Swiss Are on the Hook for $13,500 Each on Credit Suisse Bailout
bloomberg.com
bloomberg.com
(Though that maximum is unlikely to be hit)
In the meantime, top managers extracted 32 billion in bonuses over the last 10 years.
Privatise profits, socialise losses.
UPDATE: My mind still boggles at the scale of the looting. 32 billion in bonuses. If that's a thousand "top managers" that would still a jaw-dropping and life-changing 32 million per person. If it's a hundred "top managers", then it's a mind-numbing 320 million per person
Let's go with the lower payout figure: 32 million would still be an insane amount even as the top payout for the singlemost important person, let's say the CEO, iff the company had been immensely profitable during that time and there had been significant personal risk. But the company wasn't profitable, there was no personal risk, and it wasn't a payout of that scale for the top one person, but for the top thousand or so (or whatever the number is, I don't know how many top managers there were...but if there were fewer top managers, the relative amount of the payout just gets larger).
UPDATE 2: Source (German)
"Denn was ist mit den verantwortlichen Top-Managern der Credit Suisse? Die, so hat es der "Tagesanzeiger" aus Zürich ausgerechnet, seit 2013 32 Milliarden Franken an Boni kassierten, während die Bank im gleichen Zeitraum 3,2 Milliarden Verlust machte."
https://www.tagesschau.de/wirtschaft/weltwirtschaft/credit-s...
'Something will 'ave to be done, and that very soon,' Grinder was saying. 'We can't go on much longer as we're doing at present. For my part, I think the best thing to do is to chuck up the sponge at once; the company is practically bankrupt now, and the longer we waits the worser it will be.' [...]
'Sell out!' replied Grinder with a contemptuous laugh in which the others joined. 'Who's going to buy the shares of a concern that's practically bankrupt and never paid a dividend?'
'Who's to buy?' repeated Sweater, replying to Grinder. 'The municipality of course! The ratepayers. Why shouldn't Mugsborough go in for Socialism as well as other towns?' [...]
'Afterwards,' resumed Sweater, 'I'll arrange for a good report of the meeting to appear in the Weekly Ananias. I'll instruct the Editor to write it himself, and I'll tell him just what to say. I'll also get him to write a leading article about it, saying that electricity is sure to supersede gas for lighting purposes in the very near future. Then the article will go on to refer to the huge profits made by the Gas Coy and to say how much better it would have been if the town had bought the gasworks years ago, so that those profits might have been used to reduce the rates, the same as has been done in other towns. Finally, the article will declare that it's a great pity that the Electric Light Supply should be in the hands of a private company, and to suggest that an effort be made to acquire it for the town. [...]
'Come to think of it,' observed Rushton arrogantly, 'why should we trouble ourselves about the opinion of the ratepayers at all? Why should we trouble to fake the books, or declare a dividend or 'ave the harticles in the papers or anything else? We've got the game in our own 'ands; we've got a majority in the Council, and, as Mr Sweater ses, very few people even take the trouble to read the reports of the meetings.' [...]
'Well, 'ere's success to Socialism,' cried Grinder, raising his glass, and taking a big drink.
But yeah, the first Red Scare in the US was during the First World War. Look at how they treated Eugene Debs - https://en.wikipedia.org/wiki/Eugene_V._Debs#Sedition_convic...
Freedom of speech... as long as you don't actually try it.
Its the intrinsic arrogance that the profits are somehow due to the business prowess of these charlatans, while any losses are due to "the market"
What’s the staff size of CS - could it be 10,000 top managers. Or 1,000 top managers but over ten years becomes ~5,000 if turnover averages at every 2nd year.
Despite investment bank bonuses being very high compared with other industries, 32mil is just too insane to believe!
Example: You have a credit trading desk and an equity trading desk. Your equity trading desk makes 1 billion, your credit desk loses 2 billion. Sure, you lose 1 billion in total, but you still pay the equity desk the bonus on the 1 billion profit.
Who maintains this blacklist, is there a way to preview it?
Take a big risk and make your company go bust? Maybe you lose a job.
Take a big risk and make 1B? You are getting a fat bonus check.
Constraining bonuses like this is only achievable via collective action.
Top performers in highly leveraged positions really do generate outsized returns. There are definitely people in certain positions who "take their margin with them" and so firms compete by offering that individual a higher percentage of the margin they generate and the nature of markets mean anyone who doesn't compete "loses".
You need a collective action mechanism (government) and the only solution we've ever seen in practice is a high marginal tax rate. Companies are less willing to pay exorbitant sums being taxed at 94% and individuals fight less for them.
In no year has Stripe ever made a profit.
For comparision in 2019 Stripe had 4,000 employees, Credit Suisse 50,000.
https://www.bloomberg.com/news/articles/2023-03-06/stripe-de...
This doesn't mean that a bonus structure isn't appropriate. Bonus are supposed to be an incentive. Achieve bold goals -> get bonus.
If anything this is more important in growing companies than in stable, profitable companies, which have achieved a sustaining business model. Why pay a bonus to people just following the algorithm.
No judgement on Stripe's specifics.
It feels like this is misrepresenting the situation quite a bit. This is not a tax bill on bonuses. This is a tax bill on equity, which is a part of the regular compensation package, and an awkward situation due to that equity being illiquid as Stripe has not gone public.
Banks are different.
One of the greatest coups of lobbying was when the finance industry convinced politicians all over the world that banking ist just like any other industry and thus should not be regulated more than other industries.
On one hand, it's safer they only hold money for a day or two.
On the other hand, no FDIC insurance. If Stripe (or Visa or Mastercard) were to poof, what would actually happen to in-flight money? Seems like you could pretty easily lose a day or two where the client got charged, and it never got paid out.
However, the money may be stored in a money market account i.e short term bonds or even if it's a more normal savings account the bank itself depends on fractional lending and bonds.
I'm be very surprised if any major payment processor hasn't vetted the institutions that hold transaction funds. That said some payroll companies were hit by SVB's collapse but more so on not being able to accept checks than loosing already received funds.
Fbo accounts are technically the banks, the processor keeps the records of whose funds are whose within the account and the fdic limit applies to the beneficiary (the person the processor is holding the funds for).
Source: I worked for the treasury group at a payment processor.
Other than the word "raising" that statement is completely incorrect.
> $3.5 billion
Recent article mentioned this was north of 5B
> tax rate 22%
That's not accurate even for US and they have employees worldwide.
> In no year has Stripe ever made a profit
Source?
> (some of)
Almost all employees get stock based compensation at big tech companies
> bonuses
These are salaries or stock based comp, not bonuses
> comparision in 2019 Stripe had 4,000 employees
Source?
I's worth looking up how it works. There is no "well lets just ignore the people".
https://www.weforum.org/agenda/2017/07/switzerland-direct-de...
We had a vote in 2014 about a very specific way to restrict immigration into Switzerland, it was voted through, but Federal Government wasn't willing to nuke our economic relations with Europe so now if you are advertising for a job in Switzerland you first have to make sure Swiss people don't fulfil your criteria before you hire a foreign person(i.e that is the result of an initiative whose aim was to restrict asylum and Shengen agreement movement).
This specific case of the Credit Suisse doesn't appear (to my as a layman) to be in contention of anything external to CH.
Some states do have ballot initiatives but obviously those can't override the Constitution. For example, see California Proposition 187 on illegal immigration which was passed by voters in 1994 but then largely struck down in federal court.
And I can’t speak about Switzerland but even state level ballot initiatives can be checked by the courts if they violate some other law.
CA voted to ban gay marriage via ballot initiative, their courts stuck that down.
I don't know enough about how Switzerland is established as a country to talk specifics. I only know that it isn't technically an EU member, but is part of the Schengen zone.
The closest we have in the USA is “Article 5” —- if you can get two-thirds of the state legislatures to ratify an amendment, it becomes part of the constitution, without any federal say in the matter. In
right, but had you led with that, nobody would click
There's so much that giant companies can do. Ordinary folk only have their word of mouth, their wallets, and their votes. We saw how the rise of the internet gave these people power and things started to change, and so the word of mouth power was taken away through the actions of social media companies, which then affects how people use their wallets and their votes.
Once again, freedom of speech turns out to be the most important freedom in a democracy.
But, Credit Suisse said it was a bad idea, and apparently the people believed them.
Why were they not there in the regulator approved, big 4 audited accounts from 3 months ago?
The regulations in switzerland are no different to any other bank in the world, likely they were more stringent requirements to hold larger quantities of capital and mark-to-market more instruments on their balance sheet.
> make sure that banks never gets too big to fail
Well the regulators just took two too-big-to-fail banks and merged them ...
With good reason.
During the early 80s (neoliberalism, Reagan, Thatcher, Kohl, etc.) regulations were relaxed and banking deregulated. The first big bank crisis + bailout (Savings and Loan crisis) followed a year later.
Banking is not a regular industry, for a bunch of reasons.
The bank run started because failing to make the annual report was the final straw after years of untrustworthy behavior.
There don't have to be actual losses in the confidence game that is our fractional-reserve banking system. Banks only need to hold a certain fraction of their depositors money in liquid reserves (hence "fractional-reserve"...). Every modern bank would be insolvent immediately if all depositors decide to withdraw their money, the money that they own but keep at the bank.
We rely on this being a very unlikely event, and it is unlikely as long as depositor behavior is uncorrelated. But if there's panic it becomes correlated and boom.
> What are the impaired investments?
Again, there don't even need to be impaired investments for this to happen, but the problem appears to be that safest of possible investments: government bonds. Which banks may even required to hold. The recent rise in interest rates means that the liquid value of the low-interest (we even had negative interest rates for Bunds, for example) bonds that banks are holding has declined massively.
These bonds will still get paid out in full when reaching maturity, so the money isn't really gone and there isn't a loss. If you can wait for them to mature. But if they have to sell those bonds now because an unexpectedly high number of depositors want their money, then they have to sell them at a loss.
So central banks are now facing a conundrum: raise interests rates to fight inflation, but risk the financial system going boom. Or lower rates again and risk inflation running out of control.
That would be an impaired investment. We know that of the ~200bn at SVB around 50% of it was in their hold-to-maturity accounting bucket with no provision of any loss.
Credit Suisse bonds were hedged / short duration.
Worth pointing out that in the US and the UK, this amount is zero (0) at the moment. In Switzerland this looks like 2.5%.
https://en.wikipedia.org/wiki/Reserve_requirement#Reserve_re...
It's like Tucker Carlson said - it's no wonder that the young people support socialism, when they can't afford a house and face massive economic uncertainty even in professional fields, etc.
Everyone knows that the super-rich executives will benefit massively from this (or have already taken huge bonuses and dividends in prior years), and they basically run the government and will face no consequences.
They get rewarded for failure, meanwhile normal working people face mass lay-offs, high interest rates and high inflation.
There are always -short term (how did we do this year, the classic everyone gets) -long term (bonus defined today, paid out over a few years if you meet the strategic goals, typically director and exec level, we are easily talking 100k+/year here in bonus money)
bonusses. So, yeah, still a financial letdown for them. But they still got paid quite a lot of money of course. The average swiss person had no stakes or no culpability at all (except maybe choosing them, clients could have walkd away)
Like you can make $5 million a year now, but have things suddenly end on you at some point when things come crashing down, but probably not for several years, or you can make $1 million a year, but play it safe, and in five years get a $7 million long-term bonus.
Might as well get as much out of the company now and trust the government will bail you out (or not, what do they care, they can just move on to the next thing, and even if not, they've already made a shit ton of money, they could just retire, no big deal).
What? Tucker Carlson said something sensible and actually correct for once in his life?
For real though - remember the saying "If at age 20 you are not a Communist then you have no heart. If at age 30 you are not a Capitalist then you have no brains"?
It's just the same: by age 30, the generations of my parents and before generally had a stable job with one earner earning enough to feed a family, afford to buy a house and a car. Basically, back when that quote was said, people at 30 had actual assets to their name which (at least fundamentalist) Communism would have threatened to take away... but our generation? What do we have that actually belongs to us? Our homes are rented, our cars are beaters barely road-worthy, financed/leased or we don't have cars at all, our computers are often enough simply the machines we get from work, our phones are rented from our phone providers and our "pensions" are a virtual joke - the pensions in the US are a gamble on the stock market (and heaven forbid if there is an actual correction - stocks are fundamentally overvalued by at least 50%, but correcting that downward would wipe out so many people that politicians have no other choice than to feed the beast), and thanks to medical debt being a thing and elderly care costs exploding as well we can't even expect to inherit meaningful wealth. Oh and the old tale our boomer parents told us from "you have to waste your childhood with learning and learning and learning otherwise you end up poor" turned out to result in "we are poor anyway".
So, why should we defend a capitalist system that doesn't even give us anything in return? Why should we defend the right of rich people to exist when we have to struggle to make rent and food each month? Why should we not take up the pitchforks?!
US citizens are too lazy to consider voting for candidates other than the ones lambasted by their corrupt news sources. Picking up a pitchfork and deciding who to stick it into requires even more effort.
Well, Lenin did say “Study, study and study.”
And even academic degrees per se outside of academic careers aren't a guarantee for higher paying jobs any more, not since large companies started to use having an academic degree as a proxy to legally discriminate against wide swaths of the population, including normally protected classes: it's hard to get academic degrees with a variety of mental health disorders, and many people from socioeconomically disadvantaged castes (immigrants, poor people, people of color) get filtered out by the educational system way before they can even enter university.
So why should one go for an academic degree or otherwise put in unhealthy amounts of effort if you finish at 25-30 and still only get exploitative, underpaid labor? The entire "social contract" framework underpinning our societies is broken at a fundamental level and I don't see the political will to fix any of that unless the boomers are removed from society's high positions.
My father in the 90s was able to afford a SAHM with two children and a car on the salary of a low-level police officer, and by the time he was 30, to buy a large 3BR+kitchen+living room flat in Munich.
I'm as old as he was back when he bought that, and I have absolutely zero in savings, with the combined income of my s/o and me barely keeping up with rent and cost of living despite earning above average in an IT job. I couldn't afford to have a car but thankfully don't need it as public transport in Munich is actually worth the name. No, moving out of Munich is not really an option, as house prices and rents have exploded just the same in the entire area and rural areas are, as I described, absolutely left to rot in terms of infrastructure.
The world back then may indeed have not been as rosy as many of my generation paint it - but it sure was objectively better than today. Our only hope is that we can inherit something from our parents, assuming that there is something left over after elderly care will have robbed them of all their savings and assets.
No, unless you agree with what he said.
I'm in a trade union and here in Sweden we support the Left party because they support trade unions - e.g. in the 80s there were proposals for having union members on the board, having unions own a stake in the companies, etc. - these all would have helped a lot with the current mass layoffs and inflation.
Speaking of the US, the unionised work there is terrible: at 4PM they would drop everything and come back the next day. No overtime, no nothing. You can't do a rush job or anything, they worked at their own pace and they didn't care about our deadlines and stuff. Its like dealing with government employees.
On the other hand, working with non-union people was great. They would put in the hours with no fuss, and obviously get paid for overtime and stuff. But you could actually get them to work as much as possible in a day.
When given a choice, people prefer not to be overworked due to poor management/scheduling/greed. When given a choice, people prefer to have stability in employment. This is demonstrated by the fact that when they have collective power these are two of the common items they negotiate for. Unions are created to promote their members interests. There, now you understand unions :) They represent the interest of their members not the companies interests and not letting workers pay the price for poor management/scheduling/overcommitments (I think this is where you are getting confused).
Unions don't care to 'force companies' anything, They care to represent THEIR members priorities. What you are promoting are a company's priorities which the company already looks out for and would be a strange thing for unions to form to then also promote.