan's fate when it comes to its economy.
Re: Credit Suisse CEO Seeks to Calm as Default Swaps Near 2009 Level
#13Re: Credit Suisse CEO Seeks to Calm as Default Swaps Near 2009 Level
#14The moment the CEO is saying things like that you know the FDIC or equivalent is busting in the back door.
Re: Credit Suisse CEO Seeks to Calm as Default Swaps Near 2009 Level
#15The title on HN is missing a very important word that makes it unintelligible:
> Credit Suisse CEO Seeks to Calm [MARKETS] as Default Swaps Near 2009 Level
Re: Credit Suisse CEO Seeks to Calm as Default Swaps Near 2009 Level
#16The title on HN is missing a very important word that makes it unintelligible: > Credit Suisse CEO Seeks to Calm [MARKETS] as Default Swaps Near 2009 Level
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Re: Credit Suisse CEO Seeks to Calm as Default Swaps Near 2009 Level
#17It still confused me that these haven't been properly regulated as insurance policies...
What do you mean by "these"? The credit default swaps? They are derivatives and they are subject to derivatives regulations, such as [1]. The Basel document [2] is a bit more readable.
In particular, the two counterparties that enter a CDS contract will need to post 2 types of margin, variation margin and initial margin. Variation margin has exactly the level that if one of the counterparties defaults, and the market does not move, the other counterparty can replace the CDS contract at no loss. The initial margin is designed to cover the replacement cost even if the market moves quite violently.
Here's a tweet [3] from March this year that states that Initial Margin across the industry has topped one trillion dollars.
If this is not to your liking, what type of regulation do you have in mind?
[1] https://www.federalregister.gov/documents/2021/01/05/2020-27...
[2] https://www.bis.org/bcbs/publ/d499.htm
[3] https://twitter.com/clarusft/status/1529413987158396933?ref_...
Re: Credit Suisse CEO Seeks to Calm as Default Swaps Near 2009 Level
#18Earlier quoted context omitted.
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…
> Japan has been stuck in stagnation and a "silent depression" I think that's what's in store for us here in Europe anyway. We have no reasonable young workforce anymore (in term of numbers, that is), the competitive advantage provided by cheap Russian energy is gone forever, we didn't really get on the IT bandwagon, or, more exactly we slipped off it by the late 2000s (I'd say), the euro is not the world reserve cur…
Hasn’t Europe already experienced its lost decade?
Re: Credit Suisse CEO Seeks to Calm as Default Swaps Near 2009 Level
#19Good. 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 part…
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Re: Credit Suisse CEO Seeks to Calm as Default Swaps Near 2009 Level
#20Good. 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 tired of outsized banker bonuses and socialized losses. Cleaning out the disease allows for new owners to step in. Take out some cash money for some bills, and let's get started with the cleanup.