Pop Quiz Answer: Presenting Countries "X" And "Y"

Tyler Durden's picture

In our pop quiz article earlier today, we asked the question of which two countries - notable among the uber-wealthy Russian oligarch class - are approaching the same ratio of financial assets to GDP as seen in both Cyprus and Iceland, and which has been blamed for the recent onslaught against Cypriot savers.

We were not surprised to note that the vast majority of readers figured out that one country, noted as X, was Switzerland, where as we have discussed over the years, just two banks, UBS and Credit Suisse alone have three times more assets than the total Swiss GDP. The top 10 Swiss banks with total assets as reported by Bloomberg are shown on the chart below:

This implies that, as has been known for decades, Switzerland is one mega-banked country, and it should come as no surprise to anyone that the vast majority of bank liabilities are in the form of deposits.

Are Swiss deposits as a fraction of total liabilities as high as in Cyprus? The full, accurate breakdown is not very clear, especially since many banks are rather "loose" with how they define their liabilities out of legacy deposit secrecy concerns. However, it is accurate to say that when it comes to funding, the Swiss financial system does have a preponderance of deposits on the right side of the balance sheet.

Does that make deposit tax levy in the country that was formerly synonymous with bank secrecy, and where having a bank account used to be a symbol of wealth and success, feasible? Absolutely. Does it mean it will actually happen? We have no idea. But then again nobody had any idea a week ago that Cyprus would shock its depositors on Saturday with news that up to 9.9% of their savings would be expropriated.

What would make a Swiss bank tax levy it more likely is if, following ongoing exposure of tax evasion in Switzerland or for any other reason, depositors decided to pull their money out of banks in bulk, forcing a funding collapse and a vicious financial system contractionary cycle, which might then force the local government to follow through with a Cypriot type act. It certainly would not be unprecedented: it was only several months ago that various Swiss banks implemented negative deposit rates. All a deposit tax levy would do would be to collapse the ongoing "taxation" from negative rates in a one-time event.

Finally, with Russian oligarchs a key source of marginal funding of Swiss deposit accounts in the past several years, should the witch hunt against Russian wealth escalate beyond merely the Eurozone, due to political pressure or otherwise, it would make this particular class of Swiss bank clients especially vulnerable to an unwelcome, and unexpected (but long ago predicted) tax on their wealth.

So much for country X Switzerland.

Moving to country Y, we were surprised to see only two readers suggest, correctly, that it was Singapore, with a total financial asset to GDP rate of 7.7x.

Although, in retrospect, it is perhaps not all that surprising, and it means that Singapore is doing a great job of preserving the fact that it is now the defacto target of the world's uber wealthy depositors, who no longer have faith in the Swiss banking system, mostly due to the loss of banking secrecy which for centuries made Switzerland the preferred target of accrued wealth from around the world. In other words, Singapore is doing precisely what its depositors want it to do - stay off everyone's radar as much as possible.

Below, again from Bloomberg, is a breakdown of the top Singapore banks by assets. Here, even more so, it becomes obvious just how concentrated the assets are among the top 5 banks, which collectively have nearly 7x more assets than the host nation's GDP.

We fully expect the asset-to-GDP ratio of Singapore's financial system to soar in the coming months, as more ultra-wealthy "private clients" from around the world reallocate their savings from Switzerland, certainly from the Europe's periphery, and now - even from Europe's core in the aftermath of Cyprus, and into Singapore very much under the radar banks and financial institutions.

And while the Swiss confiscation risk is certainly out there, it is anyone's guess if, when and under what conditions even the last bastion of savers, Singapore, will proceed with blatant wealth expropriation. If that happens, it is just as unclear where in the world, if anywhere, there will be a safe place for inert capital, one which is not invested in assorted risky assets (or is buried underground).

Which perhaps has been be the goal all along - after all the one thing the Keynesians in the world are suffering from (and are constantly shocked by) is the record low velocity of money. What better way to boost said velocity, and monetary circulation, than by making depositors themselves doubt the sanctity of their cash held in a bank.... Any bank, anywhere in the world.

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SeverinSlade's picture

Listen to Simon Black though and store your gold and safe and sound in Singapore.

Prefer to hold some gold and a clip full of lead in my hand instead.

redpill's picture

If dey gotz so much money how come they called Singa Po'

AlaricBalth's picture

I was wrong. 0%
Fill in the blank was never my forte'.
I always did better on essay questions.

WayBehind's picture

And the winner is .... helicopter Ben

toys for tits's picture

Maybe we now know why the Swiss were allocating their customer's gold accounts.

Pegasus Muse's picture

In other Swiss news looks like the people have collected enough signatures to force repatriation of Swiss Gold.


The UDC has filed its initiative to preserve the gold reserves

UDC wants to preserve the gold reserves of the National Bank (SNB) in the current context of currency instability. It filed its initiative "Save gold for Switzerland", equipped with 105'279 signatures. The initials must now be controlled by the Federal Chancellery.

The initiative focuses on three claims. She asked the SNB to halt its sales of gold, repatriate all the gold stored Switzerland abroad and stockpiling gold for at least 20% of its assets. The current context of currency instability makes such a compulsory measure, officials said the SVP in a statement.

Maintain the stock of 1040 tons of gold from the SNB is required to ensure the stability of the Swiss franc. This helps protect private savings and the level of wages, annuities and pensions, say initiators.

United States singled out

Nearly half of the gold reserves of the NBS are deposited abroad, with the largest share in the United States. National Councillor Lukas Reimann (UDC / AG), member of the initiative committee, fears that the state of indebtedness which are in the United States do pose a threat to Swiss gold placed at the U.S. Federal Reserve.

He cites as examples the recently expressed refusal by U.S. authorities at Germany, who asked to inspect the vaults of the Federal Reserve when its gold stocks are stored.

(Ats / 20.03.2013 14:00)


Ratscam's picture

the advantage of a direct democracy.
At least poeple still have some influence over the countless lobbyists

boogerbently's picture

Why don't they just steal the REST of my Soc. Sec.??

Muppet Pimp's picture

Behold the holy grail of behavioral economics.  This method treads a bit lighter on the proletariat debt serfs as it forces the holders of capital to stimulate something rather than just having governments pile up more debt (much of which is simply siphoned off by the same global elite class) to be paid off by your kids and grandkids in a very cruel form of indentured servitude. Call it what it really is, taxation without representation (the generation paying it back had no say in how it was spent).

But you will never hear a democrat admit as much, it is their grandest secret that they are in fact destroying the very ones they claim to want to help (and laughing all the way to the bank).

swissaustrian's picture

I am part of this effort.

Here's my more accurate take (orginally posted here: http://www.pmbug.com/forum/f2/switzerland-referendum-prohibition-gold-sa... )

Switzerland has a system of direct democracy. The people can demand a referendum on all new federal laws. Changes of the federal constitution are always subject to a referendum. The Swiss constitution offers the institution of a "constitutional initiative". If a certain number of people sign a petition to change the constitution, then a nationwide referendum will be held.
Recently, the Swiss Peoples Party (SVP), mainly a neocon collectivist party, has launched a constitutional initiative to ban gold sales by the Swiss central bank (SNB), to require the SNB to hold at least 20% of it´s assets in gold, and to store all Swiss gold in Switzerland. This is obviously a great idea. I´m actively trying to get signatures right now, although I´m not a member of this party and I think most of their positions are terrible. I´m confident that we´ll get enough signatures (100000 reuired by march 2013) to have a referendum. Most political parties will not support our cause, but the Swiss people have prooven that they´re voting against their politicains if they think a certain cause is just.
The icing on the cake is that - if passed - the initiative could cost us our IMF membership, because it effectively means instituting a partial gold standard (20% of the SNB assests in gold, all the time) which is prohibited for IMF members.

Official text of the initiative

Quote :

Federal popular initiative 'Save our Swiss Gold (gold initiative)'

The Federal Constitution1 is amended as follows:

Article 99 (new) Gold reserves of the Swiss National Bank

1 The gold reserves of the Swiss National Bank are not for sale.

2 The gold reserves of the Swiss National Bank must be stored in Switzerland.

3 The Swiss National Bank has to keep their assets to a large extent in gold. The gold content shall be not less than twenty percent.

Tijuana Donkey Show's picture

Plus they have hot blondes! Gold on gold baby.

imaginalis's picture

you must think they drive Volvos too

ronaldawg's picture

I dunno about hot blondes - I know a lot of hot swiss brunettes that speak French - so visual evidence please.

YHC-FTSE's picture

"I was wrong. 0%."

Ditto. I chose France & UK BAH! 

Pseudo Anonym's picture

frankly, i bet on the carribean trio cayman, bahamas, bermuda.  like, what do these three islands produce other than shell corporations and bank accounts?

CriticalUser's picture

Uhmm, I looked onto the annual report of Malacca Trust ("no. 1" in asset value for Singapore), and the value of their assets is 1007B... indonesian roupies! Not Singaporean dollars! 1007B IDR = 80M€, peanuts.

laomei's picture

Do you expect people to bother with those tiny details?  News does the same exact thing when talking about those corrupt government officials in China.  Billion RMB automagically becomes billion USD because it just sounds better, captures headlines and journalism is a complete joke.

13thWarrior's picture

That explains why I never heard of it.

slaughterer's picture

Swiss bank deposits are like Swiss watches.

slaughterer's picture

Swiss bank deposits are like Swiss watches.  Everybody wants to buy a reprpoduction Singapore Swiss watch instead. 

laomei's picture

More like, the fakes are just as good as the original, but cost a whole lot less and only an expert might care.  But in the end, it's just a watch either way and as long as it works who the fuck cares.

swissaustrian's picture

There's a whole industry in north-western Switzerland built on watch buying tourism from Asia. They're channelling in buses of Chinese to spend thousands of CHFs at watch stores. I've been told that many of them are buying multiple watches, because tarrifs are making these watches more expensive in China.

imaginalis's picture

You will care if you dive with it to 30M under water

laomei's picture

And the number of people who dive 30m under water?  Sorry, there are already dive watches out there which are far more useful.  Buy a fake and don't dive 30m underwater with it.  So difficult to remember, and even if you do, it's just a fake and cheap to replace anyways.

orez65's picture

Don't need a watch anymore, cell phone does the job.

Zer0head's picture

I think it's time to review Singapore's human rights record

max2205's picture

Coin toss. Who do you trust? Muslims or Christians?

Buckaroo Banzai's picture

Child, please. Christians are people, and have all the normal problems associated with basic human nature that everyone else has.

Muslims on the other hand, are a duplicitous, bloodthirsty people with a diabolical political system that masquerades as a religion. When it comes to violence, dehumanization, and economic and social failure, their track record is nearly perfect


thatthingcanfly's picture

You left out Islam's establishment of child molestation as "normal," or, more accurately, "divinely-inspired," as the pedophile-prophet Mohammad demonstrated with his youngest "wife," Aisha, who was 7 when he "married" her, and 9 when he first raped her.

We allow these people to immigrate here.

And build Mosques.

And vote.


LongBallsShortBrains's picture

If you mean fucktard bleeding heart liberal communist cocksuckers when you say "we" , then you are correct.

But "allow" is a typo. Try encourage and pay.

thatthingcanfly's picture

I was pulling punches. Forgot this was fight club. Sorry. Won't happen again.

thatthingcanfly's picture

Gross misrepresentation. You should be ashamed.

Pedophiila is ensconced in Islam theology. It is not ensonced in Christian theology. Any argument to the contrary must combat 2000 years of Christian tradition and 1600 years of Muslim tradition, simultaneously.

Good luck with that.


I'll trust my 5 year old child within the hands of any Catholic Cardinal before leaving her in the hands of... anyone else.

And I'm a protestant!

hooligan2009's picture

hey..i didn't mention scout leaders, who have just about as much right to molest kids as catholic or moslem priests!

thatthingcanfly's picture

...which is to say: zero.

Was there a point to this?

Diogenes's picture

A religion that tells you to murder your own children and call it honor killing doesn't come from God it comes from the devil.

e-recep's picture

god, devil or any other deity do not exist and all religions are made-up. enough with fairy tales already. i am here for reality and people talk about their hallucinations.

tarsubil's picture

God is reality. You cannot deny one and have the other.

tarsubil's picture

So basically, you're saying Christians are people and Muslims are people. I totally agree.

hooligan2009's picture

hmmm..i know i don't trust any hindus or mormons..i do trust some of each of your choices

as in distrust most those we know the least

ronaldawg's picture

Yeah and that "Mormons are the chosen people" really went to shit when Romney lost the election.  I mean they should have been able to do their underwear magic eh?

hooligan2009's picture

that's twice you said that..and i listened very carefully too

OpenThePodBayDoorHAL's picture

Human rights? As compared to America's human rights record? Now that's a funny one...100's of thousands of (dead) Iraqi citizens might have a different point of view.

And at least in Singapore there's still a chance that criminals will be prosecuted, unlike the too big to jail BS

AynRandFan's picture

I guess we oughta feel bad about all those nazis we killed too.

hapless's picture

You're just pissed 'cause your boy was dragged off to the Hague.