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Commercial vessels wait to pass the Bosphorus strait during a misty morning in Istanbul, Turkey, October 31, 2022.
Hard Numbers: Grain deal extension woes, FRB rescued, loose Libyan uranium, global coke binge
120 or 60: Although the Black Sea grain deal will almost certainly get extended before it expires Saturday, Russia and Turkey are tussling over how long that extension should be. Ankara — backed by Ukraine and the UN — wants to prolong the agreement for another 120 days, while Moscow is insisting on 60 days, presumably to pressure the West to lift sanctions against certain Russian payment systems.
30 billion: Asian and European stock markets on Friday saw gains hours after a group of 11 big US banks swooped in to rescue First Republic Bank, an embattled regional lender. The banks injected $30 billion into FRB to shore up confidence in the US banking system following the recent collapses of Silicon Valley Bank and Signature Bank.
2.3: A warlord has recovered an estimated 2.3 metric tons of uranium ore that had gone missing in eastern Libya. The uranium was probably left over from the late dictator Moammar Gadhafi’s defunct nuclear weapons program.
35: Global cocaine production surged by a whopping 35% in 2020-2021, according to a new UN report. One of the main reasons is that drug cartels have taken over coca-cultivating areas of Colombia previously run by the FARC and are competing to churn out more powder for Americans and Europeans to snort.An illustrative stock chart and Credit Suisse logo displayed on a phone screen.
Europe now feels the US financial panic
It's been hell week for banks on either side of the Atlantic. Days after the collapse of Silicon Valley Bank and Signature Bank sent shockwaves through the US financial system, now Credit Suisse, a major European bank, is in serious trouble.
Credit Suisse lost roughly 30% of its value Wednesday after disclosing major internal problems, which prompted its largest shareholder, Saudi National Bank, to refuse to give the bank more cash. But then its shares rebounded sharply Thursday thanks to a $54 billion lifeline from the Swiss central bank.
What does this tell us about the state of the global financial system? First, that the US jitters over SVB/SB are reverberating around the world, which means that any bad news about banks is going to get a lot more eyeballs than before. And while Credit Suisse does not yet pose a systemic risk, it might leave big holes in the balance sheets of other European banks if it goes under.
"European central bankers are probably thinking: This can't happen here," says Eurasia Group expert Jens Larsen. "But what's happening in the US will make them think twice."
Second, while big banks are more tightly regulated since 2008, they are not immune to the blowback from high-interest rates. The same way that SVB/SB lost a lot of money when the Fed raised rates to curb inflation, European banks are in a similar spot because the European Central Bank is following the Fed's lead.
Yet, unlike the Fed, Larsen says that whatever happens, the ECB will almost certainly push ahead with another hike on Thursday because "financial stability won't drive ECB monetary policy decision-making.”
Still, if the (in)stability continues, perhaps the ECB may need to rethink its approach and be as flexible as the current fluid situation demands.