My Friend, You’re Right. Be Patient.

We’re on a long road that zigs and zigs. Just because we can see it doesn’t mean it’ll happen immediately. [The Rude Awakening] March 24, 2023 [WEBSITE]( | [UNSUBSCRIBE]( My Friend, You’re Right. Be Patient. - Yesterday’s Rude was brutally technical. Sorry about that. - The edifice is collapsing around us, but we need to be patient. - The mailbag asked some provocative questions. [Jim Rickards Issues Urgent Announcement To Readers]( [Click here to learn more]( >> A major stock market event will hit just days from now. Act right away or get left behind forever, legend warns. [Click here now for access](. [Click Here To Learn More]( [Sean Ring] SEAN RING Happy Friday! I’m writing this on Thursday afternoon in Asti. By the time you read this Friday morning, I will be landing in Brussels for some Belgian Trappist Ales with Aussie Trav. Before I do that, I wanted to write you about a few things. First, yesterday’s Rude was far too technical and probably put you to sleep. I apologize for that. But if you finished it, you know as much about AT1 and CoCos as most bankers. I’m serious! Most of them don’t have any idea what happened. To get it into three sentences, I’d say, “CS issued $17 billion in ‘principal write-down’ CoCos to strengthen its balance sheet. The Swiss government forced CS to write them down to zero, so UBS never has to repay those bonds. That made it much easier for UBS to take over CS.” That’s it. Second, we haven’t had our crash yet. You can see what’s coming down the road, yet it hasn’t materialized. It’s incredibly frustrating. I want you to know I share your frustration. But as Jim Rickards said, “The banks go first.” Not last. And going, they are. Silvergate, Silly Valley, Signature, Credit Suisse… It’s happening. The last thing to go is the stock market. It’s when retail investors finally capitulate. And we’re simply not there yet. Think about this. When the stock market finally crashed in 2008, Bear Stearns, Fannie and Freddie, Merrill Lynch, AIG, Lehman Brothers, and WaMu had all fallen. The real estate market had already fallen off a cliff. And while the Fed was cutting its Fed Funds rate, market rates were actually increasing! In short, there are a lot of other things that need to happen before our thesis plays out. But play out, it will. Just stay the course with me. Now, I’m going to turn to the mailbag. This time around, it’s juicy. Friday Mailbag The Iraq War Great article about Iraq on 3-21. Except for that bit that the war was about oil. US free access to Iraqi oil was never in question. Please refer me to your best source that the war was really about oil. I've been looking for such, but have never found. I am very happy to be corrected, if such exists. Thanks much. Robert L. Thanks for writing, Robert. Sure, there were other reasons as well. But I hold to oil being the main one. As for proof, I point to these quotes: “Of course, it’s about oil; we can’t really deny that,” said [General John Abizaid]( former head of U.S. Central Command and Military Operations in Iraq, in 2007. Former [Federal Reserve Chairman Alan Greenspan]( agreed, writing in his memoir, “I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil.” Former [Senator and Defense Secretary Chuck Hagel]( said the same in 2007: “People say we’re not fighting for oil. Of course, we are.” The link above on General Abizaid is helpful. Additionally, I direct you to the Carter Doctrine: Let our position be absolutely clear: An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force. I wonder how that will hold up against China and Russia wooing Middle Eastern countries like Saudi Arabia and Iran. It’s an open question. Dear Sean, I really enjoy and appreciate "Rude." I'm writing in hopes that you will clarify a misconception that I may have regarding Dubya and WMDs. First, I know that a lot of folks are saying that Dubya lied about WMDs. He said that Saddam had, and used, WMDs. I agree with the statement that no WMDs were found. I say if Saddam hadn't used them all, then the remaining stuff was buried under any one or two of an infinite number of sand dunes. I recall seeing a video taken from a low-flying helicopter over Kurdish territory. This video showed hundreds, if not thousands, of dead bodies of Kurds. The narrative was that Saddam had used poison gas on them because they disagreed with him over something. Poison gas is a WMD. I also remember reports of Saddam firing SCUD missiles at Israel, trying to get them involved in the war. The news said that we defended Israel with "Patriot" missiles, shooting down the "Scuds." Scud missiles are WMDs. Sean, if you have time, please correct me if I'm wrong. Waiting for your reply… Best regards, Jack G, Viet Nam Vet. Thank you, Jack. Though I’m more libertarian than anything else, one of my great regrets is not serving. I just can’t get over how many useful skills my military friends have. (I’m sure you, like I, know many freedom fighters who fought for their country first!) So I pay special attention when I’m talking with a serviceman. I’m not going to correct you. Because technically, you’re correct. Poison gas is indeed classified as a WMD, as are Scud missiles. I’ll defend my position this way: if you asked the average American what a WMD is, they’d say something like… - ICBM - Atomic bomb - Daisy-cutter - A fast-spreading disease meant to kill all (Covid, anyone?) My point - and I don’t think it’s a trivial one - is that Americans overwhelmingly supported the war for a few reasons: righting the world after 9/11, ridding Iraq of perceived nuclear weapons, and doing those things quickly and cheaply. We were “liberators.” And truth be told, if the war lasted one year and cost that $50 billion Rumsfeld said it would, no one would be talking about it in anything other than glowing terms. But it cost - without even considering the oil premium American commuters directly paid - about $3 trillion over 20 years. So my Econo-BS meter is off the charts. Because if you’re going to prosecute a war over Scud missiles with [a maximum range of 700 km]( and poison gas - utterly horrific and abhorrent as it is - that dissipates over a battlefield, it better be quick and cheap. I’d say - and not flippantly - there are wmds and WMDs. But I take your point and completely understand if you disagree with my thinking. [[VIDEO] Nord Stream Attack a “Covert Act of War” By President Biden?]( [Click here to learn more]( Shocking new details have come to light that all but PROVE Biden had something to do with the attack on Russia’s Nord Stream pipeline… And the ramifications are going to be felt by you and EVERY American citizen… Including crippling fuel shortages… widespread “Biden blackouts”… and energy bills rocketing to $1000! This is NOT a drill. [Click here to reveal the shocking truth – and learn how to protect yourself NOW]( [Click Here To Learn More]( My Charts I liked your analysis in "Energy Stocks are Good, But Are They Good Right Now?" (03/17/23). I notice, however, that the charts you refer to as showing 50- and 200-day moving averages appear to show 10- and 40-day simple moving averages. Your point is, nonetheless, well made. G.A. G.A., thank you for catching this. I should have explained it better on the day. If you’ve got a weekly chart, a 10-week MA is a 50-day MA (5 days in a trading week), and the 40-week MA is a 200-day MA. I will make sure I do this next time. Great spot! Wrap Up There were a couple of great questions without names attached to them, so I’ll address them next mailbag issue. Also, thank you for the fantastic support and info: Bruce W., George H., E. L. T., my man Beau Jon S., Joe E., Mike R. (yes, I need a record!), Kevin B., Douglas G., Joyce in cold Michigan, Arthur H., Richard H., Tom H., Sandy, Martin, Bruce P., and Gary from Fredericksburg. Gary, my parents live right down the road in Cibolo. We always get to Fredericksburg for a meal and a stroll when I visit them. It’s a lovely place! Have a wonderful weekend! All the best, [Sean Ring] Sean Ring Editor, Rude Awakening In Case You Missed It… A Rant and a RIP For My Old Bank [Sean Ring] SEAN RING Good Morning Reader, Good Thursday morning to you! I’ve been putting off writing about the demise of my old bank, Credit Suisse. I didn’t write about it in the Rude all week because I didn’t have the energy to do it justice. But since this Morning Reckoning gives me a bit more latitude, I’ll tackle the subject here. If you read the Rude, you know I spent over 11 years of my life over two stints working for Credit Suisse. And if you think that was a waste… I worked for Lehman Brothers for about 15 months before my first CS stint! I’ve worked in CS’s Eleven Madison Avenue office in NYC, its 1-5 Cabot Square office in London, and its swanky 87-88th floor office in the ICC in Hong Kong. In between my western and eastern stints, I got into financial training. It so happens I trained CS staff in Singapore, Hong Kong, Mumbai, Jaipur and Pune. So I know the bank rather well. And other than friends losing their jobs, I’m not sad it’s gone. In this piece, I’ll tell old stories, what CS’s problems really were and why banking regulation is ultimately useless. Now let me share some of the amazing things that happened while I worked for them. It Wasn’t All Bad I didn’t realize how much I wrote about the good times in the Rude. I’ll link all those articles. In short, my life never would’ve turned out this way without having worked at CS. After all, not many workplaces second you from New York to London… and many years later, from Singapore to Hong Kong. In New York, I never would’ve fallen in love with [our impossibly beautiful 20-year-old intern]( – hold your horses, I was only 23 – and dated her for two years. Our first date is one for the ages, as you may read later. While in London, Hung-Wah never would have driven me to Bruges for [Belgian waffles](. I had forgotten my old boss, Ed, happily paid my tuition (out of CS’s pockets) [for London Business School](. Thanks Ed! If I didn’t go to LBS, I never would’ve met Aussie Trav. That night we spent at the Duke of York pub in St. John’s Wood [listening to a drunken head of risk management]( informs this very piece. And I never would’ve got a bird’s eye view of the mortgage-backed securities debacle if I hadn’t met [my girlfriend, who worked for S&P]( and explained everything to me. Finally, I got to see the [great proprietary trading desk of Alan Howard, Chris Rokos]( et al, at work. They are still at it, at Alan’s Brevan Howard hedge fund and Chris’s family office. If you read those pieces, you’ll know me very well. Interestingly, the first column I ever wrote for the Rude, was titled “[Credit Suisse Hwangs Itself; UBS Loses High Ground, Suffers $774m Loss]( That explains quite a bit. And I’ll reference it here. [Breaking: Did Biden Really Blow Up Nord Stream?!]( [Click here to learn more]( New evidence has just been released the all but PROVES a shocking truth… President Biden gave the green light to blow up Russia’s Nord Stream Pipeline! According to [this shocking new expose]( Crippling fuel shortages… widespread “Biden blackouts”… and energy bills rocketing to $1000… Are about to hit American shores as a result. [Click here to learn the TRUTH about Nord Stream and how it will impact YOU](. [Click Here To Learn More]( Senior Leadership The problem was at the top of the house. In Zurich. Yes, Board-level idiocy. Sure, you had some dummies in Asia and the Americas. But the Swiss, themselves, were clueless as to how to run a global bulge bracket bank. (I hasten to remind you – the Swiss government bailed out UBS itself in 2008.) You’ll never see a more incompetent bunch of unjustifiably overconfident midwits in your lives. As a CS employee, I can’t tell you the number of times I asked, “Who’s stupid f*cking idea was this?” Most are already gone, thank the maker. As for the ones that remain, I hope each and every one of them gets fired. If they get to stay at the new UBS, it’s a crime. But really, hiring Tidjane Thiam was the pièce de résistance. Thiam was the CEO of the UK’s Prudential insurance company (not to be confused with The Rock in the US). Despite coming from two rich West African families, speaking fluent French, English and German, clutching an Insead MBA and being a former McKinsey consultant, Thiam is a doofus. [His ass should’ve been thrown out of Prudential]( for a botched takeover of AIG’s Asian life insurer AIA. But thanks to The Bernank’s helicopter money and the Bank of England trotting happily behind, sniffing Helicopter Ben’s ass, Prudential’s shares quadrupled under Thiam’s “leadership.” This fooled the dopey Credit Suisse board, featuring [“King of the Dipshits” Chairman Urs Rohner]( into thinking hiring a black insurance CEO would goose CS’s share price. And hire him they did. At his first press conference, when asked if it would be different running an investment bank rather than an insurance company, the new CEO – and old McKinsey hand – said no, it’s just about numbers. Soon after that presser, a Managing Director and I were walking up to the office. He looked at me and said, “I can’t believe Tidjane said that. Let’s see what the markets think.” Needless to say, the markets weren’t impressed. But the biggest mistake of Thiam’s reign was sidelining the sales and trading teams just as a new bull market began. It couldn’t have been a worse move. Thiam wanted to copy UBS to create a wealth management powerhouse – not a bad idea – but one of CS’s great strengths was its traders and salesmen. The investment bank thrived, mostly. The private bank did, too. But during Thiam’s reign, the S&P 500 climbed over 62%. While Goldman Sachs, Morgan Stanley, Citi, and Bank of America raked it in on their trading floors, Credit Suisse barely participated. This is Bastiat’s “Unseen” of why CS collapsed. UBS Takes Over I used to joke on LinkedIn, begging that UBS takeover CS to improve the look of my profile. I thought it should’ve happened years ago, but the argument was always, “To what end?” “Getting Credit Suisse’s Board away from the moving parts,” was a good enough answer for me. Because ultimately, the Archegos and Greensill disasters happened because the C-Suite overruled the people on the ground. Yes, risk managers told their bosses not to do these deals. But they were overruled because Thiam’s “entrepreneur’s bank” strategy of combining the private and investment banks colored their judgment. That is, Bill Hwang’s private money was in the private bank and his hedge fund money was in the investment bank. If CS pissed him off, they lost twice. So they treaded lightly. Far too lightly. Costing a combined $6.78 billion, those two scandals destroyed Credit Suisse’s already barely existing credibility. How CS lasted another two years is beyond me. A Bailout at What Cost? The Swiss National Bank (the Swiss central bank) backstopped UBS in a way US banks can only dream. From [The Wall Street Journal]( The complete write-down of Credit Suisse’s securities had been pushed for by UBS executives to reduce the burden the firm inherited by taking over its rival. Some investors were caught off-guard because Credit Suisse common shares were spared, with UBS paying $3.2 billion for them via its own stock, even as the AT1s were written down. While that upends the common order in an insolvency, there was a fierce debate over whether Credit Suisse AT1s in fact allowed such a move in their documentation. Finma, the Swiss financial regulator, said Sunday that Credit Suisse was experiencing a crisis of confidence and risked becoming illiquid, even if it remained solvent, and required the state-engineered deal to stay alive. The government provided a more than $9 billion backstop to UBS on potential losses. Sowing consternation among AT1 investors: Swiss authorities hastily passed a law last week that expedited the regulators’ ability to write down the riskier bonds to zero. I’m running out of road here, but luckily I explained the AT1 capital situation in today’s Rude Awakening. Just [click here]( and read it if you want to know more. I’ll leave you with these shocking tweets: [tweet] Credit: [@WallStreetSilv]( [tweet] Credit: [@KobeissiLetter]( As Thomas Sowell once said, “In every disaster throughout American history, there always seems to be a man from Harvard in the middle of it.” In this very Swiss disaster, in the middle of it was a guy from Insead. RIP, Credit Suisse. Say hi to Lehman for me! Let me know your thoughts by emailing me [here](mailto:feedback@dailyreckoning.com), I really enjoy reading them! All the best, [Sean Ring] Sean Ring Contributing Editor, The Morning Reckoning feedback@dailyreckoning.com [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2023 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your Rude Awakening e-mail subscription and associated external offers sent from Rude Awakening, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@rudeawakening.info. This address is for feedback only. For questions about your account or to speak with customer service, [contact us here]( or call (844)-731-0984. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized financial advice. We allow the editors of our publications to recommend securities that they own themselves. However, our policy prohibits editors from exiting a personal trade while the recommendation to subscribers is open. In no circumstance may an editor sell a security before subscribers have a fair opportunity to exit. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. All other employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. Rude Awakening is committed to protecting and respecting your privacy. We do not rent or share your email address. Please read our [Privacy Statement.]( If you are having trouble receiving your Rude Awakening subscription, you can ensure its arrival in your mailbox by [whitelisting Rude Awakening.](