A global recession is on the horizon - please read OP for mod warning

For me it's clearly an issue with the banks not handling duration risk, like at the moment I have a bunch of money in a money market fund, the units of the fund are always designed to be valued at par, the fund invests capital in very short duration treasuries for like a week to a year. The interest from these minus the cost of rolling the bonds and managing the fund is what the investor gets in return, if all investors sold their units they would all get their money back. Usually the interest on these things might be nothing, now because of high short term rates, investors may get 3-4% but that's unusual. Why can money markets, that have been around since forever manage these risks easily but some of these banks cannot?

A possible tie up for CS and UBS. CS has a market cap of 7.5 billion swiss francs now with the value of UBS at 60 Billion.

Next week could be interesting the Fed has issued a bank guarantee. Implicit yes...but essentially explicit. The Irish govt followed this policy briefly with interesting results.

...and again, our current inflationary pressures are primarily supply side, not demand side, ie. largely nothing to do with the money supply, and again, the majority of the global money supply is now coming from the financial sector itself in the form of credit, hence why private debt is now at an all time high. and again, the age of overall deregulation of the financial sector has catastrophically failed, yet again, we have to reintroduce far more robust regulations and regulatory bodies, and make sure they are adequately funded and resources, in order to try reduce the frequency of these failures, but we re currently unwilling to do so....

...before this era of capitalism, so called financialisation, occurred, we experienced far less frequent financial sector crashes, this is what we must do again, but since we have empowered the whole financial sector so much, during this period, we are simply unwilling, possible unable, to reintroduce such measures.... we have to!

i personally advocate for the public option of public banking, but that to can be very problematic, nature of the beast i guess......

Since 2008, we've been in an era of regulation (especially in Europe)

I'm a strong supporter of regulation, but indeed there's always a flipside, meaning that it trades wealth generation for safety. There's a balance. The yanks are far more cowboy with that stuff than we are.

Something does not smell right lads. A few days ago CS said we have enough cash and don't need to borrow, a few days later and a mad rush is on to sell the thing ASAP.

Sounds like a bit of panic going and now fraud cases being brought by shareholders.

Just a couple of points. The banking regulations (in Europe) have been constantly on-going since 2008. It never seems to stop. It's not just on the individual banks themselves, but also on the plumbing and infrastructure of the system, which indirectly puts it's own sort of risk controls on the banks (a good thing)

Haven't seen anything bad about Sparkasse or KFW, they seem solid enough. A lot of solid banks out there, I just think the market is hunting for banks that are relatively weak for their standing, for example there are plenty of much worse rated entities than Credit Suisse, but they don't seem to be attracting the issues that CS has experienced (obviously factoring in 3 years of controversy and reputational damage and share value slide and revolving door CEOs)

I don't think anything is at breaking point, but it's definitely on a kind of amber alert. It's almost like a test on how the system can cope with a banking style loss of confidence post 2008. So far, not great, not terrible, but have to see what happens this week.

The example of public banks you have shared are development banks or savings banks. These only address specific banking needs and on their own wouldn’t be able to provide the banking needs of a modern economy. The development banks we have in Ireland but in the form of development funds…There is very little difference between them… The public savings banks are more or less the equivalent of building societies or a co-op bank. I still don’t see an end to end public banking model that would be capable of replacing the current banking model.

I don’t get your point on regulation…99% of all experts have all confirmed that the situation with SVB wouldn’t happen in Europe because that specific scenario is stress tested.

There have been lots of commentary on the subject and you can tell within a min or two of reading or listening that a lot don’t really know what they are talking about or even know what regulations are in place to mitigate the risks they are taking about. Even bears and people who have been critical of the banking sector have admitted that the regulation has worked in Europe.

Is there room for improvement in banking regulation of course there is that is why it is always being reviewed and updated.

Also Let’s not forget also that european bank’s previous navigated quick changes to bond yields and the impact on the banking books during the 2012 crisis. And the interest rate risk was very closely watched by the European regulators.

It wouldn’t have happened with the large US Banks either because the adopted full regulations but because the US decided not apply all the recommended regulations to all banks it wasn’t tested with SVB.

CS and DB have had problems for years and despite numerous restructures they can’t get it right. The issue isn’t a regulatory issue the issue is the business model.

No was replying to @Wanderer78

yet another stupid statement by the economist he recommends to explain public banking.

‘When Lehman appeared to be in trouble, the repo and derivatives traders all rushed to claim the collateral before it ran out’

it seems she doesn’t understand how a repo works.

It’s a very simple concept party A transfers collateral (normally bonds) to party B who transfers cash to party A.

if party A doesn’t repay the cash when the repo matures part b keeps the bonds that are in his possession.

if during the repo the price of the bonds fall a margin call is initiated to cover the drop in value.

its secured lending nothing more but she thinks this is more risky than unsecured lending and it’s a derivative because it sits off the balance sheet.

the reason the bond sits off balance sheet is because party B (despite having it in its possession) only takes ownership if party A defaults.

What happens when depositors understand that all funds cannot be guaranteed by the government.

I wonder who those could be ?

BNP probably the other?

Neither would be as bad as Credit Suisse situation though.

Deal done it would seem, just as I was posting .

One has to think the Swiss National Bank put a gun to head of UBS to get this deal done. Why would they want the bag of shite that is Credit Suisse, even if it is for peanuts.

Shareholders getting shafted on both sides.