6 ms·
But will it end the bank runs or will the panic just move on to the next bank? For those who lived 2008, it feels so deja vu.
by cm2187 4y ago
But will it end the bank runs or will the panic just move on to the next bank? For those who lived 2008, it feels so deja vu.
- AnimalMuppet 4y agoNo, to me it doesn't feel like 2008. It's kind of in that direction, but this is nowhere near as bad. In 2008, I was on a hair trigger. Then, I was prepared to take emergency action within 24 hours. This time around, I'm not there... yet.
- deleted 4y ago[deleted]
- Zetice 4y agoBank runs are psychological in modern times; my next worry is that the news machine has begun to nibble on midsize banks, so that may be the next victim that gets devoured for content.
- cm2187 4y agoThere are a few other large banks that have also their lot of challenges. At this stage, as you say, it is an irrational panic. CS was well capitalised by any modern standard and it would have required massive losses before creditors and depositors were seriously exposed. But no bank can resist a large enough bank run.
- Arnt 4y agoFWIW almost none of the $100B that flowed out was insured.
- fsckboy 4y agothat's interesting, and exactly what regulators should expect. in a certain sense, the crisis starts when the bank starts taking in large uninsured deposits
- Arnt 4y agoTo be pedantic, this was managed money, not deposited. You can go to CS and say "Here, I have a million, please buy and sell some shares for me so my children will have two million each", or "here, we sell much in the runup to Christmas but our costs are evenly spread over the year, please manage our spare cash so we'll earn something when we can".
- mschuster91 4y agoCS was gobbled up in a truckload of scandals for years now; I'd guess only Deutsche Bank surpasses them. It is not surprising at all that all the mistrust finally caught up with CS.
- dwater 4y agoAre you referring to Credit Suisse as a victim of the media and not their own constant institutional failures? Ditto Silicon Valley Bank.
- blibble 4y agoCS is not middle size, it's one of the big ones ("globally systemically important")
- psychphysic 4y agoIt was a dumpster fire of a business however. And confidence has been lacking for much longer than this recent crisis.
- EFreethought 4y agoIt depends on who winds up running CS. Officially, Boeing bought McDonnell-Douglas, but in the end the engineers at Boeing got pushed out and the bean counters at M-D were in charge and ran it to the ground. The question is will prudent people run the new UBS? Or the same sort of people who got CS in the trouble that it is in?
- psychphysic 4y agoUBS has been very clear that they intend to gut the investment banking arm and continue the universal banking arm. This should prove a cash cow for UBS so long as they ruthlessly trim CS. The final deal is a bit different from OP 3.3bn, 100bn liquidity and 8bn indemnity from losses (more than market value of CS Friday!)
- Zetice 4y ago"Midsize U.S. banks reportedly ask the FDIC to insure all deposits for two years" [0] The beast must be fed. [0] https://www.cnbc.com/2023/03/18/midsize-us-banks-reportedly-ask-the-fdic-to-insure-all-deposits-for-two-years.html https://www.cnbc.com/2023/03/18/midsize-us-banks-reportedly-...
- fsckboy 4y agoyour warning makes me think "wait till a bank and a media company start relying on the same AI for advice" - chatGPT, for the lulz of course, employees of various companies in a place like NYC socialize together after work (in NY, everybody goes out after work on the regular, who wants to go home to a teeny airshaft apartment?) so they're basically engaging in a large game of telephone about what happened each day, might have the same effect.
- nonethewiser 4y agoAnd if that’s the dynamic, you can be sure foreign interests are hard at work to exploit it.
- Arnt 4y agoCredit Suisse was a bit special. In the words of someone who's worked at several of the large banks there, "Credit Suisse was always a bit more more aggressive about risks". If you mean whether the panic will move on to the next bank with a similar reputation, then…
- kreeben 4y ago>> was always a bit more more aggressive about risks Isn't there always a handful of banks that are like that and isn't there always a handful of other banks that are invested? And isn't there always another set of banks that are invested in them? But is there really no chance of a devastating, cascading event? Should we really not panic? The only thing that holds banking together, is it that we don't panic? Because if so, then...
- mardifoufs 4y agoMaybe, but credit suisse was a mess even back in the "good days", since at least 2018. They went from blunder to blunder, even when other banks were doing just fine. The only other bank I can think of that has struggled as much is probably Deutsche Bank. In comparison, most other banks are very well capitalized even in the current situation.
- somewhereoutth 4y agoI learned a new (financial) word thanks to all this: idiosyncratic - CS's case is particularly idiosyncratic, apparently.
- silentsea90 4y agoBear Stearns collapsed on March 16, 2008. Lehman Brothers on Sept 15, 2008. It took 6 months from the first major one to widespread carnage and bailouts. I can't tell what will be but I wouldn't assume we're out of the woods by any measure. The first dominos to fall are the ones holding most risk (SBV, CS), but the "safe" ones aren't really safe either. I wonder what the Fed will do next i.e. conform to market expectations of a cooling off of QT and hikes and let inflation possibly rise or continue at 6%, or be resolute in raising rates to control inflation at the risk of a systemic failure.
- mschuster91 4y agoWhat most people don't account for is that we're not in a classical inflation scenario - we're, at least fundamentally, in an energy cost inflation scenario where the countries with more than enough of oil and gas to spare jack up the prices just because they can. And unfortunately, on top of that comes profiteering. The price hikes of everything that went far and beyond reasonable increases due to rising energy costs are insane - and outside of Spain which has introduced serious price controls and other counter-inflationary measures and Hungary where Orban misdirects EU funds into bribing his voters, no major Western government is doing anything about that. At least the French are bringing out the pitchforks.
- silentsea90 4y agoMarkets don't arbitrarily inflate prices across asset classes (stocks, crypto, commodities, real estate). Classifying widespread worldwide inflation as energy cost inflation OR profiteering is (subjectively) an excuse for policy failure. Single family home owners in San Diego don't collude with condo owners in Vietnam. They do respond to bidders outbidding each other, flush with cash from asset values rising as a consequence of money printing worldwide. The core reason is money printing. The rest is noise. See charts for Fed balance sheet, M1 and M2 money supply for 10 years worth of printing in a year. The Cantillon effect makes people close to the money spigot richer at the expense of the masses. The Fed knows it too, else QT and interest rate hikes wouldn't be used as weapons against inflation. Political messaging is oriented around not taking responsibility and blaming the pandemic, supply chain issues, Ukraine war etc. These reasons do play a role to be clear, but not to the extent that $ printing does.
- gWPVhyxPHqvk 4y agoCommercial real estate is next
- baremetal 4y agoI wouldn't want to be holding commercial real-estate REITs in this environment.