Thank You ! / Credit Suisse / Cryptos

Good Morning Ladies and Gentlemen

«The culpability of corporate directors in often putting their interests ahead of shareholders and customers seems a reoccurring, unaddressed course of business. When times are good, they deserve high compensation and stock options; when their decisions cause loss and hardships, it is time for risk to be shared.»

By Tom, one of my readers

Thank you!

Ladies and Gentlemen, This week, I initially wanted to write about an analogy with Aristotele’s unmoved mover. However, I felt like coming back on my last weekly. Thank you for the many emails I received to my last week’s Stefan’s weekly. I became slightly emotional when I wrote it; thanks for your understanding.

Accountability

I wanted to ensure that the message, not only obviously incapable management and shareholders but also clients who enabled the frivolous behaviour of Credit Suisse’s management ever since the Great Financial Crisis, maybe even before, should be held accountable. I know this is wishful thinking, and I know that most customers are simple, kind people who do not ask questions. Not many think about the fact that the big bonuses, the limousines with drivers, the buildings at the most expensive addresses, and the silver teaspoons to go with the expensive china have to be paid for, and thus no one questions where the money comes from and whether, in addition to too high fees, too high risks are also taken. However, I genuinely believe that mature bank customers should consider such matters, and if they do not, they should, as a consequence, bear part of the risk. As Tom put it, it cannot be that we «privatise profit and socialise risk.», i.e. that the broader population pays for it.

Cryptos

Let us move to another topic. Many cryptocurrencies, above all, Bitcoin, were initially launched as a decentralised, fast and cheap global means of payment. This was the idea behind the protocol. It was not primarily designed to be a store of value or a product of speculation. Nevertheless, this is precisely what it has become. As a result, most transactions in cryptocurrencies are speculative.

Advantages of FIAT currencies over cryptos

I am also a moderate critic of the FIAT system. It indeed has its weaknesses. However, where is the advantage of a system, like in cryptocurrencies, without a hint of a chance of recovering lost or stolen money? Ladies and Gentlemen, the ultimate lender who steps in if the worst happens does not exist in the crypto environment. The last lender, like in the case of Credit Suisse, remains central to any crisis case.
Moreover, who else should represent it but a state institution, which certainly does not enjoy organising bailouts? It is probably no fun for them, but it is their job, and they are doing it, and I am pleased they are. While I believe that large parts of a population can not assess the consequences of what would happen if state institutions did not interfere in a crisis, most of the population is probably, even if unknowingly, happy they do so. While I can not think much of privatising profits and socialising risks, I am still happy to know there are institutions stepping in when the worse comes to worst.
Now, Ladies and Gentlemen, this “guarantee” of the ultimate lender does not exist in the world of cryptocurrencies. Funny enough, the notion of many crypto “investors” is the opposite, i.e. they think that cryptos are more secure. They obviously are not, or not yet. Think about it.

Ladies and Gentlemen, please share your opinion with me, but please remember (instead of hitting the reply button) to send your messages to:
smk@incrementum.li.

Many thanks, indeed!

I wish you an excellent start to the day, a wonderful weekend, and above all, joy!

Yours truly,

Stefan M. Kremeth
CEO & Head of Wealth Management
Incrementum AG – we love managing assets

Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 102
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li