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Capital Controls Coming to Greece and Switzerland
Greece
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A few weeks ago I wrote about my conversation with a friend in Athens (Link). At the time, he believed that the June 17 election would bring a different result than the May 6 election disaster - the catalyst for change being the fear of leaving the Euro. So far he has been proven right. So I called to get an update.
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BK – It seems you might be right. The polls from Greece this weekend have given the European markets a lift today. Do you still believe that the centrist parties will win sufficient votes to form a coalition government and avoid a catastrophe?
Athens – Only a fucking idiot would invest money based on these polls.
BK – Are the polls not correct?
Athens – The European leaders have scared the Greeks with their talk about throwing Greece to the wolves. So yes, I think that the fringe on the extreme left and right will not get as many votes as they did on May 6. But Syriza (anti-bailout) has gained votes. The election is a complete crapshoot.
It may not matter. It’s not certain that Greece can make it to June 17 without a crisis.
BK – Explain that.
Athens – There is no money left in Greece. In the first two weeks of June, the government and the banks will face a huge cash squeeze. Everyday more money leaves as depositors withdraw cash and transfer money out of the country.
It’s clear to everyone who lives here. Greeks are not stupid. Either exchange controls happen before the election, or they happen immediately after. The election will not change that either way.
BK – What do you mean by "exchange controls?"
Athens – A ban on money transfers out of the country. Limits on the amount of cash that can be withdrawn from a bank or ATM.
BK – What are the odds that this happens before June 17?
Athens – The election is now twenty days away. For Greece that is a very long time. If the Europeans wanted to send a message to Greece, they would stop the emergency lending. So I would say it's 50-50 that we see some measures before the election .
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Switzerland
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Last week there was a funny looking move in the EURCHF cross rate.
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We now know that this blip was an insider who bailed on a short EURCHF position after getting a call that the head of the Swiss National Bank (SNB), Thomas Jordan, would soon be publicly talking about exchange controls in Switzerland.
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The move in the direction of exchange controls is not just a matter for the SNB. The entire government is behind the effort to ring-fence the country from its neighbor’s troubles.
At the request of the Swiss Central bank, Switzerland’s National Bank Financial Market Authority (FINMA) has formed a “crisis committee”. The members include Federal Councillor Eveline Widmer-Schlumpf, SNB President Thomas Jordan, and FINMA President Anne Héritier Lachat.
This crisis group has the authority to do pretty much as it pleases. If it wanted to introduce exchange controls in Switzerland it could do it in an hour. I’m sure that a complete roadmap of policy actions has already been laid out. I’m also sure that benchmarks have been set that would trigger the introduction of exchange controls. Certainly one of those benchmarks would be if Greece establishes its own set of controls, or formally leaves the EU. We are very close on those triggers.
There is a very strong possibility that exchange controls are established in both the strongest and the weakest countries in Europe in less than a fortnight. If those two extremes establish capital barriers, the other countries of Europe will be forced to take similar actions in a matter of months.
Who will blink first? Will it be Switzerland or Greece that ignites the fires in Europe? My guess is that Switzerland will force the issue onto the table. It will happen very soon.
Notes:
I have no positions in the CHF crosses. I think you would be nuts if you did. Don’t let the flat lined graph of the EURCHF at 1.2012 fool you. There is a ton of two-way risk in that cross these days.
There are nearly 10m homeowners in Eastern Europe (Hungary, Poland, the Czech Republic, Romania and Croatia) who have a mortgage in CHF. I think those folks have something to worry about. What happens in the FX market over the next month or so is not clear, what will happen to the EURCHF rate in the next few years is a clear as it gets.
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I'd take the other side of that wager. Financial superconductivity means one bank isn't broke until they are all broke, and that hasn't happened yet. When it does it will be so ugly you won't be logging on to Zerohedge for grins IMHO.
WINNING
That's even better than Schroedinger's Bank
I lost all respect for the Swiss when the Jews/Israel started extorting money from them in the late 90s via WWII "guilt". And now the slightest whiff of the US govt coming down hard on them to release the names of Americans w/ Swiss accounts and they fold like a house of cards- not to mention pegging their currency to that trash Euro. They get what they deserve
That happened after UBS and CS became too big to bail...
Re the Swiss payments to Jewish organisations in 'settlement compensation' for harm to Jews in the Nazi era -
Israeli journalist Barry Chamish, has talked about how those wealthy Jewish groups have kept the Swiss money for themselves, and used a hundred bureaucratic excuses to not distribute the funds to the actual World War II survivors living in Israel, who are largely elderly and impoverished, and who often die without seeing one shekel of those funds extorted in their name.
And some of those elderly poor Jews - being EU citizens by birth - have come back to Europe, even to Germany! - to get medical and other care they cannot get in cruel Israel.
As Chamish and other Jewish journalists point out, Israel and the big-money Jewish groups are quite cruel even to the common Jews they supposedly represent.
My Cantonal Bank Banker told me that CS and UBS are both illegally providing the IRS with loads of data. Switzerland has become the IRS's bitch.
CS and UBS are Swiss banks in name only. Swiss do exactly what you are doing - use a cantonal bank or PostFinance and be immune from the USA .
I have had an account with Migrosbank since 1997. I just had to fill out a W8(?) so that they can report my info (I have maybe a whole 5,000 CHF in that account) to the IRS. Neither ZKB nor BKB will open an account for me, as they do not wish to comply with the US. No idea about how the Post banks work. All I know is, my German nationalization won't come any too soon for me. I'm sick of tyranny. I always thought that reporting my bank accounts here to the IRS was sufficient. Apparently not. Still, how would YOU feel if you had to send your account info (numbers, etc.) to DETROIT for processing? It wouldn't surprise me if my giro account just turned up empty, shortly before my rent comes out.
Belize aint playing ball with the IRS.
Stable,english speaking,bearer accounts available in any currency.
Would not keep anything in a bank at the moment though,except
running expenses.
Demand your Pay in something else besides US Dollars.
Maybe they will bank you then knowing you are one of the few reportables.
PostBank will not accept a non-Swiss.
Go to CIA factbook and see what banks are paying for use of your money. There are several banks in various rapidly growing countries, which have better credit rankings than US banks, do not comply with US bullshit and will pay 6.5% to 13% and all business can be transacted online.
To be more exact Postbank will not open (or keep) an account for someone not domiciled in Switzerland.
Do us a favor and go commit a hate crime. We know you want to, and ZH would be better off if you Jew haters were in jail and couldnt fill up the comments with your rancid filth.
You know who I REALLY hate? Brain-dead antifas. Love to see all of them murdered by their "diversity" friends that they are so hot on replacing the native stock of all European countries with.
Who is "us"? You do not speak for me. Personally, I get very tired of zio-trolls. They are everywhere on the internet trying to make an issue out of non-issues... and what they seemingly end up doing is turning people against them and the cause they claim to protect.
Is that the point? Are you TRYING to create backlash?
Firstly, there was nothing about hating Jews in the comment above. Secondly, even if there was, why is it a special 'crime' to hate Jews, while hating muslims, blacks, or any other 'group' of people is normal? Jews are not special, get over it. Don't bring on that WW2/Hitler crap - you guys have squeezed so much guilt out of it by now, it doesn't work anymore. And anyway, I'm asian, that guilt doesn't mean anything to us.
So are the Arabs.
PS: If you are Oriental, then just say so --- enough already with this idiotic and geographically ignorant "Oriental = Asian" prattle. In case you hadn't noticed, the continent of Asia includes MANY more peoples than just the Oriental ones. By stating "I'm Asian", you could just as easily be declaring your identity as a Russian, or a Turk, or an Indian, or an Iranian, or a whole host of other nationalities, none of which are Oriental.
Bit off topic but over here in UK there's been a media flurry over a recent GCSE question asked of 15 year olds school kids. The question was worded " Why are some people prejudiced against Jews"?
A female spokesman from the Jewish Chronicle or some other organisation was explaining to the BBC radio presenter why it was more offensive to the Jewish community compared to any other group.
The radio presenter asked "So how would you mark a paper if someone said - because they're idiots"
The Jewish woman was absolutely outraged at such blatent anti-semitism threatening to invoke all kinds of hell on the BBC and this BBC presenter in particular!
The presenter calmly replied in spite of such a torrent of abuse "You're not listening, the answer was some people are prejudiced because they are idiots'
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Special treatment encourages intolerance it would seem.
Bruce, does your Greek contact actually live in Greece or is he simply Greek but working on Wall Street? I suspect the latter because if he lived in Greece he'd know that Tsipras has managed to become a modern day Kolokotronis for the Greeks, with Troika instead of the Ottoman empire being the enemy this time.
Repeat after me, the polls are bogus, a fabrication of the status quo's complicit media.
Tell your friend.
He lives there. You?
TX - I was wondering about the same my friend. It is so easy to manipulate the polls. They do it in USA all the time.
Also OT - I noticed the same political trend developing all over the world. It is a generational conflict of massive proportions. Younger people want change and the old establishment is using all sorts of tricks to keep the status quo going.
I think Bruce knows so Greek guy who is fisherman in Boston. They probably all voted for the 2008 Islamic including Bruce.
Without going back to the drachma nothing changes.
"We now know that this blip was an insider who bailed on a short EURCHF position after getting a call that the head of the Swiss National Bank (SNB), Thomas Jordan, would soon be publicly talking about exchange controls in Switzerland."
So Bruce, who the #uck is suppose to follow up on this form of perverse... ahem... I mean free market capitalism? Can't these #uckin trades be audited?
This isn't capitalism... its a rigged casino. Every time I see one of the various Muppet masters talk about how government legislation would affect capital formation, or hurt their ability to offset counter party risk... its a #uckin lie and a sham... They are talking about 5% of legitimate activity to mask a 95% casino play. These red herrings of impediments to capital formation are thrown up like motherhood and apple pie... you just can't question them, or else you are a socialist or an illiterate who doesn't get it.
It is propaganda at its finest and worst. The system is one a one way train track headed for a cliff. I am really not looking forward to living in a world of $400/oz silver.
That's easy enough to fix.
Put 10% of your NW in it, you'll change your tune.
Already done... and more than 10%.
400 dollar silver...
YEEHAW!
Now making coin into cash (Whatever it might be in a new world.. that is the challenge.)
That will make gold around between 4K and 7K depending on the Au to Ag ratio.
Those student loans can be paid with a few coins instead of 20 years future income to the bankers.
if silver is at $400/oz I would wager student loans and other civilities, good and bad will have disappeared. Velocity of this level of global trade can't/won't function on precious metals as currency. Be very careful what you hope for
I would not cry for the student loans and the whole goddamn sorry mess.
If it all went poof, the sooner the better to break the chains that shackle this Nation.
"We now know that this blip was an insider who bailed on a short EURCHF position after getting a call......."
Maybe 'we' know but we readers don't. How about citing who is the insider and maybe who made the call?
Think it through. The members of the "crisis commitee" should have been the only ones to have this information prior to Jordan speaking publicly about it. So the leak had to come from a member of that committee.
Who did the damage to the EURCHF is more complicated. UBS was involved in the market at the time, but who were the working for? I would bet that it was a macro hedge fund out of the US.
WHAT would you do with that particular datum? If you can't do anything about it, then you have no NEED TO KNOW.
Might add some volatility to the markets very soon. Tx for posting on a holiday.
I agree on the being flat in CHF Bruce. I do have alarms on the EUR/CHF, (which were drawing cobwebs) and was surprised when they went off last week.
Found out why.....but the alarms have been re-set.....going to be interesting to say the least.
Bruce, don't mke yourself become a shill for TPTB - the Greek opinion polls released to the public these days are either completely fabricated or were carefully selected.
If they can fabricate opinion polls they will also try to fabricate the election result. Be ready for anything. SYRIZA might be better off losing and letting the others ride the tsunami all the way to hell. Because hell it will be no matter which way you look at it.
They will just confiscate the gold.
If there is any gold...
Customer shocked "allocated" gold not in Swiss bank: http://kingworldnews.com/kingworldnews/Broadcast/Entries/2012/5/22_Egon_von_Greyerz.html
The same "they" who haven't even been able to extract taxes owed from Greek citizens?
In the US using Obama's recently enacted powers to confiscate all assets during a "National emergency". It's a little more complicated in a still democratic Europe.
Making an edict and enforcing said aren't the same thing.
I believe the United States Government has the power through the special Presidential Orders that are kept ready for time of trouble.
If there is such a order sent to take ALL assets for the Nation (In the style of the old USSR Battery sweep prior to war out of private and commercial vehicles) They will make it happen.
Remember your insured home and cars mean nothing in time of war.
The US Government can and WILL take your assets, including Gold and whatever else.
What the People DO in reaction to thugs busting down the doors... that will be costly for both sides. They may have to bring in the Soviet Forces to do that, our Domestic Military may or may not refuse such an order.
With that said,
Greeks are the first in what I expect to be a long line of change. Nation by Nation hung high on the cash.
We encourage those who have not get ready or became "Preppers" do so now, for your and family's sake.
DO PLAN on a new life without your current job, whatever that is. Learn to cut wood, make ammunition etc do other productive tasks on which you can trade with others.
The Cash is only worth what the counter party thinks it is. If it take a wheel barrow (As it did in 30's Germany) to buy dinner, then you will do well to prepare.
As far as the transfers out of the country, there will always be the Lear Jets first, followed by the Yachts and lastly by the cream of the masses on the train, car, bus etc.
Who are left are either stuck, too poor to leave or otherwise determined to live or die in Greece.
Those of you working in the Cities, you need to consider moving out into the more Rural areas. Never mind the Culture shock and lack of luxuries. It will be bad for you if you stay.
Capital controls make perfect sense for Switzerland IF it wants to completely kill off its Private Banking business. If not, I suspect this may just be wishful thinking on the part of those trying to achieve the latter, mostly the IRS and competitors in private banking.
Philipp Hildebrand, chairman of the governing board of the Swiss National Bank, resigned in January over his wife's currency trade last August. I suppose the odds are a gazillion to one that Thomas Jordan, current head of SNB, has a wife, relative, or friend who was the insider that caused the blip in EURCHF.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9003630/...
And what happens when everyone figures out they can't put capital controls on Gold? /rhetorical question
Wow. Thanks Bruce. Always enlightening.
[Late Addition]: Sold about 10K in CHF currency a few months back. Ya gotta hand it to the Swiss. They have the most beautiful currency of them all. Particularly the 1K note. Always thought enlarged versions would make interesting wall art.
Agree BK, anyone on CHF right now is either a frontrunner or as mad a meat-axe.
& tx for you input - a read without fail
The shuffling of Euros backwards and forwards is quite funny. It is amazing how the same currency can end up being worth more or less depending on which country it is deposited in. Gold is worth the same regardless of where it is.