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Moscow... Or Geneva?
A month ago, when the Russian Ruble was crashing, developed nations were delighted to poke fun of Russians who lined up in front of currency exchange kiosks, supposedly to convert their rapidly devaluing Rubles into Dollars or other rising fiat.
* * *
Today, those same developed nation hecklers are deathly silent after what may be the biggest western central bank faux pas in recent history, and which in addition to sending the Swiss Franc soaring has - perhaps for the first time in history - manifested in lines of people in front of currency exchange bureaus nowhere else, but in that bastion of capitalism: Geneva.
Direct consequences of SNB abandoning 1.20 EURCHF floor. Currency exchange has never seen a queue before! pic.twitter.com/MUhbHlqKd9
— Richard Watts (@watts_richard) January 15, 2015
Still queuing at the currency exchange. Should be closing soon pic.twitter.com/LzUhia4mGh
— Richard Watts (@watts_richard) January 15, 2015
Swiss currency exchange. Queuing at all the exchanges that are still open pic.twitter.com/K4Blj8xte5
— Richard Watts (@watts_richard) January 15, 2015
Swiss currency exchange, that's a huge difference between buy and sell rates pic.twitter.com/7zuERaGZsK
— Richard Watts (@watts_richard) January 15, 2015
What's going on? AFP explains:
"It's like Christmas all over again!" enthused Vanessa, as she joined a swelling queue outside a currency exchange office in downtown Geneva Thursday.
The 28-year-old hospital orderly was one of many across Switzerland rushing to cash in on a soaring Swiss franc.
Minutes after a shock announcement from the Swiss central bank that it was abandoning the minimum rate of 1.20 francs against the euro, the safe haven Swiss currency strengthened almost 30 percent to 0.8517 against the common European currency before easing back to 1.0421.
"I heard the news this morning. I'm so happy!" Vanessa, who refused to give her last name, told AFP outside of one of many mobbed exchange offices in Geneva.
She has reason to be extatic: she is one of some 280,000 people working in Switzerland but living and paying bills in eurozone countries France, Germany or Italy.
These so-called "frontaliers", or border-crossers, are the biggest winners in Thursday's Swiss franc surge, seeing their incomes jump 30 percent in the blink of an eye.
Vanessa said she was contemplating "changing all of my Swiss franc savings into euros".
Other frontaliers were also celebrating Thursday, but said they would not immediately buy large amounts of euros.
Panic buying?
"For those of us living in France and working in Switzerland, this is great!" said Doina Bancila, a 40-year-old bank employee.
"But I don't want to buy euros in a panic. I'll wait for next week or the week after to see how the situation evolves," she told AFP.
Gaelle Voisin, another resident of France, meanwhile said she had only learned about the bonanza she had in store when she turned up at the exchange office.
"I was really surprised to see all of these people here," said the 40-year-old radio presenter, adding she at first thought the crowd was waiting to buy the latest copy of Charlie Hebdo, in tribute to the 12 people killed in last week's attack on the satirical weekly's Paris office.
"I was just going to do a simple exchange, and then this. It's good for me, and for all the French people working in Switzerland," she said.
Many Swiss residents were also rubbing their hands over their booming currency, envisioning vacations abroad and perhaps buying up cheaper real estate on the other side of the border.
"This could mean we can take cheaper euro vacations ... and if you want to buy a secondary home in France, this is a good thing," 70-year-old wealth manager Charles Gutowski told AFP.
But, he added, the Swiss central bank itself will loose a fortune, since it has huge foreign currency reserves, and large Swiss companies will take a beating.
"This is going to cause a lot of trouble," he said.
Swiss business leaders called the central bank's decision a disaster, with banking giant UBS saying it would lead to a drop of 5 billion francs worth of exports and knock 0.7 percentage points off overall output growth.
"I am at a loss for words," Swatch group's boss Nick Hayek told news agency ATS. "What the SNB has sparked here is a tsunami."
The Swiss watchmaking giant was the biggest loser on a Swiss stock exchange bathed in red Thursday, with its shares sinking 16.4 percent.
The Swiss exchange's main SMI index lost nearly nine percent Thursday.
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too bad the swiss didn't have balls enough
to back their currency with gold
before they dropped the euro peg...
that would have been a real game changer...
opportunity missed...
I'd be ecstatic if I woke up and found myself with 30% more buying power.
Not me, man. I'd spend 3 weeks trying to figure out what the catch was.
Any analysis out there by those in the know about how much of this was front run by the Swiss. Not sure how they would do it or how it would be traced...
Guess they were wrong when the voted not to move to a gold backed currency.
Well, the Germans will probably bomb Geneva seeing that they already have practice by bombing Pearl Harbor....
And it's well known that America does not just give up when Germany bombs Pearl Harbor.
Just think of all the extra Muesli and Ementhaler the Swiss preppers will be able to buy.
Across the border, yes. Swiss retailers will not be in a hurry to lower their prices... That'll hurt them.
Will the USD reach parity with the Euro after the first salvo of ECB QE?
This is the big idea. Get all of Europe & N America to par & then fix it.
Predatory Pricing & Semiconductors
Unions are a funny thing. You pay for current retirements, knowing that your pension will be inflated away, so long as your income is four times your rent, and you average twenty-five hours a week. Mostly, unions replace each other, in a race to the bottom, like most everyone else, because increasing protection replaces skill. Not all union members, and not all non-union workers, are morons. Resonance is a funny thing.
Apes having monkeys compete to build business practice, with better as enemy of best results, requires no brain cells, just activity, lots and lots of activity, drawing down natural resources in favor of hoarders, original sin, supplying margin leverage to the monkeys, always in a state of artificial scarcity. Immersed in public education, you would swear that capital and management came before work, and theories preceded inventions before insight.
They all knew better, but they all had excuses to chase oil up and chase oil down, as we watched the economic activity liquidate purchasing power, of temporary grant income, with permanent monetary rent inflation, in an administrative environment built to produce crime, with arbitrary, capricious and malicious bipolar system intent, growing income inequality with more of the same.
Government cannot replace parents, with negative rates and government grants, debt before surplus, or revolving immigration, but that never prevents the majority from participating, and trying to enforce equality on everyone else, with MAD insurance.
Whether America or ISIS is responsible for the current fad of fascism is a matter of perspective. From the perspective of labor, all governments are ran by incompetent, feudal, money-laundering fascists, which have their uses, ignorance serving stupid, teaching ignorance. It’s not the size of government, but rather its market share that matters. There’s Carney again, always applying force on the wrong side of the curve, with the same conclusion.
Empire rocket scientists, trained to prove that something-for-nothing is an economy, is a problemsolution. Don’t go in there without sufficient momentum to advance forward EMF spark. A wire and a switch does have inductance, capacitance and resistance, depending upon your position and frame of reference, your meter and the surrounding gas.
The speed of light is a function of resonance, from the perspective of the observer, not a limit across the universe. Do you really think Faraday began with equations and constants, standing on the shoulders of Maxwell?
Life is not a question of the chicken or the egg, fusion and fission, or the Big Bang. The chicken and the egg exist on a fulcrum. Which comes first depends upon your position and frame of reference. If there is life beyond this solar system, do your really think it would communicate with the majority, or its leaders, always in a State of adolescence?
So Putin is yet another money launderer extending the rest, and Obamacare is yet another capital control, extending the rest, and funny, the critters in the middle wanted the black boxes, from both Boeing and Airbus, surprise.
-1, you didn't cover, "Where does the white go when the snow melts?"
Yer a funny bastid.
Yellow snow has a similar outcome.
Can I point out the the Swiss Franc and Rubble moved in opposite directions? The swiss are 30% wealthier overnight, I am not shedding tears for them. Whereas what has happened in Russia . . .
It means that the monetary authorities are trying to discourage foreign investors from buying CHF by making them pay for the privilege, and are encouraging Swiss residents to buy forex so as to stop the uncontrolled revaluation of their currency which is going to crush the economy. For Switzerland this is the equivalent of a tsunami - which is not usual for a landlocked country. The FI is going to be rather pricey, given that the local base rage is -1%. negative rates suggest that Switzerland should have closed its borders and lived on chocolate and rostis.
Don't poke the putin worshipers in the eye.
Queuing up for vastly different reasons in Moscow vs. Geneva. Folks in Russia certainly not smiling like the Swiss.
At least 100'000 French foreign workers in Geneva alone got a flash wage raise of about 30% when they convert their salary to Euros.
It will probably be a wash when the ecb pulls the trigger on it's QE.
The Swiss rejected gold.
They have to keep their paper now.
would be good to know, what is the inflow and what is the outflow, before and after.
Beware of markets bearing gifts, stranger.
Jim Grant has a book out that outlines a depression that occurred in the 1921. The government did nothing and the markets healed themselves in fairly short order.
I wonder if the Swiss realized policies to maintain a low Swiss Franc were in the long run more harmful than keeping things simple and weathering present challenges. Perhaps the Swiss, by doing this, will avoid long term the future economic drag avoiding additional legacy harmful effects of endless short-sighted policies.
And why should they announce it ahead of time? Legarde today claimed ignorance of the decision until after the fact. Pre-announcing would only lessen the pain for those nimble enough to get out of the trade early. And telegraphing ahead of time, the pain would still be there but 'amortized' over a much broader group.
We in the U.S. should have had the guts to avoid (most of) what we did in 2008-9 with all the well intentioned programs to avoid the short term pain - which has turned into a long term zombie economy and the real possibility of a much worse downturn.
The dollar is "rising fiat"? How can that be, if the United States is an economic basket case and Vladimir Putin a god?
whenever i see a line of people i know
i am in the presence of fear and desperation,
someone must have said it.
... or greed... think Black Friday.
Steely Dan - "Black Friday"
https://www.youtube.com/watch?v=q1ZV4Mx7tw8
I believe a rise in the CHF is a good thing for the people holding CHF. LIstening to the swiss business leaders cry is sickening.
They think a strong currency is bad for business, why dont they look at Japan and ask the business leaders there how well They are doing with a weak currency...
All I want to know is, will my turkey and swiss come with more or less cheese?
who does the usa bomb now?
Whoever it is, NATO will get there first.
Swiss European Exchange Strategy Event .... aka CH.E.E.S.E (with lots of holes in it)
Seems to me this happened:
The Swiss were watching (no pun intended) the ECJ for it's verdict Draghi's OMT, which being OMT needs to be unconditional. The ECJ is corrupt, and determined to preserve the EU and all it's doings and apparatus, including the Euro and the ECJ itself. However, it was hampered by the fact that it was simply required to ratify the verdict of the Verfassungsgericht which had effectively declared OMT illegal (at least in terms of German law). The ECJ therefore strained every sinew, and went way outside the law, and somehow declared OMT legal, but with conditions. This now had to go back to the Verfassungsgericht, where it is likely to be vociferously opposed (given that the ECJ finding was not a ratification of the Verfassungsgericht decision). Meanwhile OMT can now only be conditional so Draghi and the ECB are hamstrung just as Greece once again goes off the rails, along with plenty other untoward stuff going on in Europe, a new offensive reportedly by separatists in Donbass while Russia moves away from Petrodollar, Chinese property going squirrelly and default starting to occur in the shadow banking sector, and the Euro itself being too strong for most of the Eurozone but too low for Germany while pegging to it was costing them a fortune.
The Swiss therefore decided that being a de-facto part of the Euro was far too expensive, and that the Euro now lacked the necessary crebility and (legal) central bank support. They therefore, following the ECJ farce/fraud, decided to do the very thing they had left open to themselves quite deliberately, and got the hell out before more harm was done. They clearly understood that the short term pain of adjustment would pass and the CHF would find it's own level per the near-forgotten concept of fundamentals. I've little doubt plenty of Eurozone countries (or at least their under-employed and abused populations) would love to be able to do the same. They clearly didn't want to hang around for the uncertainty and paralysis of another hearing in the Verfassungsgerich (which can hardly contradict itself) all the while German politicians blow hot & cold and the Bundesbank continues to say "Nein" to OMT.
There is not any "new offensive by seperatists in Donbass"
there never was
they defended homelands against forces sent by Kiev
and Oligarchs private armies
Fiar enough, I am happy to agree, but I was referring to the reported attack on Donetsk airport.
Step 1 : convert all usd reserve to rubble = a lot of cheap rubble for expensive usd
Step 2 : sell energy for gold. No more usd.
Step 3 : back the basket rubvle yuanz to gold. Cheap rubvle become ultra expensive rubble.
Step 4 : watch with pop corn.
I am off for a vacation. My Swiss franc deposit in Bern suddenly is worth a lot more...Thanks a lot. Cheers!
"I am at a loss for words," Swatch group's boss Nick Hayek told news agency ATS. "What the SNB has sparked here is a tsunami."
Yes its terrible when you let a currency float freely to find its true value. Manipulation and artificial pricing are so much more enjoyable for parasitic cunts like you, Nicky boy.
I’ve been reading a number of articles and comments over the last few days...
It seems Russia is quickly working towards the stopping of all trade with NATO countries, including transit trade routes?
Does this mean Ukraine gas will stop completely within days, Nord and Yamal Streams will stop just as quickly, oil transit trains and pipes to be stopped; Russian transit shipping will not stop at NATO ports?
Everything to EU will pass through Turkey, if it leaves NATO. Would that be a correct hypothesis?
If true, the EUR/RUB and EUR/TRY pairs might change somewhat and quickly.
Government intervention, whether in credit or financial markets, always leads to bad things.
http://www.globaldeflationnews.com/jaguar-inflation-a-laymans-explanatio...