2008 all over again? Credit Suisse is on the verge of collapse
An array of scandals hanging over the wounded banking giant has experts worried that they could fail, sparking fears of turmoil rivaling 2008's housing market collapse aftermath.
An array of scandals hanging over the wounded banking giant known as Credit Suisse has experts worried that they could fail, sparking fears of a recession rivaling 2008's housing market collapse aftermath.
Speculators seem to be watching Credit Suisse very closely in the wake of turmoil within the company. The global banking and investment giant based out of Switzerland sees itself under a microscope as investors seem to be bracing themselves to relive a nightmare akin to the one that the collapse of Lehman Brothers set into motion in September of 2008.
Credit Suisse's market capitalization has taken a beating almost nonstop with its high being around $79 billion. Currently, Credit Suisse's market capitalization is around $10.28 billion and is unlikely to recover any time soon so long as the beleaguered company's struggles continue.
At the beginning of September, it was announced that Credit Suisse was mulling over cutting as many as 5000 employees, or nearly 10%, from its workforce. That resembles an amputation by any company's standards in terms of cost-cutting measures, yet Credit Suisse's CEO, Ulrich Koerner, is still portraying confidence as any leader might, reassuring his employees that the daily struggles of the company were not a significant cause for concern and accusing the media of overstating their struggles.
Koerner wanted to emphasize to his employees that the day-to-day stock prices should not be a concern, even though they have lost 21% of their value over the past week alone, underperforming the S&P 500 massively, by as much as 4.6%. Yet he does admit that they are at a 'critical moment' while overhaul plans that are being kept under wraps are finalized. October 27th is the date set for the unveiling of results from Credit Suisse's strategic review, after which a clearer picture of Credit Suisse's future will be shown.
Again, confidence is projected by Koerner, but his sentiments smack of an effort to buy time, likely in an effort to boost morale after the departures of two senior executives Jens Welter, who was the global co-head of banking, and Daniel McCarthy, now the former global head of global credit products. Not exactly good news for a company attempting to restructure in order to remain competitive in today's market. Add to that the previously stated layoffs being planned, and I would bet a glut of resumes are being sent out by current Credit Suisse employees.
Loyalty to a paycheck is an effective strategy of control until it looks like the people signing the paychecks seem to be careening toward insolvency. CEO Ulrich Koerner merely saying, "Nuh-uh" in a memo likely won't be enough to convince people that he's not gaslighting the world to save his own skin. If you see the rats abandoning ship, it's probably a good idea to follow their example.
When you consider that Credit Suisse has floated the idea to split its investment bank into three separate entities, and when you also consider Credit Suisse's credit default swaps are at a 14-year high ( 2008 was 14 years ago, I think we all remember that year quite well ) then you see another effort by Credit Suisse to stem the tide. It seems the workforce wasn't the only amputation, and now Credit Suisse is employing tourniquets to try and prevent themselves from bleeding out, while also amputating more gangrenous flesh in the process. Think for a second what them splitting into three would entail, especially as one is designated a ‘holding pen’ for their bad investments. It very much seems like they’re trying to remove a gangrenous limb to save the rest of the body to me, metaphorically speaking of course.
Things have gotten bad enough that Credit Suisse is reportedly considering outright exiting the U.S. market altogether if they don’t raise the capital needed to cushion the $4 billion in losses incurred in the last three quarters alone. Of course they deny it, but then publicly-traded companies aren’t known for being transparent about anything they can avoid divulging to stockholders. They intend to do this by hitting up investors for more capital, a move which has become commonplace for the ailing bank in recent years, as this would be the fourth time they’ve petitioned to raise capital to cover their asses in 7 years, loans valued to the tune of $12.22 billion, nearly $2 billion MORE than their current market capitalization of $10.28 billion
We all know what happens after reckless investments by horridly overleveraged banks deemed ‘too big to fail’ come due — taxpayers get stuck with the bill. Going to have to refuse on this one.
The real question we should be asking is this: Are we repeating history because of yet more ignorant actions from the wealthiest 1% of people? No more bailouts, let them fail. Even though that’s likely what Klaus Schwab wants, we shouldn’t be sticking up taxpayers in any nation every time a risky investment doesn’t pan out for the ultra wealthy class. I know no one was there to offer me cash to cushion my losses after failed stock trades, they shouldn’t be given that safety net, either.
If the lesson wasn’t learned before, it will never be learned. The yacht class never has to learn from their mistakes because they live life with a gun to the heads of world economies in order to make sure that they can run roughshod over ordinary people and pillage the savings of those who have little to make sure their ride never ends.