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What’s Next for the SNB? Something Important?
A curious development took place today. Rather a subtle one. But when it comes to watching central banks, the subtleties are often worth noting. I’m assuming all readers know that the head of the Swiss National Bank (SNB) is out. The question is, “What’s next?” Strangely enough the answer is, “Nothing”.
I wrote the other day that Thomas Jordan would be appointed as the next head of the SNB. Wrong. Jordan was made “Acting” head of the SNB. At first I thought this was just a formality and that Jordan would soon get the final approval. After all, he was the logical candidate, and someone has to run the place, right?
He has the credentials. He appears to have been a significant factor in setting policy. He knows where the bathroom is, and knows who does what at the SNB (he’s been there 15 years).
However, I learned today that Mr. J is not the shoe-in I thought he was. The new Swiss Federal President, Eveline Widmer-Schlumpf, said this:
"It could take several weeks and potentially months before the cabinet appoints a successor for Philipp Hildebrand."
Months? Did she really say months? Does she not understand that the markets hate uncertainty? That there is a fair bit at stake here?
She does not offer a reason for the long delay, but continued:
“The Federal Council had no legal duty of supervision. The National Bank is independent.”
By this she means that the political side of the equation has nothing to say about the activities of the SNB. That’s true, but then why should it take a period of months before the leadership at the SNB is re-established?
In odd twist, Ms. Widmer-Schlumpf also happens to be the Swiss Finance Minister (go figure). One can safely assume that she understands the risks associated with a delay. By itself, it causes uncertainty. This elevates the risk of a market test of the 1.2 peg. That risk could be avoided with a rapid appointment of Jordan and a reaffirmation of the independence of the SNB.
So why is she taking the risk? The answer is that there is opposition to the continuation of the independent status of the SNB. Widmer-Schlumpf can’t do what she wants to because of that opposition.
What the hell does that mean? A few thoughts:
What appears to be coming up for discussion in Switzerland is the independence of the central bank. Who does it report to? Who controls it? What are its powers? What checks are there in the system?
These are very weighty questions. It’s understandable that this could take months. While Mr. Jordan may ultimately get the nod and become the true boss at the SNB, it's likely that the SNB will be be subject to new rules and oversight when he finally does gets that title.
There was no reaction to this news in the markets. It’s early days. I suspect we’ll be hearing more on this in coming months . There are two very critical issues at stake. One is the future status of the peg and the sovereignty of the Swiss currency. That’s a big one.
Much more significant, and long overdue, is the broader discussion regarding the central bank’s independence. I find it interesting that this is happening in Switzerland. As far as independent central bankers go, the SNB is on top of the list. At least it was.
Post Mortem on Hildebrand – Got Verdeckel!
A significant amount of information had been provided to the public prior to Hildebrand’s resignation, none of which proved he had prior knowledge of his wife’s intentions to trade currencies. We now know he was lying.
After the resignation, the SNB released an email that appears to have been withheld to the press and the external auditors who reviewed the Hildebrand affair. The note was from Sarasin bank to Hildebrand. In it, the author reminded Hildebrand that he had agreed, in a phone call on August 14th, to a currency "diversification" strategy by Kachya.
This was the smoking gun that brought Hildebrand down.
There is an odd twist to this story. Just prior to being on national TV to discuss the issues with Hildebrand and the SNB, the National President of Switzerland, Widmer-Schlumpf, (yes, the same as above) received a copy of the damning email. She understood immediately the significance of the document and what it would mean. What did she do?
She went on TV and defended Hildebrand and what had happened with his currency transactions. She said the government was supporting the existing leadership at the SNB. She did this to a big audience knowing full well that Hildebrand had misstated the facts and that it was now certain he would have to resign or be fired.
Later she was asked about this. She responded:
“I thought about canceling the appearance.”
The President thought about it? After thinking about it, she went on TV and perpetuated the story that there was insufficient evidence to force Hildebrand out. Is this a fib? Is this how things get done by world leaders? They go on TV and say stuff that is not true?
I can’t think of a screwier end to this screwy story.
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Smart move by Swiss PM Eveline Widmer-Schlumpf. The longer Jordan is in the SNB post the more permanent he becomes.
Six months and he will be like the paint on the wall.
I presume the SNB is fully one of the global central banks, privately owned by banks/corporations/PTB, operating in Swizterland under a boilerplate agreement similar to the BIS. For those who haven't seen it, the legal defenses, protections and exemptions granted the BIS under what could be considered a treaty between soverign states is astounding.
Here is a link to the "Agreement between the Swiss Federal Council and the Bank for International Settlements
to determine the Bank’s legal status in Switzerland"
http://www.bis.org/about/headquart-en.pdf
Jerry Springer has Mrs Hildebrand lined up for an appearance so she can tell her side of the story along with her husband and Senor Draghi and Merkozy.
Breaking Bad.................................
That's all politicians do is LIE. So yes, that is what Leaders do these days. Pathetic.
It's "shoo-in," not "shoe-in."
*sigh*
bailout maybe?
http://expose2.wordpress.com
Tks for this. As of a few months ago I hired an editor to look at my stuff. I write fast and often. I'm a lousy editor. First to admit it.
I get copy back that is a sea of red ink. Depressing.
But here's the deal. The shoo-in thing isn't my fault. She corrected it as it is. So I'm clean (sort of).
Anyway, what the fuck is a "shoo"?
Didn't you mom ever shoo you out of the kithchen as a child?
"Shoo" is a verb, meaning to drive away an unwanted creature, animal or child from somewhere they should not be and to do so with a touch of impatience. The action is often accompanied by the subject flicking their hands out, back to palm and going "shoo shoo".
For example: a medieval housewife would "shoo" a goose out of her kitchen, or a pompous, irritated publican would tell a child that was hanging around the front of his business to "shoo off".
A "shoo-in" is a situation where someone is driven into a place, with a similar temperament of impatience. Even though they may not necessarily want to go, the subject doing the "shooing" deems it a necessity.
BTW, I am an editor. You should give me a job, Bruce :oD
Maybe you should replace your current editor with Seize Mars?
Bruce...surely you know that when the other shoe, shoo, shit, falls..right? Yuk, Yuk! It gets curiouser and curiouser ( Is that a word? ) by the hour over there in Euroland. Nice article.
Who does Switzerland serve and will it be allowed to retain its untouchable status?
OPEC
For the reasons I describe above, if I were a Swiss citizen that's the kind of debate I'd be demanding to participate in.
I am Swiss. In general, the Swiss are as clueless as Americanus Boobus. When the media tells them "nothing to see here, move along" then the Swiss move along. The elites, like Hildebrand, are still firmly in control.
How could this not be all wrapped up in politics?
And at this point it should be.
Obviously there are all kinds of good reasons for FRBs in general to be as independent as possible but given what's happening with the Euro and the actions the SNB has taken thus far, the fate/direction and economic viability of Switzerland itself is largely in the hands of the central bank at this point and I would think that Swiss citizens (who generally seem quite connected to the civic life of their country) would want more direct or indirect input into some of these game changing issues.
A decision to say, print money and buy Euros vs. print money and by gold (and all the trade-offs inherent in each move) ultimately has far reaching political implications that could drasticly affect the livlihoods of many (if not all) Swiss citizens.
There really aren't any obvious, pain-free strategies for Switzerland to adopt here but the long term stakes are so high that I would think the citizenry would want to broaden the discussion beyond a handful of technocrats.
Somewhere, in defense of his all-politics-all-the-time approach to life, Christopher Hitchens told an interviewer that "you can't escape politics".... because it affects everything important in one's life. Well, at least in Switzerland right now, I think they've reached the point where you can't escape finance either.
I know no one but me will say "i'm glad we have Ben Bernanke in charge of the Fed" but "I'm glad we have Ben Bernanke in charge at the Fed" when i read stuff like this. Is the President of Switzerland next in the firing line? You're the expert...i have no clue how Swiss politics work...and even less in how the government is structured. Obviously the sooner you put a scandal like this behind you the better for all parties concerned. The fact that the Swiss polity seems to have it in their interest to continue the farce says there's more to come out to me. Apparently my farcical awards were premature! The hunt continues!
http://www.youtube.com/watch?v=ZzQL3T0Fc0Q&feature=player_detailpage
and you don't think that Bernanke and the revolving door of Fed/banks/governement isn't a greater farce ?
Off Topic: The Golden Jackass brayed out the following:
Actually, the ZH crew merely took the ball and ran with it, as they do so adroitly and consistently. In my opinion, the Zero Hedge web journal is by far the most valuable and broad single source of relevant information in the global financial crisis, bar none.
Thanks, we luv you and all that you do, also!
You can only judge from the informtion and sources which you are aware of, you do now know what zero hedge does not reveal to YOU ( and that which others don't either) !
Jim Willie = Mencken = awesome read
Beautifully and simply told, an eye-opener of a story, about the power wheels of Swiss banking and how they can come off, even momentarily, and scare the shits out of a lot of people. If Swiss Central bank loses its independence its like somebody saying Mont Blanc is no longer the tallest mountain of Europe! Earth shaking news!
The email was a damning trail. As always, the grain of sand exists if people have access to find it. Now the panic striken cover-up and shilly shallying, but the damage is done.
I have a gut feeling that this lady feels that given the general run-down state of politicians in US/EUro zone, she deserves some sympathy and that apathy and the hot potato of next week's upcoming media splurge (on Greece or Merkozy or whatever), will allow people to forget this major embarrassment for Schweitzer land.
Tyler a day ago told us that soon the eurchf floor will disappear.
BK says that the peg will be confirmed.
So who I have to believe?
Further, why Hildebrand was fired? Becouse he wasted currency reserves fighting the chf appreciation, or becouse he started the peg?
Who is going to be screwed in Switzerland? Swiss main street or national and international savers?
The multiyear trend as I've smelled it in Ferdinand Lip's Gold wars, spells of Switzerland loosing its unicorn, but I and eurozone savers are nervous.
Some people has right now to choose between the risk of dying like a deer in the headlight or like a fish jumping from fire to fry pan.
Finally, what is the less dirty shirt? Usd or chf?
Hiidy was fired because it became clear that his wife was trading (and profiting) on his info.
No way, I think we have to dig deeper. At present in Switzerland there is a gold war wrapped in a currency war wrapped in a political and social confrontation
Further reasoning
I've seen that chf gold had a 5y gain of 105%
versus eur gold 172% and $ gold 162%
My hint is chf gold will play catch up with the two other pairs
But this is inconsistent with Tyler argument that the eur chf peg will be ramoved, unless Tyler was saying the eur chf could be headed higher (the less crowded trade).
So again what are going to do the Swiss puppet masters?
1) kill the swiss average joes?
2) Skim the international whealthy people community by killing the "retail whealthy"?
3) Start a gold backed currency (at this stage I think is science fiction and inconsistent with Ferdinand Lips multiyear scenario)
Politicians lying with a straight face!? Say it ain't so... what never ceases to amaze me is how stupid and ignorant the general masses are in still having trust in the system
"What appears to be coming up for discussion in Switzerland is the independence of the central bank. Who does it report to? Who controls it? What are its powers? What checks are there in the system?"
Perhaps the Swiss should talk to Hungary first to see what happens when a government tries to discuss the 'Independence' of the Central Bank.
or to Poland
The blind unconditional faith without sufficient checks and balances in what ultimately may prove to be a single trader's ill considered bet with the assumption the market can be manipulated indefinitely, trading with others people money, EURCHF 154 billion bet, may prove to be gullible and a very costly affair to the extreme. Artificial pegs, intervention and manipulation, the hedge funds are only waiting for the right timing to slaughter this p( )g. A Soros bis experience in the making, history tends to repeat inself. In private banking the bank partners are personally liable with everything they have, here they would walk free, perhaps even with a golden parachute.
Every Swiss that I have spoken to about this has said that Hildebrand didn't do anything wrong and that that eevil Blocher is the problem. The left lie and deceive with impunity here just as they do in the US. The Swiss are so easily manipulated (think AGW) and have no clue, that is what the Swiss media want.
Cut the woman some slack! She did think about cancelling. I am certain she had "serious reservations" about doing the appearance. See? She really is a considerate and compassionate person. /s
Temporary leader, next leader up in the air = flexibility.
The current stooge can do what he wants and fail and exit, or do something popular and stay.
Flexibility!
I say they keep the 1.20 for CHF and let the Euro flail in the wind.
Maybe its a ploy to create uncertainty in Switzerland in order to devalue the CHF-they wouldn't need a peg then-in fact its exactly what the Swiss have been trying to do since eur 1.50
everything is going as planned, thats what the bilderburgs are for, just keep working slaves.
Bury the fucker in the Alps!
"the banks didn't break any laws..." -Obama
Are you just now catching on?
Is this a fib? Is this how things get done by world leaders? They go on TV and say stuff that is not true?
that needed a repost
There is a first time for everything. Wait until the lying starts here in the US!
Wait ?
DOT,
Can you imagine the chaos if Bernanke began lying through his teeth at press conferences and Congressional testimony?
As snark, this is brilliant!
There's a very valuable lesson here.
Get rid of a central banker and the "group" has a problem replacing them.
You didn't even mention the connection between Widmer-Schlumpf and Blocher, that guy who was informed of Hildebrandt's currency "diversification" first...
https://en.wikipedia.org/wiki/Christoph_Blocher (Note to the non-Swiss: take Wikipedia articles about politics with a big spoon of salt, political correctness abounds...)
"(Note to the non-Swiss: take Wikipedia articles about politics with a big spoon of salt, political correctness abounds...)"
I would suggest that disinformation abounds ...
Still trying to get my mind around how this affects other markets. My gut says the peg getting aggressively taken out will have many consequences globally.
The peg cannot be taken out. Switzerland's economy is NOT based on the banks, otherwise there would be no peg. Switzerland's economy would be killed without the peg as it's an export country.
The peg is totally correct as their currency is being artificially inflated by the safe haven effect, so they artificially bring it down. Blocher et al are against the people of Switzerland - all fascists are against their own people. He's sponsoring right-wing extremism in Europe with funds partly coming from the Jewish Defence League and ist best buddies with Le Pen and Wilders, among other fascists in Europe.
The peg might become more flexible as Switzerland will charge negative interest on Swiss Franc accounts, but then this money will need to flow back to the economy somehow.
As far as I understand this balance, as seen from EU:
http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113450.pdf
Switzerland is actually a NET IMPORTER from EU zone, and NOT a net exporter... please correct me if I am wrong...
All the rich Swissies are already waaaaaay into gold.
Devalue the franc to "save" the exporters and to show chf is "not a safe haven"
Gold pops up in Swiss franc terms as currency is devalued
Swissies make a mint
Money enters the economy.
Seeemples.
Bruce, Swiss Stuff is manipulation at it's fines ne? At it's root, Switzerland is an anomolous nation, clearly helped to where it is by it's Templar roots.
I find this controversy coming out of there high comedy.
Meanwhile billions/trillions of dirty money continues to be sequestered/squandered there.
ori