Dan Davies - Author of Lying for Money on Credit Suisse and the 2023 Banking Failures

INVESTOLOGY: re-think investment management

Dan Davies is the author of Lying for Money and an expert on banking crises. We discuss the latest string of banking failures: Silicon Valley Bank, Credit Suisse and what that means for the financial system.

EPISODE LINKS

Lying for Money https://www.amazon.co.uk/Lying-Money-Legendary-Frauds-Workings-ebook/dp/B078WFT5JV
Dan Davies's new substack: /backofmind.substack.com
Twitter https://twitter.com/dsquareddigest
QUOTES

“The trouble with fraud is it's like the evil twin of the real economy. It's part of the real economy, and you can't necessarily get rid of it. And it might be that the optimal amounts of fraud to tolerate might be surprisingly high.”
“It was actually Credit Suisse that invented AT1 Bonds in the last crisis. The purpose of these securities is that they are meant to provide capital for a bank that's gone into resolution. They were high-yielding instruments, and that's why they were popular. But everyone getting into these things knew or should have known that if the bank gets into real trouble, they could get zeroed out.
"Silicon Valley Bank looks like it's going to be the best bank ever to go into insolvency. It went bankrupt on US government bonds and agency mortgage bonds.”
TIME STAMPS
00:00 Intro
00:57 Dan Davies Profile
03:06 The Credit Suisse collapse and AT1 Bonds
05:35 Is it a banking crisis?
10:19 The problem with narrow banks
13:22 The tough job of central bankers
22:04 Fraud and the Canada Paradox
24:25 Difference between hype and fraud
27:40 Vulnerability to fraud in happiness and good times in the 19th century
30:58 Detecting fraud 1: fast growth
33:10 2: People don't change
35:22 3: Check out the product not the demo
39:41 Response to the book
41:46 Narrative history
42:50 Dan's substack and next book

ABOUT
Investorama is your guide to the future of investing without the hype. In each episode, reformed investment banker and marketer George Aliferis and his guests take a deep dive into a key topic that shapes our financial future.
George is the founder of Orama.tv (podcast & video company), as well as its content arm Investorama, a podcast, YouTube channel and Newsletter.
https://linktr.ee/investorama

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit investorama.substack.com