The Illusion of Stability
Recent events in both the United States and Europe have shocked the investment world.
The rapid collapse of Silicon Valley Bank, Silvergate Bank, and Signature Bank all in the United States and all within a matter of days, produced a fear that a full-scale U.S. banking crisis was about to unfold. And before investors could absorb the significance of those domestic bank failures, a 167-year-old institution and one of the leaders throughout the World – Credit Suisse – was acquired by its arch competitor, UBS, in a hastily-arranged merger negotiated at the urging of the Swiss government.
Thanks to the instantaneous sharing of opinions and news across social media and communications platforms, the speed with which the fear of contagion crossed the Atlantic and infected the European banking industry was similarly unprecedented. It soon became clear to all sophisticated investors that the stability they relied upon was in fact an illusion. An illusion that has since shattered.