New Financial Crisis

bluesince76 said:
If I was, I wouldn't have been saying it without a whole load of caveats. I'm just some bloke down the virtual pub, so follow at your own risk.

But over a long enough period, the market has never not gone up in the past. Think it was Morgan Housel who said if you only checked your investments every 12 years, it would never have been down (assuming investing in global passive funds and not a single share/crypto etc).
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I’ve loaded in this year using the 3 year count back to top up to maximum contribution. Sadly currently my growth is the the tax relief. Fingers crossed for lift off
 
blueinsa said:
Credit Suisse about to go belly up?
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I work for CS in their Zurich HQ..They have trillions in assets but all this bad publicity is like a self fulfilling prophecy..Everyone is being spooked and pulling out their money, all at once this causes liquidity issues which then causes it to have to stop withdrawals, which then causes panic like a snowball effect, as they cannot sell assets (like real estate or another part of the company) as quick as Dave, George and Mildred want their nest eggs. The bank is too big to fail so won't be allowed too, but all these whispers are causing the problems.
 
Gaz in Zurich said:
I work for CS in their Zurich HQ..They have trillions in assets but all this bad publicity is like a self fulfilling prophecy..Everyone is being spooked and pulling out their money, all at once this causes liquidity issues which then causes it to have to stop withdrawals, which then causes panic like a snowball effect, as they cannot sell assets (like real estate or another part of the company) as quick as Dave, George and Mildred want their nest eggs. The bank is too big to fail so won't be allowed too, but all these whispers are causing the problems.
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The problem of social media
 
Gaz in Zurich said:
I work for CS in their Zurich HQ..They have trillions in assets but all this bad publicity is like a self fulfilling prophecy..Everyone is being spooked and pulling out their money, all at once this causes liquidity issues which then causes it to have to stop withdrawals, which then causes panic like a snowball effect, as they cannot sell assets (like real estate or another part of the company) as quick as Dave, George and Mildred want their nest eggs. The bank is too big to fail so won't be allowed too, but all these whispers are causing the problems.
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That's the problem. You get conspiracy nuts who see fractional reserve banking as some some sort of Judaeo-Masonic plot to take over the world and reduce us to serfs but under normal circumstances day-to-day bank withdrawals don't matter and, without it, investment would be massively smaller if banks had to hold most or all of their deposits as easily liquid assets.

But if a few people get the idea that a bank is in trouble, they induce a run on that bank.

I saw something that pointed out that even if SVB sold its assets at a significant discount, they'd still have billions of dollars left over once they settled customer liabilities. They aren't seemingly bankrupt or otherwise insolvent; it's simply a case of not being able to liquidate their assets quickly enough.
 
Prestwich_Blue said:
That's the problem. You get conspiracy nuts who see fractional reserve banking as some some sort of Judaeo-Masonic plot to take over the world and reduce us to serfs but under normal circumstances day-to-day bank withdrawals don't matter and, without it, investment would be massively smaller if banks had to hold most or all of their deposits as easily liquid assets.

But if a few people get the idea that a bank is in trouble, they induce a run on that bank.

I saw something that pointed out that even if SVB sold its assets at a significant discount, they'd still have billions of dollars left over once they settled customer liabilities. They aren't seemingly bankrupt or otherwise insolvent; it's simply a case of not being able to liquidate their assets quickly enough.
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Exactly this.
 
Gaz in Zurich said:
I work for CS in their Zurich HQ..They have trillions in assets but all this bad publicity is like a self fulfilling prophecy..Everyone is being spooked and pulling out their money, all at once this causes liquidity issues which then causes it to have to stop withdrawals, which then causes panic like a snowball effect, as they cannot sell assets (like real estate or another part of the company) as quick as Dave, George and Mildred want their nest eggs. The bank is too big to fail so won't be allowed too, but all these whispers are causing the problems.
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Doesn't even need to be a bank - post on Facebook that you work at a refinery and there's going to be a petrol shortage which is why the government is making sure all the army trucks are filled up and by next week there will be a petrol shortage as everyone brims their car on a daily basis.

There were Muppets the other week stockpiling bananas and cucumbers because their might be a shortage. And you wonder how people fall for Nigerian prince scams...
 
bluesince76 said:
Doesn't even need to be a bank - post on Facebook that you work at a refinery and there's going to be a petrol shortage which is why the government is making sure all the army trucks are filled up and by next week there will be a petrol shortage as everyone brims their car on a daily basis.

There were Muppets the other week stockpiling bananas and cucumbers because their might be a shortage. And you wonder how people fall for Nigerian prince scams...
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Well now you mention it, I am actually a Nigerian prince but although I’m extremely wealthy (multi billionaire) my assets aren’t liquid. If you could send me a few quid, I’ll give it you back with interest in a few years….
 
Johnny Mars Bar said:
Probably not.

1. Crypto was always a bubble and anyone with an ounce of sense saw this coming years ago.
2. The tech sector has been struggling for over a year and a bank like SV with an over exposure to one market were always going to get hit.
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SV’s problem wasn’t being the Tech bank of choice, it was the pathetic risk management of their Treasury portfolio in a rising interest rate market, as their deposits exploded with VC money!
 
yankblue said:
The US is the most socialist country in the world when it comes to bailing out the banks. It's when those pesky workers start wanting healthcare and a decent wage we go full Capitalism
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The Rich get ever richer, because they espouse Capitalism on the way up, Socialism on the way down!

Hilarious to hear VCs calling for a bailout of their billions in Tech Start Ups!

All the reward, none of the risk!

Bigwig Wall Street type said yesterday, “We have over 300 regional banks in the US, who needs that many banks?”

Look for the multinationals to suck up a few of these for pennies on the dollar! Don’t be surprised if Buffett’s Berkshire grabs a handful, usually of Preferreds, to make the Boogeyman disappear!!
 
Can some one explain like I am five as to what are credit default swaps and why are credit Suisse ones so much more expensive than the rest of the market?

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mindmyp's_n_q's said:
Can some one explain like I am five as to what are credit default swaps and why are credit Suisse ones so much more expensive than the rest of the market?

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Other posters might be able to offer a more technical answer but I know a bit about this stuff so I’ll give it a stab.

Think of a CDS as basically like buying an insurance policy. The insurance you’re buying is a protection against the risk of the person or firm who owes you money defaulting.

So if I lend you £100 and you’re paying me back £1 a month, there’s a risk that at some point you might not be able to pay me back and you default on the payment, maybe you lose your job. I can transfer the risk of that happening to somebody else. Maybe I pay Bob 10p a month and we agree that in return if you default on your £1 payments then Bob has to reimburse me for the remaining value of the loan. It’s an oversimplification but that’s the crux of the theory behind it.

Credit Suisse CDS prices have shot through the roof because people think the risk of them defaulting has increased so the people offering that insurance want a higher price for bearing the risk.
 
SkyBlueFlux said:
Other posters might be able to offer a more technical answer but I know a bit about this stuff so I’ll give it a stab.

Think of a CDS as basically like buying an insurance policy. The insurance you’re buying is a protection against the risk of the person or firm who owes you money defaulting.

So if I lend you £100 and you’re paying me back £1 a month, there’s a risk that at some point you might not be able to pay me back and you default on the payment, maybe you lose your job. I can transfer the risk of that happening to somebody else. Maybe I pay Bob 10p a month and we agree that in return if you default on your £1 payments then Bob has to reimburse me for the remaining value of the loan. It’s an oversimplification but that’s the crux of the theory behind it.

Credit Suisse CDS prices have shot through the roof because people think the risk of them defaulting has increased so the people offering that insurance want a higher price for bearing the risk.
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They will also quite possibly have various covenants in some of their peer loans that state if the share price drops below x or CDS trades at y etc then the loan becomes payable - this creates extra pressure on cash flow. Anyway good to see central bank has stepped in decisively to underwrite their liquidity and try to calm immediate fears. I wish CS well - they were one of the banks to not need a bail out during the financial crisis.
 
metalblue said:
They will also quite possibly have various covenants in some of their peer loans that state if the share price drops below x or CDS trades at y etc then the loan becomes payable - this creates extra pressure on cash flow. Anyway good to see central bank has stepped in decisively to underwrite their liquidity and try to calm immediate fears. I wish CS well - they were one of the banks to not need a bail out during the financial crisis.
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Due to the recent F ups with the Greensill loss and other scandals. CS set their liquidity threshold a lot higher than other banks, but even with that. When every Tom, Dick and Harry gets spooked by some American YouTubers who do not even know where Switzerland is on the map. How ever much money you have in assets cannot stop a run on the bank. The SNB can see the balance sheet and can see that the Swiss business alone is worth 15Bil even though the whole bank can be currently bought for 6 bill. Something underhand is happening.
 
Gaz in Zurich said:
Due to the recent F ups with the Greensill loss and other scandals. CS set their liquidity threshold a lot higher than other banks, but even with that. When every Tom, Dick and Harry gets spooked by some American YouTubers who do not even know where Switzerland is on the map. How ever much money you have in assets cannot stop a run on the bank. The SNB can see the balance sheet and can see that the Swiss business alone is worth 15Bil even though the whole bank can be currently bought for 6 bill. Something underhand is happening.
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Credit Suisse has been involved in all those scandals we know about; perhaps we are in the dark on many more.
 
CS was doing poorly before this latest issue. Bank’s problems appear more chronic than acute.
 
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