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Pan-European Bank Run Is Now On: Capital Flight From UK To Switzerland, As GBPCHF Intervention Strikes Next

Tyler Durden's picture





 

Yesterday we disclosed that the reason for numerous SNB interventions in the EURCHF was due to billions in deposits rushing out of Germany and seeking the relative stability of Swiss neutrality. A quick look at the trading pattern of the GBPCHF shows that it is now UK depositors who are panicking and shifting their money to unnamed (not so much anymore) Zurich bank vaults. The result: a 300 pip move in the GBPCHF as the SNB rushes to put out this particular capital flight fire. Too bad it only succeeded for about 12 hours. The run on the bank (to another bank) in Europe is now on.

 


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Thu, 05/20/2010 - 09:52 | Link to Comment Whizbang
Whizbang's picture

Not totally relevant I know, but check out this heat map. there is no safehaven in U.S. Equities at all. Crazyness! I have not seen anything like it since 2008.

 

http://finviz.com/map.ashx?t=sec

Thu, 05/20/2010 - 10:05 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

The cockroaches have no where to run, no where to hide.

Thu, 05/20/2010 - 12:29 | Link to Comment LeBalance
LeBalance's picture

Real Estate

Asset

Inflation

Destruction

>>> roaches mortgage in, but they don't get out.

Thu, 05/20/2010 - 10:00 | Link to Comment lizzy36
lizzy36's picture

but what of cramer's prolific call on DB this week?

"Deutsche Bank's the king," he proclaimed. "Merkel's the champ," he said of the German chancellor

Thu, 05/20/2010 - 10:11 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Watching Cramer is like watching a protestor poor gasoline on his head and then setting himself on fire.

You know there's a greater purpose here but for the life of you, you can't figure it out.

Thu, 05/20/2010 - 10:56 | Link to Comment Whizbang
Whizbang's picture

Almost pooped a little I laughed so hard

+1

Thu, 05/20/2010 - 11:32 | Link to Comment Hulk
Hulk's picture

LOL, that was perfect...

Thu, 05/20/2010 - 11:55 | Link to Comment PhotonJohn
PhotonJohn's picture

Yeah, I knew gold had reached some kind of peak when Cramer started recommending it.

Thu, 05/20/2010 - 10:25 | Link to Comment hbjork1
hbjork1's picture

lizzy,

Who is Cramer?

Is that one of those blind men with his hand on an elephant?

 

Thu, 05/20/2010 - 11:33 | Link to Comment Conrad Murray
Thu, 05/20/2010 - 10:24 | Link to Comment Wyndtunnel
Wyndtunnel's picture

"It's the final countdown...

Doo doo dooo...doo doo doo doo dooooo"

- Europe

 

Thu, 05/20/2010 - 11:19 | Link to Comment Boop
Thu, 05/20/2010 - 12:14 | Link to Comment Day_Of_The_Tentacle
Day_Of_The_Tentacle's picture

OHHH WHAT PAIN..... PAAAIIINN, I SAY.

Gotta hand it to him though... for consistency, that is. Being a third below key pretty much all the way takes some kind of talent. Good laugh.... excruciatingly painful....but good.

 

Thu, 05/20/2010 - 10:25 | Link to Comment walküre
walküre's picture

ok, so where is the liquidity disappearing to?

Bündchen is HOT.

Thu, 05/20/2010 - 10:25 | Link to Comment walküre
walküre's picture

ok, so where is the liquidity disappearing to?

Bündchen is HOT.

Thu, 05/20/2010 - 10:26 | Link to Comment depression
depression's picture

Get your $0.01 bid's in early !

Thu, 05/20/2010 - 10:45 | Link to Comment ricksventures
ricksventures's picture

So what happens next, can someone help me ?

 

EURO banks loose cash = go down/bankrupt ?

Where is ECB and Merckel gonna get money for her bailout adventures ?

 

What exactly will SNB / all Swiiss banks do with all that pound and euro ?

 

tx

Thu, 05/20/2010 - 10:49 | Link to Comment BeerGoggles
BeerGoggles's picture

Could someone please explain why if money is flying into the CHF that the pairs go up?

If people are buying the CHF, shouldn't the EURCHF and GBPCHF go down?

Thu, 05/20/2010 - 10:59 | Link to Comment Whizbang
Whizbang's picture

It depends on what is being sold or shorted to purchase the CHF. Today, there is a huge yen squeeze happening, also it looks like the AUD is getting ass pounded into the ground as well, which could be the arb trade today.

Thu, 05/20/2010 - 11:43 | Link to Comment Renfield
Renfield's picture

"If people are buying the CHF, shouldn't the EURCHF and GBPCHF go down?"

One would think. In these halcyon days of intervention (aka meddling), one would be wrong.

Swissie, for example, notices that everyone and their auntie is selling EURCHF (selling EUR to buy CHF).

So Swissie goes ahead and BUYS a few billion (was it 13B?) of EURCHF.

Boom. Market rises, a few big green candles shoot up, shorts get destroyed as the price rises.

Swissie does that a few times in a day, with several pairs; continuing buying big every time the red candles start seriously lowering the pair.

Pretty soon the market goes dead. Traders can't short the pair b/c if they do they will be overwhelmed by a wave of Swissie buying. All that's left in the market is Big Brother Central Bank, buying and making sure the price goes up. Oh, and completely disconnecting the pair price from any form of fundamentals, analysis, or trend movement. Hence the term 'short squeeze'.

(They do this to devalue their own currency, CHF, ostensibly to preserve their export market. I don't think that's the reason, but that's their story and they're sticking to it.)

The other thing they've like to do a lot is buy a LOT as the pair goes down, limiting red candles to a few pips down at a time, letting it drift down a few dozen pips an hour, two steps down and one step up. This slows the slide to a glacial pace. (Needless to say, when they intervene with big buying sprees, the pair flashes up 100 pips in a few minutes, often sparking follow-on buying on the momentum.)

Nice thing about this is it doesn't show up on the hour charts. Looks like a bunch of buyers charged into the pair. You can see it happen in real time if you're watching the minute charts as it's happening.

You can probably guess my general disapproval of these measures. But then, I always prefer to take my crashes and losses right up front, no hiding. (Coincidentally, not being a bankster, I wouldn't have a choice but to do it that way anyhow.)

And THAT'S why as Europe is spectacularly falling apart, the EURUSD pair is generally up. ('Recovered' and 'bounced' on politician reassurances and risk tolerance, as the MSM prefer to say. Oh, and on 'global recovery' too. And green shoots.)

Thu, 05/20/2010 - 11:02 | Link to Comment walküre
walküre's picture

ok, so where is the liquidity disappearing to?

Bündchen is HOT.

Thu, 05/20/2010 - 11:10 | Link to Comment JenkinsLane
JenkinsLane's picture

Can anyone predict a timeframe for capital flight restrictions amongst EU countries or do people think punitive tax rates on capital flight, e.g. 50%+ are more likely? I'm thinking here along the lines of the situation in the UK in the 70's; I vaguely recall the tax rate on capital flight as being somewhere in the region of 70% for the sheeple around the time the UK had to go to the IMF.

Danke schön

Thu, 05/20/2010 - 11:56 | Link to Comment Privatus
Privatus's picture

Creditanstalt redux. 

Thu, 05/20/2010 - 11:58 | Link to Comment Grand Supercycle
Thu, 05/20/2010 - 13:07 | Link to Comment BlackBeard
BlackBeard's picture

Sigh...everything is good over there except the cheese with holes...

Thu, 05/20/2010 - 15:10 | Link to Comment Grand Supercycle
Grand Supercycle's picture

 

For several days I have been warning of EURUSD buying support as detected by my indicators, and this has been confirmed by the recent break out.

The proprietary indicators I use can identify trend changes before they occur.

http://stockmarket618.wordpress.com

http://www.zerohedge.com/forum/latest-market-outlook-1

Thu, 05/20/2010 - 18:14 | Link to Comment Buck Johnson
Buck Johnson's picture

People are getting their money out of europe and want to wait and see what the outcome of everything will be. 

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