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Captain Obvious and the Next Shiny Thing [1]

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Date: 2023-03-20

I’d like to make some observations about the banking industry. My qualifications are a little bit thin, although my wife worked in a bank for two decades and dealt first hand with bundled mortgages, and I drink Deer Park bottled water just like Alan Greenspan did. Captain Obvious notes that banking is a very competitive industry. He also notes that banks are not averse to risk taking, or even extreme risk taking as long as no one gets caught taking said risk.

During the great bank fiasco of 2008, the risk invention of the day were derivatives and credit swap bundles. The risks were enormous, but the financial instruments were so complex that even experts were unable to determine just who was vulnerable and to what extent. Fast forward to 2023, and two U.S. banks have gone under, Credit Suisse has been rescued by UBS, and yesterday’s headline said all eyes are on the Bank of England, whatever the hell that means.

So here is my thought for the day. The Next Shiny Thing for banks to take risks with, so complex that few have thought to look behind the curtain to unveil the con, is cryptocurrency. I fear we will soon learn that once more, major banks around the world, thinking that they are mandated to stay competitive and take risks that no sane person would indulge in, have massively been taken in by this latest Shiny Thing. Just a hunch that I am entertaining. What say you?

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[1] Url: https://www.dailykos.com/stories/2023/3/20/2159225/-Captain-Obvious-and-the-Next-Shiny-Thing

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