Credit Suisse, which heretofore looked somewhat immune to credit market problems, has joined its peers in having a loss-making quarter. A Sf5.3 billion writedown on leveraged loans and mortgage instruments was the proximate cause.
Note the quarterly deficit was more than three times the consensus estimate. The CEO was also loath to declare the debt crisis to be in remission.
Credit Suisse Group, Switzerland’s second-biggest bank, reported a first-quarter loss that exceeded estimates on writedowns linked to deteriorating credit markets.
The net loss, the bank’s first in almost five years, totaled 2.15 billion Swiss francs ($2.1 billion), compared with a 2.73 billion-franc profit a year earlier, Zurich-based Credit Suisse said in a statement today. The median estimate of 14 analysts surveyed by Bloomberg News was for a 594 million-franc loss.
Chief Executive Officer Brady Dougan said the results were “clearly unsatisfactory” after 5.3 billion francs of markdowns on leveraged loans and mortgage-related securities…..
The writedowns at the securities unit included collateralized debt obligations that the bank said last month were intentionally mispriced by a “a small group” of traders. The bank had writedowns of 2.66 billion francs on CDOs, 1.68 billion francs on leveraged finance and 848 million francs on commercial mortgage-backed securities.
Profit at the wealth management unit fell 13 percent to 860 million francs, while earnings rose 3 percent to 464 million francs at the corporate and retail banking division…
On a number of occasions “people had seen the light at the end of the tunnel and it’s been a train coming down the tracks,” Dougan said today. “Things have stabilized a bit in April. While we’re certainly hopeful that things will improve from here, we’re not counting on it.”
Re: “people had seen the light at the end of the tunnel and it’s been a train coming down the tracks,” Dougan said today.’
Re: Nice background below related to that train in the tunnel. IMHO, grow as much food as you can this summer and get on it today and start a penny jar and save ever last cent you have!!!!!!
Explaining Japan’s Recession
Daily Article | Posted on 11/19/2002 by Benjamin Powell
Producing things that nobody wants and propping up malinvestments cannot possibly help any economy. This policy is equivalent to the old Keynesian depression nostrum of paying people to dig holes and fill them. Neither policy will revive the economy because neither forces businesses to realign their structures of production to match consumer demands.
Japan has experienced an Austrian business cycle. The initial boom was created by a central bank-induced monetary expansion. Because of repeated interventions, the economy has not recovered. The greatest malinvestments took place in capital-intensive industries in the earlier stages of production. For Japan’s economy to recover the government must stop intervening in the economy and allow the market process to realign the structure of production to match consumer preferences.
Japan has experienced an Austrian business cycle. The initial boom was created by a central bank-induced monetary expansion.
According to Austrians every boom is created by the evil CBs. Markets cannot ever fail by themselves, because as everybody knows, every person is completely rational and never makes mistakes.
I hope everyone will bear with me. Blogger has locked my blog. This is really an indictment of what passes for technology at Google; if you look at the characteristics of spam blogs, I don’t see how they could have singled Naked Capitalism out. And they ought to have screened it against my Google ad revenues or my Feedburner traffic, both of which they can readily access. Or better yet, contact me.
Worse, I am speaking on a first time panel of econbloggers at the Milken Conference next week. This sort of thing never happens at a good time, but this is particularly badly timed.
If you have any ideas, aside from getting off Blogger and raising hell in Mountain View, they’d be very much appreciated.
Please keep checking back….