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Jun 29 • 4 tweets • 1 min read
I am old enough to remember Carillion calling its problems a "liquidity crisis" and asking HMG for a short-term loan to tide it over. It was actually so deeply insolvent that it couldn't even pay an administrator, so it went straight into liquidation.
Looking back further, I recall RBS insisting its problems were due to "liquidity shortages", as the value of its assets crashed and it slid deeper and deeper into insolvency.
And even further back, Northern Rock tapped the Bank of England for "emergency liquidity assistence" when markets refused to fund it. It, too, turned out to be insolvent.
So I don't buy #CelsiusNetwork's "liquidity crisis". I think it is insolvent.

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More from @Frances_Coppola

Fed Up Cassandra Profile picture
Jul 1
The financials in Voyager's press release reveal just how bad their situation is. They have a massive hole in their balance sheet labelled "3AC". Nearly three-quarters of their assets have gone missing. newswire.ca/news-releases/… Image
They forlornly say they are trying to get the money back. But 3AC is in compulsory liquidation. Chances of even partial recovery don't look good. Image
Voyager has appointed two financial advisers specialising in M&A and a legal adviser specialising in restructuring. But the damage is enormous. It looks beyond restructuring to me, though I suppose a distressed acquisition might be possible.
Read 5 tweets
Fed Up Cassandra Profile picture
Jul 1
Let's unpick this. It consists of two elements:
- a call warrant with a variable strike price conditional on unspecified performance triggers
- a subordinated credit facility.
Both are bad news for ordinary shareholders.
The $240m upper bound on the call warrant is the maximum that FTX would pay to buy out existing shareholders. If the company's valuation rose above that, FTX would exercise its option, acquiring BlockFi at a discount to market price. Shareholders would be unable to refuse.
Taken together, the call warrant and the subordinated revolving credit facility are mezzanine financing. I imagine the interest rate on the RCF is pretty high - as the fact that BlockFi has already raised interest rates suggests.
Read 5 tweets
Fed Up Cassandra Profile picture
Jun 30
Oh joy. BIS has produced a new version of its consultation on the prudential treatment of crypto asset exposures, which the crypto press has as usual entirely failed to understand.
Dear Finbold, the BIS is not "allowing banks to keep 1% of reserves in Bitcoin". It is actually severely limiting banks' exposure to Bitcoin and other Group 2 crypto assets. AFAIK no other asset class has an absolute capital exposure limit like this. finbold.com/bank-for-inter… Image
The original proposal aimed to discourage banks from holding Group 2 cryptoassets by making the capital requirements onerous. Clearly the feedback was that this was inadequate, so they've now added a total exposure limit as well.
Read 8 tweets
Fed Up Cassandra Profile picture
Jun 28
It is.

Basecoin closed down only a few months after this post was published, citing the US's securities laws as an insurmountable obstacle. basis.io
Two pseudonymous coders ("Ricky" and "Mort") created a spin-off from Basecoin, called Basis Cash. Barely two months after its launch in November 2020 it went into a death spiral from which it never recovered.
"Ricky" was Do Kwon, who went on to found the TerraLuna algorithmic stablecoin. TerraLuna's design was not quite the same as Basis Cash, but it contained the same fatal weakness. And it ended in the same way. A death spiral in May 2022.
Read 4 tweets
Fed Up Cassandra Profile picture
Jun 27
Actually, the confusion between "rise" and "accelerate" in that FT piece is so egregious that a more advanced maths lesson is needed. Here's my piece explaining first, second and third derivatives of price with respect to time, in plain English. coppolacomment.com/2021/05/calcul…
If the answer to this question is "yes", then that is the THIRD derivative of price with respect to time. But I think they mean "Has inflation risen again". If so, then that is the SECOND derivative.
First derivative of price wrt time: "prices rise"
Second derivative: "prices accelerate, inflation rises"
Third derivative: "prices hyperinflate, inflation accelerates"

Accelerating inflation looks like this.
Read 4 tweets
Fed Up Cassandra Profile picture
Jun 26
If you do have to oppose Roe vs Wade, do it from a utilitarian lens. Talk about how we don't always have the luxury to be moral. How women have always aborted unsafely in back alleys anyway and it doesn't matter if they die.
Doesn't work, does it?
Abortion IS a moral argument.
The debate over abortion is fundamentally about whether the life of an unborn child is more or less valuable than the life of a woman. It is thus a profoundly moral debate. It cannot be reduced to mere utilitarianism.
I must add that if you view abortion through a Benthamite utilitarian lens, the case FOR free safe legal terminations is beyond all reasonable doubt.
Read 4 tweets

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