Roubini warns US bank failures, Credit Suisse contagion could spread globally | Hacker News Reader

Roubini warns US bank failures, Credit Suisse contagion could spread globally

fortune.com

31 pointsrntn16 comments

I don't think I'm smart enough to understand the game that some of these people are playing. I'm pretty sure it is at a higher level than the way I see things.

But my sense of it is that there really isn't much of a risk of contagion at all. The only way it would happen is if everyone got irrationally worried. And, honestly, it seems like some of these people are trying to stoke that exact fear.

I wonder if this is all a ploy to corner the Fed into not raising rates next week. Like, I think a lot of people benefit from the easy money we've had and they want to get back to it.

Having said that, I'll repeat what I said above: I'm not smart enough to really understand what is going on.

> I wonder if this is all a ploy to corner the Fed into not raising rates next week. Like, I think a lot of people benefit from the easy money we've had and they want to get back to it.

I've been thinking the same thing. Does anyone know why SVB blew up last week and not 2 months ago or next month? We're heading into a pivotal FOMC meeting where inflation indicators are showing that the fed would likely have to tighten further, and, strangely enough, the bank of the industry most dependent upon cheap money has a bank run instigated by folks in that industry.

Blew up last week because they had to sell stock and explain why. Which is what she’s light on their liquidity crunch.

   Scene: Big Meeting Of Venture Capital Conspiracy Club
   Honcho 1: Guys, here's the game plan: We tell all our startups to pull their money out of SVB, triggering a run on the bank, triggering other runs all the way out to Credit Suisse!
   Honcho 2: Just how much crack have you smoked today?
   Honcho 1: No, see, this will convince the fed to stop raising interest rates!
   Honcho 2: Oooooh. And then we can borrow more Easy Money!
   Honcho 3: From who?
   Honcho 1: Hmmm
   Honcho 2: Fuck

I suspect it was more: "never let a good crisis go to waste".

The covid crisis helped Ensure more monetary easing..

According to Swiss news the primary issue with CS is a reputation problem and not a liquidity problem. Worst case the SNB will provide liquidity.

There has been a lot of turmoil last year at CS but the Saudies which own 10% did say they are happy with the new approach the bank is taking since last year.

Also CS is considered to big to fail and has to follow some very strict Swiss rules that were put in place 2008. FINMA believes the bank is stable.

A quote from twitter, is this true? 2008: 25 banks with $373 billion in combined assets failed 2023: 2 banks with $319 billion in combined assets failed

The difference is 2008 was due to speculative asset bubble finally popping

What were the assets that SVB invested in that went down causing them to lose so much money they couldn’t cover deposits?

Bonds

I'm not sure that's a difference. The core problem seems to be that the value assets acquired during the COVID years are falling rapidly as interest rates rise.

Hundred of bank closure, higher bar to starting De Novo banks, and 14 years of Quantitative Easing means a LOT more assets have been siloed in fewer institutions.

Roubini is a victim of his own popularity. He was nicknamed "Dr. Doom" once, and now he desperately wants to live up to that name, so he keeps predicting the next doom. I wouldn't take any of his predictions seriously.

He's another Michael J. Burry at this point. Probably correct, but the timing is so bad that their predictions are mostly worthless.

They've both been preaching doom for 18 months now. They'll eventually be right, most likely, but will it be next week, next month, next quarter or next year? Or will the govt step in and socialize most of the losses yet again?

> Someone who calls himself "Dr. Doom" predicts doom

I cannot say I am overly surprised

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