Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

bloomberg.com

Post reply on HN
Print view View original

91–100 of 120 posts

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

#91

Post by qwytw »

ben_w wrote: post #43
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…

> 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.

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

#92

Post by qwytw »

HashBasher wrote: post #57
Nasrudith wrote: post #37

Earlier quoted context omitted.

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…

> What is so wrong with that?

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%* what do you think would happen? Well take the Great Depression and multiple it by N (no idea, I'd assume N >= 20 though).

Sound great?

How does close to zero capital investment into the economy sound? No loans, no VCs, no new factories/offices/shops/etc. no new anything... Investing into anything would be both very risky and likely still have a negative return compared to just hoarding money.

> I think it will usher in a "Golden" age

I think it would usher societal collapse and the end of human civilization (I seriously do.. of course I'm close to 100% certain that it can never happen, then again I'm not great at predicting the future).

*I would assume the numbers would be higher with btc.. but whatever

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

#93

Post by qwytw »

csomar wrote: post #79
Nasrudith wrote: post #37

Earlier quoted context omitted.

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

This has little effects. Inflationary systems where promoted by governments so that they can inflate their debt away and print money as needed. You can have a deflationary system and the effects will be the same. People will always be looking for a stable store of value and a yield with variable risk. Instead of increasing/decreasing the money supply through interest rate, the price of Bitcoin goes up and down. Solvi…

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 btc replaces $/€/etc.

> debt away and print money as needed.

Which on balance has been a positive development compared to the system that preceded this (permanent boom and bust cycles prior to 1930 accompanied by extreme price swings in either direction)

Look at the 'USD inflation since 1800' chart. Would you really prefer the worth of your saving to swing up and down by 10% or more every few years compared to the relatively stable inflation after 1980s?

https://www.officialdata.org/us/inflation/1800?amount=1#:~:t....

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

#94

Post by qwytw »

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…

> is not clear what is better

Yes it is.

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?

> why HN is so anti-crypto

Because it would not work as a replacement for $/€/etc. due to very objective and clear reasons anyone with an even cursory understanding of modern economics would understand.

> let's say the earth is over-populated

Let's say a nuclear holocaust occurs and everybody starts using bottle-caps as currency. Of course you're suggesting we should start using bottle caps (a close 100% accurate physical equivalent of bitcoin in post-apocalyptic society which posses no mean to make more caps) before the nuclear holocaust for some reason...

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

#95

Post by qwytw »

DethNinja wrote: post #18
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…

How do you know they provide negative value to economy? Perhaps they would invest their bitcoins far better than the current status quo and create a star-trek style post scarcity economy.

> How do you know they provide negative value to economy?

Very basic understanding of modern economics and monetary systems would be more than enough to figure that out.

> post scarcity economy

In fact it would maximize scarcity (imagine the Fed hiking interest rates to + 20% while inflation becomes negative, say - 20%. What do you think would happen?)

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

#96

Post by csomar »

qwytw wrote: post #93
csomar wrote: post #79

Earlier quoted context omitted.

This has little effects. Inflationary systems where promoted by governments so that they can inflate their debt away and print money as needed. You can have a deflationary system and the effects will be the same. People will always be looking for a stable store of value and a yield with variable risk. Instead of increasing/decreasing the money supply through interest rate, the price of Bitcoin goes up and down. Solvi…

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 there is a certain demand or necessity, people can build on top of it.

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

#97

Post by unmole »

ur-whale wrote: post #58

> "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.

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

I don't understand what finance dude is saying. AT1 bonds can be written off before equity. It has happened before, albeit at a much smaller scale.

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

#98

Post by shjake »

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…

Is there though? I mean now all deposits seem to be covered 100% with no limit. That makes the less risky than they were 2 weeks ago, doesn’t it?

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

#99

Post by personomas »

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.

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

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

#100

Post by personomas »

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…

Great analysis man
Post reply on HN