The Economy

They didn't "get money" from another bank. They sold whatever equity they had. It's more like. ... you wrote a check for money you don't have. And as a result, someone took your car and your house and all of your clothes and left you with no food. And you had to beg them to do it.

It's also a complete shitshow. What no one is telling us is just what toxic assets Credit Suisse has on its balance sheet. UBS just bought Credit Suisse with a shotgun pointed at it. It ONLY agreed to do it if they got it very cheap (at least cheap compared to what little people thought the equity was worth at the close on Friday) AND the Swiss National Bank pledged billions of dollars of backstops in the form of cash and liquidity. This is an attempted bailout. ... that still might not work. Markets (especially the credit default swaps) seem to think that what just happened took something VERY toxic and just made it UBS' problem. This could be much worse than any of us realize.

Just understand when things unravel now. ... The Swiss National Bank operates independently from the ECB. But the European Central Bank kept rates NEGATIVE for close to a decade, and it weighed heavily on Switzerland. The Swiss National Bank is not blameless. During the the height of the price-fixing schemes of the last decade and a half, the SNB was buying U.S. equities (and their central bank is insolvent on paper as a result)!! ... they were literally creating Swiss Francs out of thin air and using the money to buy Apple and Amazon and Microsoft stock, making it the world's biggest hedge fund!! (shit like that artificiality was behind the "Look at my 401(K)!" posts on here, even though nobody understood it). Except unlike other operations like it, it could just press a button and make new money (like it was a game of Monopoly). Make that the world's worst hedge fund, because central banks were blowing bubbles, so unlike the QE schemes in the U.S. and Japan and Europe where they had enough shame to not directly intervene in equity markets, the SNB was buying the U.S. stock market at its highs. Those other banks own debt that they bought too high. And now they all will get stuck holding the bag, except unlike you or I who would be homeless, they can just inflate away their problem by creating money and taxing the world by stealing our purchashing power for their stupidity.

It's insanity that a central bank was buying hundreds of billions of dollars of EQUITIES. Nobody is talking about this right now, even as the madness starts to unravel. There should have been a European sovereign debt crisis years ago, and they staved it off by creating a VERY artificial environment that put us where we are. Think about what negative rates are: People were getting PAID to borrow money. If you deposited money in a bank, the balance on your account went DOWN over time. That environment spurred on so much lending and leverage -- which was the purpose -- and it created a casino environment. Whatever batshit crazy things were happening -- that are going to make the leveraged instruments we all found out about in 2007 look like nothing -- is likely sitting on Credit Suisse's balance sheet (and this does not end with CS).

As an aside 1: The Swiss economy is tiny. It is about $800 billion. Credit Suisse ($570 billion in assets, and that is way down) and UBS ($1.2 trillion in assets) combined are more than 2X the size of Swiss GDP. To put that into perspective, the two largest U.S. banks are JP Morgan and Bank of America. Combined they are 27 percent of U.S. GDP.

As an aside 2. ... Credit Suisse opened its doors for business in 1856. It was one of 30 banks around the world that was designated as "systemically important" by the clowns who think they can design something they don't even understand. It no longer will exist as a standalone. This is what central banking has given us.

 

Another thing few people outside of a small circle are talking about. ... Inflation is raging still worldwide. ... And the idea that central banks are going to tame it (they CAUSED it in the first place) is now done with the swap lines they announced last night.

When they put an announcement like that on a Sunday night right before futures are trading, it's telling you that they are shitting in their pants and are praying they can establish confidence. It's an atempted use of a bazooka to shock and awe markets -- trying to artificially spur buying again to prop things up.

They are all coordinating now to fire up their money printing machines. It's all they do. ... And it is like putting a bandaid over a tumor. It also tries to take the problem and tax all of us for it in the form of monetary inflation. It also is what PUT US WHERE WE ARE and even if it keeps things from falling apart right now, it creates a bigger crisis later. They are so predictable in their cluelessness. ... but the arsonists are now going to ride in on the fire truck promising to save us all from the calamity (who could have seen it coming?!?!?)