Signal or Noise: Is this the start of a second Global Financial Crisis?

Banking is a game of confidence. When the public loses faith in its financial institutions, the whole system crumbles. Film buffs will know the bank run scene from the classic film It's a Wonderful Life. Investors with long memories can simply tell you about the drama that unfolded in 2008 when Lehman Brothers collapsed and how rivals like Fannie Mae and Freddie Mac had to be bailed out by the federal government. 

Well, they say history doesn't repeat itself but it often does rhyme. If the last month is anything to go by, then banks certainly have a way of repeating previous mistakes. 

The primary cause of the 2008 banking meltdown and the unfolding crisis in 2023 is eerily similar - excessive risk-taking at a time when the macro picture looked so good.

The difference this time is that two Global Systematically Important Banks (also known as the "too big to fail" club) have merged with UBS buying out long-time rival Credit Suisse for a fraction of its once-huge value. The deal caused shockwaves throughout global markets with some investors even speculating on the future of European compatriot Deutsche Bank. All this before we even consider the collapses of Silicon Valley Bank, Signature Bank, and Silvergate Capital stateside. 

So will 2023 be a repeat of 2008? Or is this just a case of poorly managed risk in individual situations?

This month's episode of Signal or Noise probes those exact questions and how the fallout from the global banking crisis is impacting the decisions of investors.

Joining moderator Hans Lee are:

• Diana Mousina, AMP Deputy Chief Economist and series regular

• David Cassidy, Head of Investment Strategy at WILSONS

• Daniel Siluk, Portfolio Manager at Kapstream Capital

Note: This episode was taped on Wednesday April 5 2023 and first published for Livewire Markets on Wednesday, 12 April 2023.