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Credit Suisse taken over amid fears of financial meltdown
Nick Beams, WSWS, Mar 20 2023

In an emergency action aimed at trying to prevent a meltdown of the European and global financial system, the Swiss government, the Swiss National Bank and the country’s financial authority, FINMA, organised the sale of the beleaguered bank Credit Suisse to UBS. The decision, in which it overrode through executive action a requirement that shareholders vote on any takeover, was announced by the government at a press conference Sunday evening before Asian markets opened today. It came after a series of measures last week, including a $54b liquidity provision by the central bank for Credit Suisse, later extended to around $100b, failed to staunch the flow of money out of the bank, reported to be at least $10b per day last week. Announcing the decision, under which UBS will take over Credit Suisse at a cost of $3.25b, Swiss president Alain Berset said:

On Friday the liquidity outflows and market volatility showed it was no longer possible to restore market confidence and a swift and stabilising solution was absolutely necessary.

He warned that an “uncontrollable collapse of Credit Suisse would lead to incalculable consequences for the country and the international financial system.” Under the deal, hammered out in series of crisis meetings over the weekend, the Swiss government will provide more than $9b to UBS to cover some of the losses it may incur as a result, and the central bank will make available $100b to UBS to facilitate it. However, the Swiss finance minister, Karin Keller-Sutter, claimed it was not a bailout but a “commercial solution.” In her press conference remarks she pointed to the global implications of the Credit Suisse crisis, saying:

The bankruptcy would have had huge collateral damage on the Swiss financial market and a risk of contagion internationally. The US and the UK were very grateful for this solution. They really feared a bankruptcy of Credit Suisse.

The same message was delivered by the financial regulator FINMA. It said Credit Suisse had experienced a “crisis of confidence” and there was “a risk of the bank becoming illiquid, even if it remained solvent, and it was necessary for authorities to take action to prevent serious damage to the Swiss and international financial markets.” The forced sale of Credit Suisse is the most significant in the banking system since the crisis of 2008 and it is far from clear that further ramifications have been averted. As the Financial Times noted in a comment:

Whether it would halt European bank runs is unknowable. Reassurance is a dangerous game in a financial panic. It can easily confirm the fears of investors as allay them.

While it had been weakened by the tens of billions of dollars in losses resulting from the collapse of Archegos Capital and the Greensill financial firm, as well as low profitability in some of its investment activities, the trigger for its demise did not emerge from within Credit Suisse itself. Rather, its collapse is an expression of the vast shift in the financial landscape over the past year as central banks, led the US Fed, have rapidly raised interest rates after providing essentially free money for 15 years under various forms of “quantitative easing.” It was set off by the collapse of the US Silicon Valley Bank, when it was taken over by the Federal Deposit Insurance Corporation on Mar 10 after a $40b bank run. Credit Suisse then came under intense pressure last week after the Saudi National Bank, one of its backers with 10% of its shares, announced it was not going to put in any more capital. The Swiss central bank then offered a $50b credit, but this seems to have deepened the crisis rather than alleviating it, leading to the emergency meetings over the weekend.

Credit Suisse has been a globally significant bank for decades, operating in Europe, Asia and the US. At the end of 2022, it had a balance sheet of half a trillion dollars and 50k employees around the world, thousands of whom will be laid off because of the USB takeover. And there are clearly fears that its takeover and the crisis it expresses, will be manifested in other parts of the financial system. Coinciding with the Credit Suisse decision, the Fed and five other major central banks announced measures to increase the flow of dollars into global financial system to ensure adequate liquidity. The FT reported that one of the concerns of European authorities is that the “heavy losses imposed on Credit Suisse shareholders, and bondholders” holding its debt could “increase stress in bank funding market this week.” In a joint statement, the central banks said that from today they would hold daily auctions of dollars rather than weekly to “ease strains in global funding markets.” On the other side of the Atlantic, there are indications that, far from abating, the crisis set off by the SVB collapse is intensifying. When markets open today attention will focus on the First Republic Bank, one of the first to suffer “contagion” from the demise of SVB.

Last week, 11 major banks, spearheaded by JPMorgan Chase and its CEO Jamie Dimon, with the collaboration of US treasury secretary Janet Yellen, decided to deposit $30b between them with First Republic to alleviate concerns that, like SVB, it would have problems meeting depositors’ withdrawals. But so far, at least, the plan does not seem to be working. Despite the $30b inflow, shares in the bank plunged more than 30% on Friday bringing the total loss since the SVB collapse to more than 70%. First Republic has the same problem as SVB. The market value of its holdings of US treasuries and other financial assets it invested in, when interest rates were near zero, is now below their book value because of the interest rate hikes initiated by the Fed. Meaning, it would incur significant losses if they had to be sold to meet the cash demands of depositors. Financial analysts are giving First Republic the thumbs down. Julian Wellesley, global analyst at Loomis Sayles, told the WSJ:

It’s not clear whether its viable as a stand-alone entity.

Analysts at KBW, a financial firm which monitors bank performance, said the changes in First Republic’s balance sheet over the past week were “staggering” and, together with its decision to suspend the dividend on common stock, painted a “very dire outlook” for the company and shareholders. In a note on Friday, analysts at the financial firm Wedbush said there would be “minimal, if any” residual value left if the bank ended up being sold because of the markdown in the value of its loans and securities in any sale. The crisis at SVB, which is clearly present throughout the banking system, especially among the thousands of smaller and middle-sized banks, has prompted calls for the lifting of the level of deposits which are automatically insured from $0.25. It has found support from growing sections of the political establishment and from banking industry lobbyists. Democratic Senator Elizabeth Warren, who likes to present herself as some kind of opponent of the ultra-wealthy who would benefit from such a move, told CBS on Sunday she thought lifting the $0.25m cap was a “good move.” Posing the question of where the new limit should be, she said:

Is it $2m? Is it $5m? Is it $10m?

Warren attempted to cloak such a measure, benefiting ultra-wealthy investors (one of the depositors with SVB, the venture capitalist Peter Thiel stood to lose $5m had the decision not been made to pay uninsured depositors in full), as giving support for small companies and non-profit organisations to pay wages and their utility bills. Another aspect of the deepening financial crisis, not attracting the same kind of headlines as on the banks but no less significant, is the situation in the $22b US Treasury market, the bedrock of the global financial system. An FT article at the weekend noted that last week the market for US government debt suffered its most volatile period since the crisis of 2008. Daily trading volumes more than doubled “as the failure of SVB sparked a headlong dash into the safety of Treasuries.” So far, analysts have said market functioning has by and large held up. But that could change at any time. The article cited comments by Priya Misra, head of global rates research at TD Securities who said:

We’re one crisis away from a complete breakdown of Treasury market liquidity.

Musicians, actors, artists sign petition demanding Roger Waters be allowed to perform in Frankfurt
Kevin Reed, WSWS, Mar 20 2023

Many artists, musicians, writers and others have signed an online petition demanding that the cancellation of Roger Waters’ upcoming concert in Frankfurt, Germany be rescinded and the performance held as originally scheduled. The petition argues that the Feb 24 decision by the Frankfurt City Council and the Hessian State government to cancel Waters’ scheduled May 28 performance is based on thoroughly false and slanderous charges. The German government officials allege that the internationally acclaimed artist and co-founder of the British rock band Pink Floyd is an anti-Semite. The petition explains that the Frankfurt authorities based their accusation against Waters on his call for “a cultural boycott of Israel,” his comparison of the Israeli government to the South African apartheid regime and his efforts to “put pressure on artists to cancel events in Israel.” The statement points out that these positions are not unique to Waters, nor are they “outside the boundaries of mainstream public opinion,” and that many human rights organizations such as Amnesty International, Human Rights Watch, Israel’s B’Tselem, various UN agencies and South African officials have also defined Israel as an apartheid state. Meanwhile, innumerable organizations and individuals have made the comparison between Israel and apartheid-era South Africa.

Among the prominent signatories to the petition so far are musicians Brian Eno, Peter Gabriel and Eric Clapton, actresses Susan Sarandon, Julie Christie and Alia Shawkat, film directors Ken Loach, Terry Gilliam and Ramin Bahrani, playwright Caryl Churchill, artists Julian Schnabel and Dread Scott, comedians Alexei Sayle and David Cross, journalist John Pilger, professors Noam Chomsky and Cornel West, historian Ilan Pappé and political activist Daniel Ellsberg. The petition was initiated by American comedian, writer and political commentator Katie Halpern on Mar 12 on Change.org under the headline “Let Pink Floyd’s Roger Waters Perform In Frankfurt, Germany.” As of this writing, the petition has received 9,642 signatures. The campaign defends Waters’ criticism of Israel’s treatment of Palestinians as “part of his long-term advocacy on behalf of human rights across the globe.” The petition introduction also asserts:

The effort to vilify Waters is a dangerous campaign that purposely conflates criticism of Israel’s illegal and unjust policies with antisemitism. This conflation perpetuates the antisemitic trope which presents Jews as a monolith who blindly support Israel. Some of Israel’s loudest critics are Jews. But those who weaponize antisemitism are fine contributing to it.

Finally, the petition calls on those who canceled the concert to reverse their decision and points a finger at them, stating that they “would rather see Waters’ music removed than engage with the issues his music highlights,” and that they should “consider their own history of antisemitism, racism and genocide and how instances of these can be stopped today in other parts of the world, including in Occupied Palestine.” As reported here by the WSWS at the time the concert was canceled, the disgraceful act of censorship is being carried out by a political coalition in Frankfurt led by the Social Democrats, Greens and Free Democrats. The venue where the concert was to be held is jointly owned in a 60–40 split between the city and the state of Hesse, which is run by a Christian Democrat/Green government that also approved the decision. The WSWS went on to explain that the false accusations of anti-Semitism directed against those who oppose the policies of the Israeli government are being used in Germany by far-right and militarist forces, the real source of fascism and anti-Semitism. In September, Waters’ show in Krakow, Poland, was canceled by the venue at the instigation of local far-right politicians, and, in October, the concert scheduled for May 21 in Munich was also canceled. In these cases, government officials used the false claims of the artist being both anti-Semitic and “pro-Putin,” because of his principled denunciations of the US-NATO war in Ukraine. In a Mar 16 post on his social media accounts, Roger Waters wrote that his lawyers were taking steps to make sure that his shows in Munich and Frankfurt took place as contracted. He wrote:

I am taking the unprecedented step of appealing to the law to protect me from the unconstitutional actions of two authorities which seem to rely upon the fundamentally false accusation that has been made against me; namely that I am antisemitic. I want to state for the record and once and for all that I am not and never have been antisemitic and nothing that anyone can say or publish will alter that.

He concluded by insisting that he did not need to “keep making my position clear on this issue,” and he was confident that “truth and the law will prevail and that these authorities will not succeed in denying any of my basic human rights.” The growing support for Roger Waters among artists, musicians, writers, actors, film directors and others reveals that the campaign to silence him rests on a very thin pro-Zionist and pro-imperialist foundation. Meanwhile, the brazen lies being spread about Waters are themselves evidence of the desperate effort by the ruling powers to keep the broad public from being exposed to political positions and ideas with which many would no doubt agree.