Winehole23
03-09-2021, 10:17 AM
Financialization has "fat tail (https://fs.blog/intellectual-giants/nassim-taleb/)" risks.
Some of Greensill Bank’s depositors could lose some or all of their deposits since only the deposits of private investors and foundations are insured by the deposit protection fund of the Association of German Banks. Thousands of jobs could be lost as companies that had grown to depend on Greensill’s funding to pay their suppliers suddenly lose that funding and are unable to pay their suppliers. This could set off a domino effect along supply chains.
Greensill itself warned that some of its clients could become insolvent, putting at risk as many as 50,000 jobs globally. Gupta’s GFG Alliance alone employs 35,000 people in 30 countries, many of them in the steel industry. According to (https://www.bloomberg.com/news/articles/2021-03-08/gupta-s-empire-warned-of-insolvency-without-greensill-funding) Greensill’s insolvency filing, GFG would also collapse into insolvency if Greensill Capital “ceased to provide working capital finance to GFG.” GFG naturally denies this. It is frantically trying to raise emergency funds from Glencore by forward selling aluminium to the metals behemoth.
Nobody yet knows who will end up holding the bag. The candidates include governments that provided guarantees on some of the debt GFG issued to buy up struggling domestic companies. The insurance industry is also exposed, in particular two firms: Insurance Australia Group Limited and Tokio Marine Holdings. The former is probably big enough to absorb a heavy blow, the latter less so. It already had to raise (https://www.afr.com/street-talk/insurance-australia-group-launches-750m-raising-20201120-p56gdf#:~:text=Insurance%20Australia%20Group%20was %20in,shore%20up%20its%20funding%20position.) fresh capital in November. Credit Suisse and GAM, whose share price never recovered from its last Greensill-related scandal, are also at risk.
But the biggest danger of all, says (https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/greensill-case-could-trigger-loss-of-confidence-in-supply-chain-finance-market-62983186) Erik Hofmann, a professor at the Institute of Supply Chain Management of the University of St. Gallen in Switzerland, is that Greensill’s downfall could set off a ripple effect across the $1.3 trillion global supply chain finance market, which is already grappling with reputational issues and the fallout of the coronavirus pandemic.
https://www.nakedcapitalism.com/2021/03/another-softbank-funded-unicorn-hits-the-wall-carnage-ensues.html
Some of Greensill Bank’s depositors could lose some or all of their deposits since only the deposits of private investors and foundations are insured by the deposit protection fund of the Association of German Banks. Thousands of jobs could be lost as companies that had grown to depend on Greensill’s funding to pay their suppliers suddenly lose that funding and are unable to pay their suppliers. This could set off a domino effect along supply chains.
Greensill itself warned that some of its clients could become insolvent, putting at risk as many as 50,000 jobs globally. Gupta’s GFG Alliance alone employs 35,000 people in 30 countries, many of them in the steel industry. According to (https://www.bloomberg.com/news/articles/2021-03-08/gupta-s-empire-warned-of-insolvency-without-greensill-funding) Greensill’s insolvency filing, GFG would also collapse into insolvency if Greensill Capital “ceased to provide working capital finance to GFG.” GFG naturally denies this. It is frantically trying to raise emergency funds from Glencore by forward selling aluminium to the metals behemoth.
Nobody yet knows who will end up holding the bag. The candidates include governments that provided guarantees on some of the debt GFG issued to buy up struggling domestic companies. The insurance industry is also exposed, in particular two firms: Insurance Australia Group Limited and Tokio Marine Holdings. The former is probably big enough to absorb a heavy blow, the latter less so. It already had to raise (https://www.afr.com/street-talk/insurance-australia-group-launches-750m-raising-20201120-p56gdf#:~:text=Insurance%20Australia%20Group%20was %20in,shore%20up%20its%20funding%20position.) fresh capital in November. Credit Suisse and GAM, whose share price never recovered from its last Greensill-related scandal, are also at risk.
But the biggest danger of all, says (https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/greensill-case-could-trigger-loss-of-confidence-in-supply-chain-finance-market-62983186) Erik Hofmann, a professor at the Institute of Supply Chain Management of the University of St. Gallen in Switzerland, is that Greensill’s downfall could set off a ripple effect across the $1.3 trillion global supply chain finance market, which is already grappling with reputational issues and the fallout of the coronavirus pandemic.
https://www.nakedcapitalism.com/2021/03/another-softbank-funded-unicorn-hits-the-wall-carnage-ensues.html