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Credit Suisse’s $17B of Risky Bonds Are Now Worthless

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Re: Credit Suisse’s $17B of Risky Bonds Are Now Worthless

#21

Post by yazaddaruvala »

pfannkuchen wrote: post #7
tuyguntn wrote: post #6

Earlier quoted context omitted.

issues are coming up mostly because of interest based economy and multitude of instruments built on top of it. IMHO, even if whole banking system will be replaced with bitcoin, interest based economy will be built on top of it and same instruments will be built with similar level of issues

The difference is that a central authority doesn’t control the size of the bitcoin supply. It wouldn’t be a utopia, it would only fix a certain class of problems we have today.

If the US gov collected taxes in BTC and funded its budget in BTC and borrowed its loans in BTC and paid that interest in BTC,

Then the US gov would have the ability to control the circulating supply of BTC.

Think of it this way, BTC caps out, then the US gov HODLed 50% of all BTC for an uncertain amount of time (call it a decade). The rest of the world starts to take risks accordingly and make investment strategies based on “no possible inflation, because BTC”.

After a decade+ of BTC HODL policy the US gov decides to release 5% it wouldn’t be “printing BTC” but it would still certainly be “quantitative easing” and the extra supply of BTC would result in very much the same inflation as we see today.

There is no scenario where the largest governments of the world cannot directly control the supply of circulating money! (Which is the only money that really matters).

Re: Credit Suisse’s $17B of Risky Bonds Are Now Worthless

#22

Post by yevpats »

qwytw wrote: post #12
codetrotter wrote: post #3

And they wonder why we want to replace the traditional banking system. Here’s a hint: it’s not got anything to do with either “metaverse” bs nor with silly “NFT” JPEGs. Read the original Bitcoin whitepaper. https://bitcoin.org/bitcoin.pdf

Using an ultra deflationary token like bitcoin as a global currency would literally be the most stupid thing that ever happened in human history. Basically people who held significant amounts of bitcoin from early on would become billionaires (if not trillionaires...) by having provided zero value to the economy. As awful and unfair what we have currently is it's still several magnitudes superior in almost any concei…

I don't have a side in the whole crypto vs fiat war but I do wonder why HN is so anti-crypto (maybe it's just classic position speak). Re the "people who held significant amounts of bitcoin from early on would become billionaires by having provided zero value" - isn't that true to people who held Google stock very early on? what was their value?

Also, I would say inflationary token vs deflationary token is not clear what is better because it is actually highly depends on the time in history. lot's of things changed in the last 100 years and we might be entering a world where there is no need for inflationary token - For example let's say the earth is over-populated and there is going to be a decline in birth and total population - this on it's can mean we don't necessarily need an inflationary token as we don't need to build more infrastructure, buy more things and so on....

Re: Credit Suisse’s $17B of Risky Bonds Are Now Worthless

#23

Post by cm2187 »

zhoutong wrote: post #4

I was initially surprised about this because AT1 notes are supposed to rank higher than equity. It seems that almost no one saw this coming (CS AT1 bonds traded higher this weekend before the write-down announcement), and traders presumed that bondholders should be made whole if equity holders get something. However then I looked at the information memorandum of these AT1 bonds (e.g. https://www.credit-suisse.com/med…

Except that the CET1 is above 14%. I think what happened wasn't related the coco trigger but a bailin, i.e. the regulator forcing losses on bond holders to create equity. So the terms of the coco feature aren't really relevant.

Re: Credit Suisse’s $17B of Risky Bonds Are Now Worthless

#25

Post by ksenzee »

dragonwriter wrote: post #17
ClumsyPilot wrote: post #11

Earlier quoted context omitted.

If the national goverbment loses control of thr moneu supply you will have auch a total disaster that current issues will look rosy. Just look at what happened to Greece, they cant control their fiscal policy and they have been stuck in the mud for 20 years. The same will happen to the world as a whole

> Just look at what happened to Greece, they cant control their fiscal policy Who do you think controls Greece’s fiscal policy? (Before you answer, consider, what does “fiscal policy” refer to, and how is it different from “monetary policy”?)

Am I the only one who finds the Socratic method ill-suited to forums?

Re: Credit Suisse’s $17B of Risky Bonds Are Now Worthless

#26

Post by indymike »

yevpats wrote: post #22
qwytw wrote: post #12

Earlier quoted context omitted.

Using an ultra deflationary token like bitcoin as a global currency would literally be the most stupid thing that ever happened in human history. Basically people who held significant amounts of bitcoin from early on would become billionaires (if not trillionaires...) by having provided zero value to the economy. As awful and unfair what we have currently is it's still several magnitudes superior in almost any concei…

I don't have a side in the whole crypto vs fiat war but I do wonder why HN is so anti-crypto (maybe it's just classic position speak). Re the "people who held significant amounts of bitcoin from early on would become billionaires by having provided zero value" - isn't that true to people who held Google stock very early on? what was their value? Also, I would say inflationary token vs deflationary token is not clear…

> I do wonder why HN is so anti-crypto

Some of it is regret from selling early (I'd be a billionaire... if I had held), some of it is FOMO, some of it is that crypto is used by criminals (see bitlocker hacks), some of it is seeing people loose everything due to security breaches, and some of it is the attitude of proponents that act like all of the above is an anomaly.

Re: Credit Suisse’s $17B of Risky Bonds Are Now Worthless

#27

Post by sebzim4500 »

yazaddaruvala wrote: post #21
pfannkuchen wrote: post #7

Earlier quoted context omitted.

The difference is that a central authority doesn’t control the size of the bitcoin supply. It wouldn’t be a utopia, it would only fix a certain class of problems we have today.

If the US gov collected taxes in BTC and funded its budget in BTC and borrowed its loans in BTC and paid that interest in BTC, Then the US gov would have the ability to control the circulating supply of BTC. Think of it this way, BTC caps out, then the US gov HODLed 50% of all BTC for an uncertain amount of time (call it a decade). The rest of the world starts to take risks accordingly and make investment strategies…

Governments would have some control, much like large holders of an asset have a significant impact on its value by e.g. selling it all at once (see binance selling their FTT all at once). What they would not have is the ability to double the supply of the currency in 2 years for no apparent reason.

Re: Credit Suisse’s $17B of Risky Bonds Are Now Worthless

#28

Post by kazen44 »

georgeplusplus wrote: post #15
pfannkuchen wrote: post #7

Earlier quoted context omitted.

The difference is that a central authority doesn’t control the size of the bitcoin supply. It wouldn’t be a utopia, it would only fix a certain class of problems we have today.

You wouldn't want a central authority to control the size of your money supply this would certainly lead to abuse oppression and a dystopia.

but in the end, an authority (usually centralised) does actually control the money supply.

This is simply the case because our economic system is based around the idea that someone will punish those who do not play by the rules of this system, otherwise we would not even have any kind of financial system to speak off.

Money is only worth something because of the rule of law, and the rule of law is only worth something because (central) authorities have the means the enforce the law (usually thanks to the monopoly on violence/imprisonment).

Re: Credit Suisse’s $17B of Risky Bonds Are Now Worthless

#29

Post by testfoobar »

zhoutong wrote: post #4

I was initially surprised about this because AT1 notes are supposed to rank higher than equity. It seems that almost no one saw this coming (CS AT1 bonds traded higher this weekend before the write-down announcement), and traders presumed that bondholders should be made whole if equity holders get something. However then I looked at the information memorandum of these AT1 bonds (e.g. https://www.credit-suisse.com/med…

Between this and Janet Yellen's shaky answer to the Senate regarding deposit flight from community banks on Thursday, I think regulators are prolonging this crisis. Each solution seems designed to address the localized problem but does not consider systemic effects.

1: With this weekends actions in Europe, how will the AT1 bond market react tomorrow?

2: With Yellen's uninspiring answer on Thursday regarding deposits in mid sized banks, what will depositors / bondholders / shareholders do?

Regulators need to address the system as a whole.

Yellen:

https://www.youtube.com/watch?v=Bcvl104tyRY

https://www.cnbc.com/2023/03/16/svb-signature-bank-failures-...

Re: Credit Suisse’s $17B of Risky Bonds Are Now Worthless

#30

Post by KarlKemp »

TheOtherHobbes wrote: post #14

If the casino always wins, why is it so hard to identify who owns this[1] casino? [1] Not CS, but the entire "serious" financial system.

Well don’t keep us guessing! What’s the secret cabal owning the financial system, according to your research, and how do they manage to own both the „serious“ business and the funny pages?
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