The Weakest Link currency matters

The Weakest Link!

In a speech to the House of Commons in 1948, Winston Churchill said, “Those that fail to learn from history are doomed to repeat it”.

Karl Marx, the ‘father of Communism’ in 1852 said, “History repeats itself, first as a tragedy, second as a farce”.

Bear Stearns, a US based global investment bank, was valued at over $20 billion in March 2007. One year later it collapsed in March 2008 and was sold to JP Morgan Chase for $236 million.

In February 2007, Lehman Brothers was capitalised at nearly $60 billion. On 15 September 2008, Lehman Brothers failed and went into bankruptcy. To this day, it remains the largest bankruptcy filing in US history.

The bankruptcy of Lehman Brothers caused a shockwave in the global financial markets and led to the ‘credit-crunch’.

In the UK, the Northern Rock and the Bradford & Bingley fell and until March 2022, the NatWest was majority owned by UK taxpayers, oops, I mean the government ????

In the last month, we have seen the collapse of Silvergate Bank and Silicon Valley Bank (SVB) in the USA and Credit Suisse, a 167-year-old bank collapsed in just 72 hours and was hastily sold to arch-rival UBS for just CHF (Swiss Francs) 0.76 a share. It valued at CHF 8.29 in the last 12 months. On Friday, Deutsche Bank came under heavy selling pressure, falling by over 14%, with Commerzbank, another German Bank falling by 5% and France’s Societe Generale by 6%.

Who Is Next?

Whilst I am always criticising the ever-negative MSM (Mainstream media) sadly I am pretty sure in my own mind that there are going to be various weak links that will give way. The question is who, in which country and will it be rescued like Bear Sterns or allowed to fail like Lehman Brothers?

The financial circumstances for all of us taxpayers are serious, so I disagree with Marx, its not a farce, there is nothing remotely funny about the coming turmoil.

Market Update

Last Thursday, 23 March was the third anniversary of Boris Johnson’s first lockdown announcement.

Time flies.

The Pound enters the last week of March trading at its 50% 1-month trading level against the Euro and just off the 7-week high registered last Thursday against the US Dollar.

The USA Fed and the UK Bank of England both raised interest rates by 0.25% in the last week.  

The US base rate range is now 4.75% to 5%, its highest level since 2007.

The UKs base rate now stands at 4.25%, its highest level since November 2008.

In the UK, retail sales rose for the second consecutive month in February. Having now returned to pre-pandemic levels. Even despite the fresh spike in the UK inflation rate to 10.4%. The driving force being food prices that have risen to their highest rate in 45 years.

London retains second spot in the Global Financial Centres Index behind New York. Still well ahead of Paris (14th) and Frankfurt (17th).

The Cosmos Offer

Of course, currency market volatility can bring trouble but with careful monitoring can also bring opportunity.

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We are pro-active not reactive.

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Please call +44 (0) 300 124 6409 or email us to discuss your individual currency requirements.

This week’s quote is from Matshona Dhliwayo

“Your end can be greater than your beginning: butterflies are the greatest proof of this.”

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