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Guest Post: A Central Bank Running Suicide? SNB Prints At Pace Not Seen Since EUR/CHF Parity In August 2011

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Submitted by George Dorgan

A Central Bank Running Suicide? SNB Prints At Pace Not Seen Since EUR/CHF Parity In August 2011

The most recent money supply data from the Swiss National Bank (SNB) has shown increases of huge amounts. As compared with its loss of 19 bln. francs in 2010 (3% percent of the Swiss GDP), the central bank printed tremendous 17.3 bln. in the week ending in June 1st and 13 bln. in the one ending in May 25th.

These numbers were not seen since August 2011 when the SNB increased money supply by 50 bln and 40 bln per week buying the EUR/CHF at rates between 1.00 and 1.13. Now, however they are buying at 1.20 and are risking extreme losses, especially because many other central banks are dumping euros.

In the 6 winter months the SNB managed to reduce money supply by 35446 mil. CHF selling euros from its balance sheet. However, only in the last three weeks, the SNB lost all these “gains” and had to buy euros for a similar amount.

Last week rumors at CNBC about some developments at the SNB before the release of the Swiss GDP led us to the conclusion that the SNB either drops the floor or prints enormous amounts. A better than expected Swiss GDP and very bad US jobless figures were the reasons that the SNB had to print even more than in the preceding week. We calculated last week that if the speed of 13 bln. CHF per week is maintained, then currency reserves will more than double this year, a weekly increase by 17.3 bln. would mean they rise by 3 to 4 times. A member of the SNB board, Jean-Pierre Danthine said that the central bank is worried about the size of the balance sheet, but pledged that the central bank will defend the floor. No reference was made to capital controls. Earlier in March he told that Swiss inflation will come back.

 

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Mon, 06/04/2012 - 14:45 | 2492890 barliman
barliman's picture

 

Wait? What?

"In the 6 winter months the SNB managed to reduce money supply by 35446 mil. CHF selling euros from its balance sheet. However, only in the last three weeks, the SNB lost all these “gains” and had to buy euros for a similar amount."

Sold high and bought low?

How is this a lose?

barliman

Mon, 06/04/2012 - 14:51 | 2492921 Ahmeexnal
Ahmeexnal's picture

Time for the armed citizens of the Helvetic Confederation to take matters into their own hands.

Mon, 06/04/2012 - 14:51 | 2492923 Winston Churchill
Winston Churchill's picture

Potential loss.

If you cannot find a buyer for what may become a

Club Med euro. losing 40% at a stroke.

Mon, 06/04/2012 - 14:56 | 2492940 Matt
Matt's picture

They should hedge their bets by printing an extra $20 billion per week and buying gold with it.

Mon, 06/04/2012 - 15:25 | 2493018 Manthong
Manthong's picture

They can't do that as part of the gold price suppression cabal.

Sheep don't realize that the shepherd is not on their side.. if he can't get wool, its time for mutton.

Mon, 06/04/2012 - 17:26 | 2493598 hoos bin pharteen
hoos bin pharteen's picture

Thing is, if they don't, someone else will. First mover advantage.

Mon, 06/04/2012 - 15:33 | 2493081 barliman
barliman's picture

 

Game theory tells us it is easier to cheat the system in a rigged game ...

... because it will operate in a non-random fashion; making its actions predictable.

Bernanke will not hit the QEEND button until Europe is ablaze from molotov cocktails ... but he WILL try to "Save The Euro".

At which point, the Swiss dump their euros into the Fed's currency swap bucket ... KA-CHING!

And then go out for a nice cappucino and some biscuits to celebrate.

barliman

Mon, 06/04/2012 - 15:08 | 2492961 Arturo
Arturo's picture

BREAKING NEWS: Banco Santander just sold their "offshore account" business in Switzerland.

Santander's President is very well aware of the "Corralito" that Switzerland will put in place against foreigners depositors.

http://www.elconfidencial.com/economia/2012/06/04/santander-vende-su-neg...

Mon, 06/04/2012 - 14:45 | 2492897 ITrustMyGut
ITrustMyGut's picture

the devil's got your stereo, and your record collection.. the way you look  your qualified for next years old age pension!

 

wtf? racing to the bottom....

Mon, 06/04/2012 - 14:48 | 2492912 LawsofPhysics
LawsofPhysics's picture

...at ludicrous speed.  Repudiate the bad debt already, least the liquidity "black hole" destroys more capital and resources.  FAIL

Mon, 06/04/2012 - 14:56 | 2492943 sunaJ
sunaJ's picture

They've gone PLAID!

 

It is amusing, isn't it?  I mean, if you just accept the failure of the system, people, you can skip beyond all of the absurdities of both TPTB and the herd.  Running around exchanging paper for paper and printing more paper so everybody can have paper is madness even to an uninvolved human.  I am embarrassed to imagine what an alien visitor might think.  Get physical assets and physical investment (put your own skin in the game) and develop a trade where you work for yourself.  You will be ahead of the herd after they get done running and jumping through these circus hoops.

 

They've gone PLAID MAD!

Mon, 06/04/2012 - 14:45 | 2492898 lolmao500
lolmao500's picture

Traitors running the Swiss central bank...

Mon, 06/04/2012 - 14:48 | 2492911 Dr. Engali
Dr. Engali's picture

Traitors running all the central banks.....there fixed it for you.

Mon, 06/04/2012 - 14:56 | 2492942 MsCreant
MsCreant's picture

It is a qualification in fact, that's why having GS, JPM, etc on your CV is such a plus...

Mon, 06/04/2012 - 15:09 | 2492981 Cognitive Dissonance
Cognitive Dissonance's picture

I suspect ALL central banks are on suicide watch.

"I have my eye on you Butchie Yost Ben Bernanke."

http://www.imdb.com/title/tt0814164/

http://www.imdb.com/character/ch0028072/quotes

Mon, 06/04/2012 - 15:43 | 2493128 RougeUnderwriter
RougeUnderwriter's picture

Check out David Stockman on CNBC Friday Night:

http://video.cnbc.com/gallery/?video=3000093596

Mon, 06/04/2012 - 16:13 | 2493236 Dagny Taggart
Dagny Taggart's picture

Watching them all....

Nice Milch reference. https://www.youtube.com/watch?v=ASY4KeQE24k

Mon, 06/04/2012 - 15:35 | 2493092 mt paul
mt paul's picture

traitors centeral

running all banks

 

further correction..

Mon, 06/04/2012 - 15:18 | 2493011 BlueCollaredOne
BlueCollaredOne's picture

The swiss bankers definitely have some balls. If I'm not mistaken Switzerland was host to bilderberg last year and a few elected officials actually showed up to actually protest the meeting on its on soil, no doubt at the behest of the population. I'm under the impression that the Swiss are a very nationistic culture, so once they get wind of this hopefully action is taken.

Mon, 06/04/2012 - 15:35 | 2493095 Leopold B. Scotch
Leopold B. Scotch's picture

Lot's of Sniper Rifles and Nato quality automatics up in them there Alps.

Mon, 06/04/2012 - 16:49 | 2493417 Urban Redneck
Urban Redneck's picture

Swiss bankers have no balls.  They are bound by convention and habit. 

CB idiot group think 101- blindly print your own currency to directly weaken it and thereby (indirectly) strengthen that of your largest trading partner in effort to keep your own domestic export market alive.

BSD banker think- over a third of the worlds oil trade is conducted between Geneva and Zug and almost of that trade is settled in USD, if the SNB incompetents inactually had balls, they would seduce or compel their friends in the trading houses (everyone knows everyone here) to start using more EUR and less USD.  The same desired end result is achieved, without the balance sheet risk for the nation and people (and immediate profits for the hookers & booze/Christmas party GL account to boot).

Just something that came up over coffee in Geneva...

Mon, 06/04/2012 - 14:46 | 2492903 LawsofPhysics
LawsofPhysics's picture

More to come as these "truths" start getting reported.  Money printing way up, profits revenues way down.

Mon, 06/04/2012 - 14:48 | 2492905 Beevreetr
Beevreetr's picture

Question...  Europe now talking "gold backed bonds"..  If these "gold backed bonds" come into existence... Will gold take off and leave silver in the dust, or will they rise in unison?? I am fighting with myself on the answer.. Your thoughts

Mon, 06/04/2012 - 14:57 | 2492950 insanelysane
insanelysane's picture

Keep fighting.  Don't let the bastard win.

Mon, 06/04/2012 - 14:56 | 2492906 Mercury
Mercury's picture

If they printed francs and bought gold instead of Euros they still might accomplish a devaluation of their currency but they would also have a built-in Plan B.

If their currency appreciated "too much" the government could even declare a dividend to citizens and businesses crushed by exchange rates.

Just wait until they realize that the discretionary banking business they just corked is in high demand....

Mon, 06/04/2012 - 14:48 | 2492908 semperfi
semperfi's picture

Where's Graham "There Will Be NO NEW QE" Summers?  Psst, G-Man, the CB's are all doing QE and just not admitting it. 

Mon, 06/04/2012 - 14:50 | 2492914 LawsofPhysics
LawsofPhysics's picture

correct, ZIRP is QE.  Unless you really believe there is "no real cost" for creating capital and not creating any real value.

Mon, 06/04/2012 - 14:48 | 2492909 qussl3
qussl3's picture

Just buy gold with those euros.

Oh wait, that would mean them admitting that their fiat isnt worth jack no?

Mon, 06/04/2012 - 15:21 | 2493026 DoChenRollingBearing
DoChenRollingBearing's picture

+ 55,000 euros

Gold is the highest and best use of any extra currency fiat$ you may hold.

Mon, 06/04/2012 - 14:50 | 2492915 SDRII
SDRII's picture

Hong Kong's gold shipments to the mainland in April jumped 62 per cent to the second-highest level on record, while gold flow from China increased to an unprecedented level

http://www.iol.co.za/business/international/hong-kong-china-gold-flow-ju...

 

Gold American Eagle coin sales double in May over April June 1, 2012 Meanwhile, silver American Eagle sales rise 89% from April in another sign bullion is regaining safe-haven status

The U.S. Mint's sales of American Eagle gold coins in May more than doubled from April as prices of the precious metal declined.

Sales were 53,000 ounces, compared with 20,000 ounces in April and 62,500 ounces in March, according to the Mint's website. Sales of American Eagle silver coins rose 89 percent in May to 2.88 million ounces from April.


Mon, 06/04/2012 - 14:56 | 2492938 Ahmeexnal
Ahmeexnal's picture

53k ounces of gold sold in may. How many milligrams per person in the US does that compute to?

Using population count from http://www.census.gov/main/www/popclock.html (313,674,524) that works out to 0.005255317 grams per head. 

 

 

Mon, 06/04/2012 - 15:08 | 2492980 Not Too Important
Not Too Important's picture

And I can get head with that gram, too!

Mon, 06/04/2012 - 15:26 | 2493043 DoChenRollingBearing
DoChenRollingBearing's picture

@ Ahmeexnal

Multiply your figure by three to get 0.015 grams per family.  Call it 1/6th of a gram per family and 1/30 of a toz, works out to some 1/180-th toz per family..., for one month.  Divide by 12 (mos / yr): one fifteenth of a toz of Au per family bought in a year.

Mon, 06/04/2012 - 15:33 | 2493083 Ahmeexnal
Ahmeexnal's picture

DCRB,

Thanks for the follow up. This will end in tears for those not stacking.

Mon, 06/04/2012 - 15:29 | 2493059 SDRII
SDRII's picture

Normalize for the 50M on food stamps and the soon to be student debt repudiators. It is a start

Mon, 06/04/2012 - 14:50 | 2492916 LongSoupLine
LongSoupLine's picture

Print Francs, buy the SPY today starting at 1:32 pm.

 

Fucking horseshit ramp job. (I really don't think it's the Swiss doing this by the way...)

Mon, 06/04/2012 - 14:52 | 2492925 Ted Baker
Ted Baker's picture

SNB FAILURE BOUND TO HAPPEN

Mon, 06/04/2012 - 14:52 | 2492926 cossack55
cossack55's picture

The hell with this economic shit.  The Swiss still have the purdiest heffers on the planet. Good cheese, good chocolate and purdy cows, what else do you need?

Mon, 06/04/2012 - 14:53 | 2492930 ISEEIT
ISEEIT's picture

Fiat:

We have a problem.

Mon, 06/04/2012 - 14:56 | 2492944 resurger
resurger's picture

off topic --

check this bartender

http://www.youtube.com/watch?v=60GJ0dJ1xmE&feature=related

 

Mon, 06/04/2012 - 17:19 | 2493577 bank guy in Brussels
bank guy in Brussels's picture

That Ukrainian bartender on stage is indeed friggin' awesome. That was great fun to watch.

It's relevant ... The spirit of European ingenuity ... with what we really care about here ... alcoholic drinks!

Somewhat funny the Anglicised version of his name 'Alexander Shtifanov' ...

As we say here in the low countries ... one of our hit songs from Holland, from hip DJ Kicken,

'There Ain't No Party Like a Alcoholic Party' - No there ain't, indeed

http://www.youtube.com/watch?v=cUxWZxD3MPw

Mon, 06/04/2012 - 21:40 | 2494418 tom a taxpayer
tom a taxpayer's picture

Tomorrow the G7 bartenders will concoct a new cocktail and slip a mickey to the world/

Mon, 06/04/2012 - 15:27 | 2493046 VonManstein
VonManstein's picture

gonna start building a GBPCHF short position soon.. they gonna drop this peg and ping!!

Mon, 06/04/2012 - 16:14 | 2493255 bob_dabolina
bob_dabolina's picture

Germans retire @ 67; Greeks @ 63

The Greeks want to have their cake and eat it too. The Greeks don't even produce anything other than olives.

Shit or get off the ez pot.

Greeks should go back to the Drachma and do whatever they want if they don't like it. It's disingenuous to stick your face in the German bailout pot and demand your own fiscal terms.

It's like helping a homeless person and that homeless person demanding you to buy them steak and lobster. Greece has a champagne taste on a beer budget.

GTFO

Mon, 06/04/2012 - 16:11 | 2493277 Negro Primero
Negro Primero's picture
"Hitler Visits Swiss Banks"

(...or Angela)

 

http://www.youtube.com/watch?v=hgQNP4O6Z4E

Mon, 06/04/2012 - 17:29 | 2493606 bank guy in Brussels
bank guy in Brussels's picture

Michael Moore (his vid in the link above) is a questionable figure at times, despite his popularity.

Here he is ridiculing the Swiss banks over those payments extorted by US courts re Jewish losses in World War II. - It was a mistake for Swiss banks to ever to set up branches in the US.

What the media does not discuss, is what happened to those 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.

- And re the Columbine massacre - another Michael Moore favoured topic - what is not being discussed in regard to that, is the allegations the two young boys who did the shooting were raped in US police custody when arrested earlier, and that trauma is what led to their impulse to murder.

Mon, 06/04/2012 - 17:58 | 2493732 FranSix
FranSix's picture

They could buy gold and sell CHF.  Nahh, they wouldn't do that.

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