Will the collapse of Credit Suisse be Europe’s ‘Lehman Brothers moment’? – The truth without silence

(by Michael Snyder | The Economic Collapse Blog) – The parallels between 2008 and 2022 keep getting stronger. 14 years ago, the collapse of Lehman Brothers caused a huge wave of panic in global financial markets and is widely regarded as the key event that plunged us into a horrific financial crisis that we still talk about today. Well, now an even bigger bank appears to be on the brink of collapse, and analysts around the world are deeply concerned about what this will mean for the global financial system if it fails.

Today, Credit Suisse is one of the most important banks in the world. If you’re not familiar with Credit Suisse, the following is some good background information from Wikipedia…

Credit Suisse Group AG is a global investment bank and financial services company founded and headquartered in Switzerland. Headquartered in Zurich, it maintains offices in all the world’s major financial centers and is one of nine global “Bulge Bracket” banks offering services in investment banking, private banking, asset management and shared services. It is known for strict bank-client confidentiality and banking secrecy. The Financial Stability Board considers it a bank of global systemic importance. Credit Suisse is also the Fed’s main dealer and Forex counterparty.

Credit Suisse is truly one of the central hubs of the entire international banking system.

If it failed, the ripple effects would be felt very deeply in literally every nation on the planet.

Unfortunately, it is being reported that Credit Suisse could be “on the brink of collapse” and we are warned that if it collapses it could cause “a shock similar to that caused by the failure of US bank Lehman Brothers in September of 2008”. “…

Speculation about the future of the Swiss banking giant has been raging for several months in the markets, in business and political circles, as well as on social media.

The second Swiss bank and one of the largest banks in the world is in deep trouble and is currently fighting for its survival. A negative outcome is likely to trigger a shock similar to the one that caused the failure of US bank Lehman Brothers in September 2008. This event triggered one of the worst financial and economic crises since the Great Depression.

When Lehman Brothers collapsed in 2008, it had $639 billion in assets.

As of the end of 2022, Credit Suisse currently has $1.5 trillion in assets under management.

pic.twitter.com/mpAoIj7zdI

— SG (@GhoshSubhag) October 2, 2022

The collapse of Credit Suisse would create a wave of panic unlike anything we’ve seen since the last financial crisis.

But new CEO Ulrich Koerner insists all is well…

There was a lot of activity around Credit Suisse over the weekend. On Friday, Chief Executive Ulrich Koerner sent a note saying the bank had a “solid capital base and liquidity position”, while senior executives spent the weekend doing their best to reassure big customers , counterparties and investors, according to the Financial Times.

The CEO’s note also notes that the bank is at a “critical time” as it prepares for a restructuring, the details of which will be revealed on 27 October. It is expected that around 5,000 jobs could be cut, with the sale of assets. . Some analysts say that won’t be enough, however. Credit Suisse is estimated to need another 4 billion Swiss francs even after asset sales to finance the restructuring, with a capital increase considered the most likely option, according to a Bloomberg report.

Are the markets buying what Koerner is selling?

No.

Credit Suisse credit default swaps are still going in the wrong direction, and that means investors are starting to get very, very nervous…

Credit Suisse’s credit default swaps, or CDS, a derivative instrument that allows an investor to swap its credit risk with another investor, rose on Friday, reflecting the market’s perception of increased risk. It is now approaching the highs seen during the 2008 financial crisis, which led to the failure of US investment bank Lehman Brothers.

Houston, we have a problem. $CS market cap is now a rounding error. 35x leverage. That and Deutsche Bank…a canary in the coal mine.

CDS at Credit Suisse now at GFC highs. #btc pic.twitter.com/cVTOavkBv2

— FOSS – Lehman CDS at 9bp in ’06, 🇨🇦 now at 41 (@FossGregfoss) September 30, 2022

At this point, almost everyone can smell blood.

And it certainly won’t take much to cause widespread hysteria.

Formal announcement: pic.twitter.com/Pmygv369gq

— Ram Cap (@RammityCap)

This is such an ominous time for Europe. The EU is facing the worst energy crisis it has ever experienced, the bond market is going crazy and now giant financial institutions like Credit Suisse are being badly shaken.

Martin Armstrong was recently interviewed by Greg Hunter, and boldly declared that “a banking crisis is about to start in Europe”…

So could Europe suck the rest of the world down the tubes? Armstrong says, “Oh, absolutely. Europe is the problem. . . . The banking crisis is going to start in Europe. . . . The debt is collapsing. They have no way to stay afloat. The debt market over there is undermining the stability of all banks. You have to understand that reserves are tied to government debt, and this is the perfect storm. Yes, the (US) stock market will go down in the short term. We are not facing a 1929 event not even a 90% drop. . . . The Europeans, probably in January 2023, as this crisis in Ukraine heats up, anybody with half a brain will take whatever money they have and bring it here.”

I’m not as optimistic about US financial markets as Armstrong seems to be.

Yes, Europe is currently in worse shape, but things are starting to unravel pretty quickly here too.

In fact, we just witnessed the worst month for US stocks since the early days of the pandemic…

September was a horrible month for stocks. The Dow fell nearly 9%, its worst monthly decline since March 2020, when pandemic lockdowns began in the United States. The index also ended Friday deep in the red.

Overall, this is the first time the Dow Jones Industrial Average has declined for three straight quarters since 2015.

And it’s the first time the S&P 500 and Nasdaq have fallen for three straight quarters since 2009.

Many people still seem to think that things will be “back to normal” very soon, and unfortunately, all of these people are very wrong.

The truth is, we’re right on the precipice of the kind of historical meltdown I’ve been warning endlessly that’s coming.

Our leaders kicked the can down the road for a long time, but now they are running out of track.

A day of reckoning has come for Europe, and a day of reckoning will soon come for us too.

So fasten your seat belts, because we’re in for a very bumpy ride.

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