Bank collapse in Europe and the United States. Memories of the 2008 financial crisis have reawakened. Will she make the same mistakes again?
Banks are in the headlines again. Just at the weekend, UBS took over struggling Credit Suisse under pressure from Swiss and international central banks. This was after several regional banks in the US went bankrupt just days earlier. International financial markets reacted anxiously to the latest news on Monday. The 2008 financial crisis is still in many people’s bones. There are some similarities to this, but there are also important differences.
Madeline Stotemeyer on the “Running the Press – What’s Important” podcast:
The most important difference lies in the causes. The starting point for the financial disaster of 2008 was bad loans in the billions, mainly to American homeowners who were not actually creditworthy due to their low incomes. In 2006, so-called mortgage loans accounted for nearly half of all new mortgages with very good credit ratings from rating agencies. These high-risk loans have been bundled into highly complex securities that are distributed throughout the financial system. There was a complete lack of transparency. At some point no one knew what was in the newspapers anymore. The prices that made the tours collapsed.
Today, bad loans do not play a major role, at least not yet. Unlike UBS in October 2008, Credit Suisse does not default on unsaleable securities. Instead, a series of scandals and mismanagements were fatal to her. But worries about the banking sector have spread from the United States, where three regional banks have now collapsed, to Europe. Silicon Valley Bank (SVB) did not invest its money in high-risk investments, but in US government bonds that were considered safe. However, they suffered great losses. Herein lies the source of all evil:
First, two medium-sized banks collapsed in the United States and were nationalized, and then investor distrust hit a number of small and medium-sized financial institutions in the country. A domino effect that also reached the other side of the Atlantic.
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