Quantitative destruction: Has the ECB made another gigantic error? Hope and fear: we hope the banking crisis is over, we fear that is not.
More unexplored banking bombs. Credit Suisse should be merged into UBS.
Our latest podcast is up!
Discussion about this post
No posts
On the regulatory failure point, I would highlight just one example.
The Solvency II regime is designed to protect insurers against 1-in-200 year events that could occur over a 12 month time horizon. That’s the objective.
EIOPA quantified this as the maximum of a 70% relative increase and a 1% absolute increase in short term interest rates. So 12 months ago the stress to the key rate would have been merely a 1% increase. That’s what insurers are obliged to protect themselves against. 1-in-200 year stress my foot. Experience this year has than surpassed it.
Ref: page 106
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32015R0035&from=EN
This is a most extraordinary exchange. It appears the consequences of the FED/Treasury decision was only realised after the Senator asked some probing questions.
https://twitter.com/unusual_whales/status/1636675744767291393?t=jHFwsE8c7cxGC3PlQyOAow&s=19