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

bloomberg.com

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

#51

Post by lowkey »

lowkey wrote: post #33
r_hoods_ghost wrote: post #8

Earlier quoted context omitted.

A central authority doesn't control the size of the money supply in our current economy either, as the vast majority of money is created by private banks and other institutions issuing loans.

Those “private banks” are at least in theory heavily regulated by the central bank. The central bank controls interest rates and thereby the cost of money. They control the amount of base money in the system and they control the reserve ratio of “private banks” thereby controlling the amount of leverage banks can apply to deposits. A central bank most certainly controls every aspect of the money supply.

Notably, the Fed set the reserve ratio for banks to zero percent in 2020 which absolutely contributed to this latest banking crisis. I am a bit surprised this hasn’t been mentioned as a contributing risk in the media, well not that surprised. [0]

[0] https://www.federalreserve.gov/monetarypolicy/reservereq.htm

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

#52

Post by ben_w »

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.

I first heard about it at $250/btc, and I didn't invest then for the same reason I think it's bad now: the hype around it is exactly the same as every bubble I've heard about in history lessons, including the one in house prices and subprime mortgages leading up to the 2007 global financial crisis.

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

#53

Post by B1FF_PSUVM »

aaomidi wrote: post #47
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…

We’d effectively be replacing a shit system with an even worse one. We really need to crack down on amassing wealth.

No pyramids, only huts.

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

#54

Post by rossdavidh »

paganel wrote: post #45
nemo44x wrote: post #24

Earlier quoted context omitted.

Yes, it is now the 5th failed bank in the last week.

I wonder how Deutsche is now feeling. For all its past mishaps I never would have imagined CS actually going down, or being allowed to go down in such a manner. The same discourse was being applied to Deutsche as recently as last year, if I'm not mistaken, hence my curiosity.

I'm not all that surprised. CS didn't make one mistake, not even one really big mistake; it was involved in scandal after misstep after scandal after embarrassment, for a decade. It takes a lot to bring down an institution this old and big, but the CS management (mostly former) had what it took.

I think part of why the Swiss gov't wanted to do it this way, is that it was clear CS was going to continue to be a problem, if it was rescued in a way that kept it an independent bank. Not that the current top mgmt is really responsible for its current state, but there had to be a fair amount of institutional/cultural issues, for that many problems to hit the same bank, year after year.

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

#55

Post by ben_w »

sebzim4500 wrote: post #27
yazaddaruvala wrote: post #21

Earlier quoted context omitted.

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.

Sure they do, they can just make a new cryptocurrency, say BritCoin, and mandate it's use for paying taxes and getting paid and receiving pension.

You know, like they already do with this whole "fiat money" thing.

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

#56

Post by rossdavidh »

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

I don't think anyone (that I ever talked to about it) wondered why one would be dissatisfied with the traditional banking system. The skepticism about Bitcoin is that it might be even worse. Events of the past year in the cryptocurrency space have not been all that reassuring.

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

#57

Post by HashBasher »

Nasrudith wrote: post #37
HashBasher wrote: post #31

Earlier quoted context omitted.

Bitcoin is not deflationary. It just has a fixed supply. People who held bitcoin from early on supported the growth of bitcoin by holding up it's value through the wild gut-wrenching rollercoaster ride that it has gone through. They should be rewarded for the risk they're taking on, having invested significant amount of their net worth in the face of harsh criticism such as yours. Bitcoin and "crypto" are completely…

A fixed supply with growing markets is deflationary. Cryptocurrency advocates wrongly insist thid is a good thing out of motivated reasoning.

When describing the currency itself, bitcoin is strictly not deflationary as the supply of it is never reduced, it's actually inflationary for the next hundred years or so until the full 21 million is mined. It might create a deflationary economy in that everything gets cheaper over time, priced in bitcoin. What is so wrong with that? Why can't you expect to purchase more goods in the future than today with the same amount of bitcoin?

There never has been a fixed supply world reserve asset, even gold has always been inflationary. I think it will usher in a "Golden" age for humanity where goods and services consistently increase in quality and value, while constantly reducing in cost. I'm very excited to step into the bold orange world.

P.S. I'm a bitcoiner not a cryptocurrency advocate.

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

#58

Post by ur-whale »

> "It's stunning and hard to understand how they can reverse the hierarchy between AT1 holders and shareholders," said Jerome Legras

Finance dude has a hard time understanding the concept of a sovereign government.

Makes you wonder what other first principles the world operates on he has a hard time understanding.

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

#59

Post by HashBasher »

lowkey wrote: post #46
HashBasher wrote: post #31

Earlier quoted context omitted.

Bitcoin is not deflationary. It just has a fixed supply. People who held bitcoin from early on supported the growth of bitcoin by holding up it's value through the wild gut-wrenching rollercoaster ride that it has gone through. They should be rewarded for the risk they're taking on, having invested significant amount of their net worth in the face of harsh criticism such as yours. Bitcoin and "crypto" are completely…

To nitpick, Bitcoin doesn’t currently have a fixed supply. It has a supply cap that takes effect sometime in 2140. Bitcoin currently inflates by 6.25 BTC every ~10 minutes. For the record, I agree that early Bitcoiners took an incredible risk on a highly volatile asset and they should be rewarded for such. As I see it, this latest banking crisis is showing the world that there is more than one type of risk. Bitcoin h…

Agreed, self-custodied bitcoin is the best way to mitigate third party risk. If some of these start-ups held a small amount of their reserves in bitcoin, they would not have had to panic to make payroll.

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

#60

Post by HashBasher »

Yoric wrote: post #16
georgeplusplus wrote: post #10

Earlier quoted context omitted.

The problems with the gold standard is we had one and everyone lied about how much gold they had, Causing the lost decade in the 70s/80s. Maybe BRICS will propose a solution that uses Blockchain to verify gold ledgers.

How could blockchain verify anything physical?

It can't.
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