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Money Stuff: Credit Suisse’s Oopsie Bonds Go Down

by
Matt Levine
Money Stuff
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Credit Suisse's Bonds Go Down

  • Background:
    • Banks must have enough capital to protect themselves from losses.
    • For the risk that Credit Suisse sees as "insignificant," they buy insurance for it because it is cheaper than having the required capital.
    • Credit Suisse sold catastrophe bonds in March 2020 to insure against natural disasters. Many view this bond as too complex for even insurance professionals to handle.
  • The recent price turmoil has been triggered by confusion over whether Credit Suisse can draw on the insurance for operational failures.

Robinhood/Say

  • While many believed investing would become less stressful for average investors, Robinhood and "YOLO" culture have completely changed that narrative.
  • Average investors have begun wrapping their identities around their stocks (e.g., discussing their investments on message boards).
  • Robinhood is now allowing retail investors to submit questions for its management through Say Technologies as retail investors become more embedded into the "hobby" of investing.

SPACman

  • A 39-year old software engineer sunk his entire $1.6 million life savings into Bill Ackman's SPAC, which later expired worthless on July 16 when the SEC put a halt to Ackman's SPAC.
  • Ackman did warn investors not to speculate and buy short-dated options on his SPAC.

Ryan Cohen

  • Despite only being a 12% shareholder, Ryan Cohen rose to become chairman of GameStop.
  • Cohen's prior success in online commerce as the CEO of Chewy made it plausible for him to make the case that he could solve GameStop's problems.
  • Instead of relying heavily on "meme culture" to obtain votes, he pitched reasonable arguments that could help GameStop move to an online platform.

The Poly Hacker

  • The hacker of Poly Network explained in a Q&A that their sole purpose was to "have fun" and "keep the tokens safe" after he found a bug in the protocol.
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