The Saudi National Bank (SNB) has announced that, due to regulatory reasons, it will stop buying shares of the Credit Suisse and shares of the bank of Zurich fell as much as 26%.
Rumors about the withdrawal of funds from Credit Suisse had been circulating in the markets for a week and they intensified after the collapse of the Silicon Valley Bank in California that turned the red light on the international financial scoreboard and unleashed a crisis that, everything indicates, is only in the start.
There is one datum that can serve to fix the reference framework of what is happening: in the 2008 crisis (fall Lehman Brothers) the spearhead was the withdrawal of funds from Washington Mutual (WaMu), until then the largest savings bank in the United States.
WaMu withdrew $16.7 billion in 10 days. Silicon Valley Bank (SVB) has been eliminated 42,000 million dollars in 10 hours. The fall was accelerated and plunged.
Financial timelines are much shorter and so are US government responses.
On Sunday, Joe Biden’s government and the Federal Reserve ordered the full deposit guaranteeup to Friday by 100%, only up to US$250,000 for SVB depositors.
The first reaction of savers was calm but with degrees of freedom. As the hours go by, a transfer of assets from relatively smaller banks to larger ones.
At the same time, expectations that the process of raising interest rates in the United States had come to an end had begun to take hold in the markets.
The reference interest rate set by the Federal Reserve has had an accelerated rise since March of last year, when the “zero rate” policy ended which, with some periods of slight rebound, had begun in 2008 in the midst of fear Lehman Brothers fall.
the torn rate to zero in March 2022 and is currently at 4.75% per annum in a. bullish raid pronounced and supported by the statements of the head of the Federal Reserve, Jerome Powellwhich had ratified his decision to keep raising it to be tougher against inflation by 6% a year.
In the market the bets are now 100 to 1 the Federal Reserve will abandon the policy of raising the rate to defuse tensions on a financial system that had been taken out of a fluid amount of money and now has to adjust to a belt closure.
The US financial system has started to hear the noise and money is accelerating its movements in a world powered by technology, algorithms and systems with extremely sensitive loss alerts.
And in the middle of the bullfight, what is Argentina like?
No emerging country is excluded from a financial meltdown and, in the case of Argentina, the peculiarity is that years have passed without being able to access the international credit market.
The decline between 2 and 3% of bonds and up to 10% of Argentine shares listed abroad materializes in a country risk rate of over 2,400 pointsArgentina would pay the credit 24% more than the US, a huge amount.
Black Wednesday after the fall of the SVB and the never-ending shock of Credit Suisse darkens the financial prospects of Argentina, which is facing the very serious problem of drought.
The global financial tremor adds uncertainty to an Argentine outside sector that already expects some to lose income 20 billion dollars this year due to the decline in agricultural production.
Already fewer dollars were expected due to exports and now a phase of uncertainty has opened up until we could see the Federal Reserve’s response on the interest rate trajectory and assistance to a financial system like the United States to whom Rating agency Moody’s has downgraded its confidence rating.
As if the drought and the global financial collapse and annual inflation above 100% were not enough, in the last few hours there have been voices from Kirchnerism suggesting that the Government should not meet the target of reducing the fiscal deficit this year to 1.9% of GDP committed to the International Monetary Fund.
The achievement of the fiscal target is one of the indicators tending to recompose part of the low level of confidence in government management, but not everyone agrees on the government party.
The old Argentine idea that breaking deals costs nothing comes back to the fore in times of crisis, even when drought is not the government’s purview.
In theory, drought could be an argument for asking for additional funding from the IMF and transitional to deal with its consequences, but it would be difficult for a government with a history of threatening defaults to achieve it.
The global financial crisis is unfolding and Argentina is getting caught in the middle a delicate career in an attempt to try and stabilize something in the midst of a deep relative price imbalance where the lag of the dollar It is one of the main chapters.
Source: Clarin
