Money & Economics

bigredfish

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It may be getting past the point of them being able to control it…

"Too Big To Fail" Credit Suisse Domino Effect Far More Potent Than SVB

Should the markets’ worst fears on Credit Suisse come true, the euro-area economy will fall off a cliff, upend the global financial system and bring policy tightening by major central banks to a screaming halt.

Unlike Silicon Valley Bank and Signature Bank, the Swiss lender is classified as systemically important by the US Financial Stability Board — meaning it’s too big to fail as a collapse has the potential to trigger a financial crisis.

European Central Bank officials contacted lenders Wednesday to ask about their financial exposure to Credit Suisse, the Wall Street Journal reported.

Credit Suisse reported that its assets under management were almost 1.3 trillion Swiss francs, or the equivalent of $1.4 trillion, as recently as last month. For perspective, that would amount to almost 10% of the 14.5 trillion euro-area economy
 

Ssayer

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And by government we mean you and your children and your children’s children.

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BREAKING NEWS

Swiss Central Bank will provide liquidity to Credit Suisse, $CS, if necessary.

Once again, it's the same progression of events:

First, it's "not considering intervening."

Then, it's "intervening, but not a bail out."

Finally, it's "providing liquidity and backstop."

A new message has been sent to banks:

Take excess risk and government will save the day.
 

bigredfish

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Really great article that lays it all out and is surprisingly an easy read.

Quinn: Is The US Banking System Safe? ...15 Years Later
Quinn: Is The US Banking System Safe? ...15 Years Later | ZeroHedge

excerpts:

.... There are many similarities between what was happening in 2008 and what is happening today. Bear Stearns went belly-up in March 2008 and was taken over by JP Morgan in an arranged marriage by Bernanke and the Fed. The usual suspects assured the country this was a one off situation and the banking system was strong. The Wall Street banks had been reporting huge profits because they were hiding the massive losses on their balance sheets. If they didn’t foreclose, they didn’t have to write-off the mortgages. The toxic debt just kept building.

.....The question now is whether the current situation is better or worse than the situation we faced in 2008. There are some factual items which may help in assessing where we are. In August 2008 the national debt was $9.5 trillion (67% of GDP). Today it is $31.5 trillion (130% of GDP). Total household debt was $12 trillion in 2008 and stands at $17 trillion today. The Fed’s balance sheet was $900 billion in 2008 and now stands at $8.3 trillion. Inflation was at a 17 year high in August 2008 at 5.9% and stands at 6.0% today. GDP was growing at 3.2% in 2008, versus 2.7% today. An impartial observer would have to conclude our economic situation is far worse than 2008.

Banks.jpg
 
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