Slippery slopes and a race to the bottom
- davidjamesgrosse
- Jan 21, 2025
- 9 min read
Lean into your boots as it’s going to get bumpy.
ACT 1.0 – Back on top
The first snows of the season have fallen silently over the mountains, jagged peaks turned to ghostly silhouette. Sounds muffled, air brittle. The intrepid strapped into their boots, clicked down on bindings, breath misting the early light. Pristine slopes awaiting.
Anticipation heightened by an extended wait. Seventeen long years since they have been allowed to ski from this upper station[i].
But who are these expectant risk-takers and why are they here?
They are the great and the good, gathered in the high Alpine peaks that encircle Davos-Klosters taking time out from the World Economic Forum[ii].
They are the Bankers, Lawyers, PR spin doctors, Consultants and Government officials.
They have spent many years climbing up the mountain side, following a previous avalanche – a GFC (Gravity Fuelled Catastrophe).
Rumour has it that their reckless off-piste skiing had triggered a devastating snow slide, which then crashed through the protective barriers and wiped out the villagers at the bottom of the slope.
Many of the local businesses never quite recovered, the residents still paying to rebuild the damage caused by the wealthy thrill seekers, who each winter rode into town.
In truth only a few skiers have climbed the whole way back, many have hopped on the new chair lift, bought with the savings from the neighbouring hamlets.
Others glided effortlessly into the clouds, protected from the biting cold in their gilded gondolas.
A few still helicoptered onto the mountain top, burning a gallon every 2 minutes to find the ever decreasing snow pack, glaciers lost to global warming.
And so they are now gathered. Back on the pinnacle where they belong. Skis waxed to high sheen, the thrill of a black run awaiting, crash fences and slalom gates being dismantled by the course marshals.
What could possibly go wrong[iii]?
ACT 2.1 – The intervening years – Switzerland
It is not that they have had zero fun in the last few years. As ever, the Swiss like their winter sports – plunging downhill through snow and ice to the clanging support of cow bells.
Unfortunately one of their top competitors veered wildly off course in 2023 and needed to be rescued by a fellow countryman, just before plunging into a ravine.
Clinging to each other for safety they inched their way back to the safety of the groomed slopes and the local town[iv].
Intermission – Chocs away – it’s time for a Toblerone
From an article from Swiss Review (the magazine for the Swiss abroad) – August 2023[v]
“A marketing coup by Swiss big bank Schweizerische Kreditanstalt (SKA) kept everyone warm almost 50 years ago, when the forerunner of Credit Suisse gave away 800,000 ski hats.
These blue, red and white knitted accessories were striking rather than aesthetically appealing. Made of acrylic and sometimes a little too tight for comfort, they were an iconic piece of branding. Everyone wanted one. It gave SKA a clearer public profile.
These hats, originally freebies, currently fetch prices of up to 200 Swiss francs each at online auctions. In March (2023), the going rate was 280 times the value of one Credit Suisse share.
With the downfall of CS complete[vi], the hat is now a sought-after retro relic.”
ACT 2.2 – The intervening years – USA
At the same time a holey Swiss cheese was melting into fondue, the cool bro’s of US snow sports were having fun at Mammoth Mountain, Lake Tahoe and Big Bear Lake.
Keen to find white powder, much of their activity was off-piste, taking their snowboards where the rules don’t always apply, but setting off periodic avalanches for the unwary below.
One esteemed local believed he was popular, until the in-crowd[vii] stopped paying for his après-ski activities.
The barman refused him an ice cold beer to quench his thirst and the resultant liquidity crisis caused a loss of confidence as he crashed into the snow, wiping out onlookers as he slid to a halt.
The marshals investigated the accident and recommended changes to beer intake, protective gear and course markings[viii], about which nothing has since been done.
Intermission – Cool California (and Utah) snowboarders
In March 2023, a collection of chief financial officers from technology companies assembled in the Utah ski resort of Deer Valley for the annual “snow summit” hosted by Silicon Valley Bank[ix].
By the following week many of the same CFOs were exchanging panicky messages on whether they should withdraw their funds from SVB.
A sale by SVB of securities to alleviate a sharp drop in deposits had focused attention on their balance sheet vulnerabilities.
The prisoner’s dilemma was that if everyone who banked at SVB kept their nerve things may be OK, but that if money started to move then the slowest depositors could lose it all.
But the social contract from being friends and acquaintances who entertained each other on the ski slopes and in the bars was too fragile, and panic set in.
Customers initiated withdrawals of $42bn in a single day. The Federal Deposit Insurance Corporation declared SVB insolvent and took control.
A senior SVB executive noted:
“It turned out that one of the biggest risks to our business model was catering to a very tightly knit group of investors who exhibit herd-like mentalities”
To which the only response is: “no shit Sherlock[x]”
ACT 2.3 – The frozen North
Not all had been so reckless. Those from the higher latitudes appeared wary, perhaps due to their in depth knowledge of snow[xi].
The Canadians had avoided the worst of the GFC avalanche, but their pride was recently dented when one of their team was caught cheating and crashed into a well placed USA ice-wall (or America’s most convenient snow bank ©?).
A black ski run at Revelstoke in Canada is called Kill The Banker.
In the UK there is little winter sport until you hit the mountains in Scotland, and upon which two local favourites met their doom in the wild storms of 2008.
ACT 3.0 – Back to the future – USA. USA.
As the intrepid skiers wait, poised on their Davos mountaintop, they expect imminent news from the chill of a January in Washington.
The mood is to cast off the annoying rules[xii]. The crash barriers, helmets and run off zones. Who needs nursery slopes? Who wants to be on a green run when you can be in the black stuff.
Keen not to miss out, London has joined in[xiii]. Now unable to enjoy the pristine slopes of Europe it’s time to find some thrilling downhill competition elsewhere.
The GFC was so long ago, embrace the risks in a new race to the bottom.
Intermission – Mogul fields and other hazards
The United States Secret Service uses code names for presidents, first ladies, and other prominent persons.
Their name[xiv] for Donald Trump first time around was Mogul[xv] (and for Melania it was Muse).
One assumes this is to reflect his business background as an industry mogul[xvi], rather than as a large snowy bump that throws people off course.
In a perfect world I would have discovered that the standard colour coding for ski-slopes would include orange for a difficult mogul field.
Sadly this is not the case, albeit orange slopes do exist in some Austrian, Swiss, and French resorts[xvii].
Orange ski slope markers are also found above the terrain parks, should you want to drop in on some jumps and rails.
Other Trump related ski trivia[xviii] includes that he became an “aficionado” after marrying Ivana in 1977, as she was a former junior ski racer in her home country of Czechoslovakia. They met at the Montreal Olympic Games, where Ivana was a successful model[xix].
ACT 4.0 – We are where we are[xx]
Imagine we are all at the summit of the mountain standing alongside our excited skiers.
What advice do we give?
Firstly we need to embrace reality. Whilst our instincts might tell us to run to the chalet and hide under the covers, we need to acknowledge that they will soon launch through the starting gate and hurtle down the slope.
Hearing the muffled sound of the crash from under the duvet or watching it unfurl on the slopes results in the same outcome – an accident, a tangle of limbs and a lot of collateral damage.
But if you are on the course you may be able to shout some instructions or advise some new equipment, and you may even be able to head them off at the mountain pass.
As with the nervous beginner skier, counter-intuitively we will need to learn to lean into the front of our boots to gain control, not sway back fearfully, and we will need to keep our knees and ankles flexed for the unexpected, weight centred over both feet.
And on the end of our pair of feet we would be well advised to wear two skis.
Many have tried it with one, the single ski of rationality - adorned with carrot and stick decals, engraved with rules and regulations, incentives and controls; but it’s hard to turn sharply with only one edge.
The second ski will help you move both fast and slow, adorned with labels of behavioural drivers and psychology.
So as the leaders and bankers exhort us to remove the safety fences, toss aside the helmets and to indulge their need for speed, let’s hope they also learn how to parallel turn and stop quickly – a skill that requires both skis.
And remember – no matter how cold it gets, never wear a ski mask into a bank.
Notes
[i] For those who marvel at the initial purple prose, be wary. Starting a new article can be the most difficult bit. So today I (partially) outsourced the opening paragraph to ChatGPT, which has done a great job, albeit unable to replicate a distinctive tone.
[ii] The 2025 edition of the WEF is sub titled - 'Collaboration for the Intelligent Age'. Me neither. As noted in this article - collaboration is not currently in vogue:
[iii] One Group who advice on Global Risk (and financial crises) it would be wise to be wary of is the World Economic Forum, whose Global Risks Perception Survey (GRPS) “harnesses the expertise of the Forum’s extensive network of academia, business, government, international organizations and civil society”.
Each year they unerringly highlight that which is salient and already happening, to the detriment of that which subsequently arises. To peruse this year’s report to see what they are not emphasizing, and hence what is most likely to erupt see WEF Global Risks Report 2025.
[iv] High in the Swiss Alps there is a battle between private banks for wealthy clients, given their role as a winter playground for the world's rich. The position of UBS strengthened after it took over Credit Suisse in 2023, prompting rivals to respond.
See – Reuters: Ski resorts in sights of Swiss banks pursuing wealthy clients January 11th 2024 https://www.reuters.com/business/finance/switzerlands-efg-bank-poaches-credit-suisse-teams-2024-01-11/
[v] From - Swiss Review (the magazine for the Swiss abroad). August 2023. https://www.swisscommunity.org/fileadmin/revue/Ausgaben/2023/04/SRV_2304_EN.pdf
[vi] In one alternative version of how things may have played out, Credit Suisse could have been saved by a banker who died in a tragic ski accident in 2020. In particular, in mitigating the huge losses associated with the Archegos debacle. https://www.efinancialcareers.co.uk/news/2021/06/jason-varnish-credit-suisse
[vii] Wine, Skiing, and Loans: How Silicon Valley Bank Became Startups’ Best Friend – Wired March 15th 2023 - https://www.wired.com/story/wine-skiing-and-loans-how-silicon-valley-bank-became-startups-best-friend/
You can bring your skis to this Bay Area tech bank's new downtown Denver office – Denver Business Journal - January 22nd 2020. https://www.bizjournals.com/denver/news/2020/01/22/silicon-valley-bank-denver-office.html
[viii] Review of the Federal Reserve’s Supervision and Regulation of Silicon Valley Bank – April 28th 2023 https://www.federalreserve.gov/publications/review-of-the-federal-reserves-supervision-and-regulation-of-silicon-valley-bank.htm
[ix] Silicon Valley Bank: the spectacular unravelling of the tech industry’s banker. FT https://www.ft.com/content/b556badb-8e98-42fa-b88e-6e7e0ca758b8
[x] “No Shit Sherlock” - a riposte to someone who has just said something obvious. Which I have just done in this footnote. So No Shit Sherlock Squared.
[xi] The Canadians have a ski run called “Kill The Banker” at Revelstoke – presumably as a warning to the over confident weekend skier, rather than as an exhortation.
[xii] Trump Advisers Seek to Shrink or Eliminate Bank Regulators – WSJ - Exclusive | Trump Advisers Seek to Shrink or Eliminate Bank Regulators - WSJ
[xiii] Trump spurs red tape bonfire for EU finance rules. Just don’t call it deregulation. January 2, 2025 - Kathryn Carlson - Politico https://www.politico.eu/article/donald-trump-red-tape-eu-finance-dont-call-it-deregulation/
[xiv] The code name for the 45th/ 47th POTUS which is known and repeatable, at least.
[xvi] Started by Babur a descendant of Genghis Khan, the Muslim Mogul dynasty ruled much of India from the early 16th century to the mid-18th century. The Moguls (also Moghuls or Mughals) were known for their talented and powerful rulers, called "Great Moguls". English speakers borrowed the word for other powerful persons – e.g. in industry or media.
[xvii] A challenging example on an orange run is the “Swiss Wall” that drops down from the French resort of Avoriaz.
[xviii] There is also a meme found on USA T-shirts and bumper stickers that “Trump skis in jeans” – whether that is intended to be ironic (uncool), iconic (a maverick) or idiotic is unclear.
[xix] He liked to boast of Ivana’s skiing prowess, including in his co-written book - Trump: The Art of the Deal (Trump has cited the book as one of his proudest accomplishments and his second-favourite book after the Bible)
[xx] The phrase “we are where we are” – can be seen in two ways. Either as fatalism or pragmatism. It this situation it is important to take the latter course and remain engaged.
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