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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

#101

Post by qwytw »

csomar wrote: post #96
qwytw wrote: post #93

Earlier quoted context omitted.

Imagine an economy with both ultra high interest rates and very high deflation at the same time. Let's say CPI growth somehow falls to - 20% and the Fed decides to hike interest rates to + 20%* (and has no way to tweak or stop this policy anymore) what do you think would happen? (hint: the Great Depression would just be viewed as a mild temporary slowdown in relation) Something like that is really not avoidable if bt…

You got it wrong. The interest rate is used to manage the supply based on the rate/velocity of the economy. Not the other way around. If people want to build businesses, get married, have kids, build products, buy/sell, speculate, etc... having an interest rate, bitcoin, paper or gold, it simply doesn't matter. Places where the financial system is broken will use alternative means of payments. Bitcoin is flexible. If…

> If people want to build businesses, get married, have kids, build products, buy/sell, speculate, etc

Yes. 2-10000x (or whatever, depending on how rich you are) less than they do now. If hoarding money always provides a better return than investing or borrowing it why do anything else besides spending the bare minimum?

> Bitcoin is flexible

How exactly? AFAIK it has close to zero flexibility compared to Fiat money.

I'm sorry but overall I really don't understand what are you trying to say. Supply of money in relation to economic growth matters and it matters a lot. It's not just about 'means of payments' that is the easiest part.

> If there is a certain demand or necessity

Well there is no way to increase the supply of bitcoin? Is there?

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

#102

Post by [deleted] »

qwytw wrote: post #91
ben_w wrote: post #43

Earlier quoted context omitted.

> Bitcoin is not deflationary. It just has a fixed supply. Theoretically, yes, albeit with spherical cows in a vacuum models of how economies actually function. Practically, keys get lost, so it's deflationary even if it totally replaced existing currency and everything else became steady state. > They should be rewarded for the risk they're taking on, having invested significant amount of their net worth in the face…

If you assume the economy is non stagnant it's always deflationary from the CPI perspective.

[deleted]

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

#103

Post by Yoric »

georgeplusplus wrote: post #66
Yoric wrote: post #16

Earlier quoted context omitted.

How could blockchain verify anything physical?

I'm not talking about physical verification but the idea that having a public ledger of each countries gold would add transparency. Whenever gold is moved it would be reflected on the ledger for all other central banks to see. The problem with the gold standard era was countries, particularly the USA, claiming it had a lot more gold than it did and you just had to take them at their word. It wasn't until Charles de G…

Not sure what a ledger would change to the problem.

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

#104

Post by CapstanRoller »

georgeplusplus wrote: post #66
Yoric wrote: post #16

Earlier quoted context omitted.

How could blockchain verify anything physical?

I'm not talking about physical verification but the idea that having a public ledger of each countries gold would add transparency. Whenever gold is moved it would be reflected on the ledger for all other central banks to see. The problem with the gold standard era was countries, particularly the USA, claiming it had a lot more gold than it did and you just had to take them at their word. It wasn't until Charles de G…

Ledgers do not necessarily add transparency, because it's easy to document all sorts of fictitious transactions.

What you really want are audits.

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

#105

Post by CapstanRoller »

personomas wrote: post #99
127 wrote: post #65

Earlier quoted context omitted.

US federal historical government spending is an exponential growth graph. As are unfunded liabilities that politicians at some point promised to pay people. EU seems pretty much the same. More gov spending, more social spending. Repeat ad infinitum. Of course, all of this wealth has to come from some place. Not the rich, because they have enough influence and connections to avoid it.

I totally agree with you. The socialism is unstainable. Especially as the world's population gets older and older. Socialism is not the way

There is zero socialism happening. Socialism is not "when the government does Stuff"

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

#106

Post by cm2187 »

zhoutong wrote: post #49
cm2187 wrote: post #23

Earlier quoted context omitted.

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.

Upon further reading I found that the Viability Event (which is also a Write-down Event) is probably the applicable one in this case: > (b) customary measures to improve CSG’s capital adequacy being at the time inadequate or unfeasible, CSG has received an irrevocable commitment of extraordinary support from the Public Sector (beyond customary transactions and arrangements in the ordinary course) that has, or imminen…

In the end bailin is a statutory action, so you really have to look at the terms in the law not in the doc.

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

#107

Post by shjake »

peyton wrote: post #36
indymike wrote: post #26

Earlier quoted context omitted.

> 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.

It does make for strange bedfellows. Weird to see so much support for the traditional banking system and antipathy towards people advancing an alternative. Credit Suisse has a rap sheet a mile long.

The fact that the current system has huge flaws doesn’t mean that any random alternative is superior to it. IMHO the current monetary/financial system is superior to everything that has ever been tried.

While it might be worth having a discussion about crypto using btc as a currency would be the digital equivalent of bottle caps in a post apocalyptic society. Dogecoin would make a better currency..

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

#108

Post by adhesive_wombat »

georgeplusplus wrote: post #67
adhesive_wombat wrote: post #13

Earlier quoted context omitted.

The ledger is verified but how do you know the gold is really there?

You ask for the counterparty to send it. Historically, the dollar was the ledger and redeemable in gold. Which the USA printed a lot more than it said it did. A ledger would stop this kind of abuse.

That would only prove that there's enough gold in a pile to send you some. It doesn't prove the entire ledger is accurate.

If you're dealing with physical goods, there's always an analogue hole unless there's a (usually centralised) authority standing by to penalise attempts to subvert the system.

One can conceive of "for-now-unforgeable" NFT-isation of physical items, perhaps based on random physical phenomena like metal grain patterns, with the fingerprints stored in the blockchain. But this would be expensive and is a disadvantage compared to the "gold in a pile at least as big as we told you" system. And it's still open to kinds of abuse: e.g. you can secretly melt some coins down and recast them into new ones, as long as you can avoid anyone asking to see the "burned" ones, and you can also file fake fingerprints for coins that don't exist, that no one really owns, in the ledger so they won't need to be proven, but they inflate your ledger's value.

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

#109

Post by euroderf »

127 wrote: post #65
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.

US federal historical government spending is an exponential growth graph. As are unfunded liabilities that politicians at some point promised to pay people. EU seems pretty much the same. More gov spending, more social spending. Repeat ad infinitum. Of course, all of this wealth has to come from some place. Not the rich, because they have enough influence and connections to avoid it.

Related: "The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money." -Alexis de Tocqueville

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

#110

Post by ben_w »

yazaddaruvala wrote: post #88
ChainOfFools wrote: post #86

Earlier quoted context omitted.

This is one of the reasons for the schizophrenic posture of Bitcoin maxi's toward government adoption - thus Central Bank adoption - of Bitcoin as legal tender, a la El salvador. I mean apart from the fact that this happening on a global scale would make them stupendously wealthy. But from a pragmatic standpoint, they also know that one advantage Bitcoin does not have, that fiat does, is an armed gang with orders to…

> one advantage Bitcoin does not have, that fiat does, is an armed gang with orders to enforce its use by all citizens. Nail on the head! The only difference between "tokens" and "currency" is an army and taxes!

Is even that a difference?

Countries don't all use their own currencies (and I don't just mean the Euro zone, this also happens with USD and used to happen with GBP), but they do all have their own taxes. Some countries don't have any armed forces unless you count the police. And the force of law is enough of a threat to get people to hand over crypto keys when they're physically in the relevant jurisdictions and the law enforcement makes that demand.

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