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Guest Post: "With Immediate Effect"

Tyler Durden's picture




 

From Simon Black of Sovereign Man

"With Immediate Effect"

Holy Red Screen, Batman! If you haven’t seen the news, the Swiss National Bank has just announced that it is putting a ceiling on the franc’s appreciation against the euro… effectively abandoning its economic sovereignty and putting its future in the hands of woefully corrupt and incompetent bureaucrats.

On the news, the franc fell off a cliff, dropping almost 10% INSTANTLY. Gold priced in Swiss francs jumped from 1497 to 1620 per troy ounce, all in about 45 seconds.

Precious metals are now all alone as the only forms of sound money that are truly safe havens.

Just 6-weeks ago on July 27th, in a letter entitled “Should I buy gold at its all-time high”, I wrote:

“Even stronger currencies like the Swiss franc have limits to their appreciation. At some point, the Swiss National Bank will impose capital controls to thwart the rise of its currency. . . [Y]ou’ll probably feel like a sucker for not buying gold at $1600 when you still had the chance.”

Since then gold has soared roughly 20%, and as of this morning, the SNB has imposed capital controls to thwart the rise of its currency.

This is just the beginning.

The Swiss government has basically told the world that they will print as much money as it takes, and buy up as much crap sovereign debt as they can, to competitively devalue the currency.

This essentially puts Switzerland in the same sinking boat as Italy, Greece, and Portugal… with one key difference: Switzerland has 0% interest rates.

In other words, you can now borrow in francs at 0% and buy government-backed euro garbage yielding 5%, 10%, 30%…. with absolutely no downside currency risk.

Here’s a practical example you can do– open a FOREX trading account and borrow Swiss francs at 0.5%. Buy the EURCHF cross and simply hold euro cash, paying 0.65%. At 100:1 leverage (quite common in FOREX trading), that translates into a 15% return simply for HOLDING CASH with no downside currency risk.

It’s free money, courtesy of the Swiss National Bank. I’m just waiting for the next wave of margin hikes. Needless to say, this is utter madness and will absolutely hasten the end game for Europe.

A few other points to make:

1) Big Swiss exporters like Novartis and Nestle are dancing a jig right now as this will surely boost their sales in the short-term. Also, banks in Switzerland and Austria who had heavy exposure to Eastern Europe are breathing a sigh of relief right now.

You see, Swiss interest rates have traditionally been lower than in Europe’s emerging economies. For example, many Hungarians took out mortgage loans in Swiss francs because the borrowing rate was so much cheaper.

Once the Swiss franc began to rise, however, borrowers had a difficult time paying back the loan; suddenly their mortgage payment and balance were much higher than before, and default rates soared.

Banks in Austria, Germany, and Switzerland who wrote most of the loans were sitting on huge potential losses… and this destruction to the financial system has been mitigated thanks to today’s move. I have to imagine this had some influence in the decision.

2) For all the talk of a pullback in gold, this is only further reason for a rise in precious metals. It’s true that nothing goes up (or down) in a straight line, but given that the world just lost nearly its last remaining safe haven currency, there are few other asset classes to turn to.

3) Markets are not functioning properly. Competitive devaluation means that governments are all striving to out-print each other… Europe is printing as much as they can to bail out the PIIGS, Switzerland just signed up to join then, Japan and China are not far behind, and QE3 is set to launch soon in America.

With so much money sloshing around the financial system, there is absolutely no sense of value anymore; people cannot invest with confidence given all the massive bureaucratic intervention.

4) In the Swiss National Bank’s brief statement, they said “With immediate effect, [the SNB] will no longer tolerate a EUR/CHF exchange rate below the minimum rate of CHF 1.20. The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities.”

The three key words here are ‘WITH IMMEDIATE EFFECT’. This is just another example of a government making instant changes that pose dramatic risk over people’s lives and livelihoods.

Make no mistake, we can all wake up tomorrow to a new reality.

 

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Tue, 09/06/2011 - 08:34 | 1637788 maxmad
maxmad's picture

You can't eat the ETF GLD!

Tue, 09/06/2011 - 09:01 | 1637895 Pladizow
Pladizow's picture

Jim Rickards book - "Currency Wars" will be a timely read.

12/21/12 here we come. Not the end of the world, but simply the end of the economic/financial world as it has been known.

Tue, 09/06/2011 - 09:17 | 1637964 tradewithdave
tradewithdave's picture

I disagree. With HKMex and PAGE coming online, this SNB move marks the end of the currency war, not the beginning.

All that remains is the petro dollar protected by U S military might and the nationalization or plundering of gold and silver mines.

Now we're harmonized so no one can arbitrage the global mergers; one for the East, one for the West all pivoting on a gold see-saw until you wake up one morning to the reset switch flipped over a holiday weekend.

Dave Harrison
www.tradewithdave.com

Tue, 09/06/2011 - 09:40 | 1638053 Pladizow
Pladizow's picture

REALLY!!!!! - "...the end of the currency wars...."

Your comment could easily be the most stupid comment I read today.

Wed, 09/07/2011 - 02:00 | 1641084 bid the soldier...
bid the soldiers shoot's picture

And you don't think we're there now, because?

Tue, 09/06/2011 - 09:24 | 1638000 Thomas
Thomas's picture

You can eat Nestles. 

Tue, 09/06/2011 - 10:35 | 1638230 Waffen
Waffen's picture

Go long Zits.

Tue, 09/06/2011 - 09:58 | 1638120 Snidley Whipsnae
Snidley Whipsnae's picture

"You can't eat the ETF GLD!"

I was curious about this oft heard remark so I tried eating some... It gave me indigestion followed by nausea, constipation, flatulence, extreme erections, migraine headaches and the runs... but it doesn't taste bad with A1 Sauce...

Tue, 09/06/2011 - 10:03 | 1638136 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

This sounds like something BigPharma would definitely be interested in developing!

Tue, 09/06/2011 - 12:29 | 1638584 Snidley Whipsnae
Snidley Whipsnae's picture

LOL... Matter of fact, I was repeating a warning accompanying a bigpharma add heard on tv...

Why would anyone, after hearing the warning, take that stuff??? Death wish?

Tue, 09/06/2011 - 08:35 | 1637796 maxmad
maxmad's picture

Make no mistake, we can all wake up tomorrow to a new reality.

 

Wow where's the mushroom cloud?

Tue, 09/06/2011 - 08:37 | 1637800 cossack55
cossack55's picture

Awaiting new nuclear CDO/CDS issuance.

Tue, 09/06/2011 - 08:45 | 1637837 spiral_eyes
spiral_eyes's picture

Currency wars are hilarious. People need to look at the real underlying figures that governments can't massage with QE.

Priced in gold, bitchez.

http://azizonomics.com/2011/09/06/america-priced-in-gold/

 

Tue, 09/06/2011 - 08:37 | 1637801 Gmpx
Gmpx's picture

CERN created a black hole finally?

Tue, 09/06/2011 - 08:38 | 1637802 DogSlime
DogSlime's picture

Probably about 12 months into the future from here.

Bullish for sunblock?

Tue, 09/06/2011 - 08:41 | 1637820 doomandbloom
doomandbloom's picture

"Wow where's the mushroom cloud?"

here. look at my face

Tue, 09/06/2011 - 08:49 | 1637852 youngman
youngman's picture

"Make no mistake, we can all wake up tomorrow to a new reality"

I agree...it will be an overnight policy change...done on a weekend...that changes everything...think Belarus....

Tue, 09/06/2011 - 09:10 | 1637928 j0nx
j0nx's picture

Which is why nobody should be investing in this market or have anything to do with it. It is and has been a rigged game for 3+ years now.

Tue, 09/06/2011 - 08:39 | 1637804 falak pema
falak pema's picture

The great psy war "save the Euro from becoming the Titanic" begins!

This will send a CLEAR signal to the German supreme court : Fellas we ARE ALL iN THE SAME BOAT...ALL EU ZONE. SO pull your finger out, feelen dank and tout de suite!

Banking cabal, in Europe, to save the five legged cloned sheep called Dolly EURO! 

Wow, let the games of currency war begin. Herr Merkel, Zurich calling you loud n clear!

Tue, 09/06/2011 - 08:39 | 1637811 cossack55
cossack55's picture

You may mean Frau Merkel, but maybe not.

Tue, 09/06/2011 - 08:38 | 1637808 Ratscam
Ratscam's picture

still no indication on the amount of EUROS the SNB bought?
propaganda works!

Tue, 09/06/2011 - 08:40 | 1637816 Gringo Viejo
Gringo Viejo's picture

Gimme Shelter...........................

Tue, 09/06/2011 - 08:40 | 1637818 max2205
max2205's picture

A lot of Forex blow ups....and liquidation to follow shortly in other assets...rinse repeat

Tue, 09/06/2011 - 08:42 | 1637822 Josephine29
Josephine29's picture

Another problem with this move by the Swiss is explained below

One of the causes of this situation has been the carry trade which mostly took place in the middle of the last decade where both Swiss Francs and Japanese Yen were borrowed heavily in many countries. This depressed the currency then and its partial unwind is raising it now. So how is creating the conditions for it again going to help? You see one cause was low interest rates which, ahem, are now negative and the exchange rate has just been effectively pegged against the Euro reducing currency risk too!

So carry traders have an implicitly pegged exchange rate versus the Euro and negative interest rates in what one might consider to be a type of carry trade heaven!

http://www.mindfulmoney.co.uk/wp/shaun-richards/the-ecb-and-the-italian-government-are-playing-high-stakes-poker-so-why-has-switzerland-just-joined-the-poker-players/

Yes they have just created conditions for the carry trade to thrive again! And this is one of the things which created this problem...

Tue, 09/06/2011 - 08:42 | 1637827 Catullus
Catullus's picture

I will create "stability" by causing the FX market to move 10% instanteously.

These motherfuckers just sank Europe's life-raft.

Tue, 09/06/2011 - 08:43 | 1637828 newstreet
newstreet's picture

Carthago delenda est.

Tue, 09/06/2011 - 15:18 | 1639187 bid the soldier...
bid the soldiers shoot's picture

SPQR = TPTB

CARTHAGE = GOLD AS CURRENCY

BATTLE AT ZAMA = GOLD FAILING @ $2000

HANNIBAL = T. DURDEN

SCIPIO = B. BERNANKE

Tue, 09/06/2011 - 08:43 | 1637829 PontifexMaximus
PontifexMaximus's picture

lets wait til currency res. of the SNB are mounting north of CHF 350 Mrd. Probably at this very moment Mr. P. Hildebrand will have a problem although he has the political backing for the moment. Looks like GS made the call to clients about going long USD and EUR dumping CHF....before the action obviously 

Tue, 09/06/2011 - 08:58 | 1637890 topcallingtroll
topcallingtroll's picture

Since Goldman Sachs has spies in every central bank and every government treasury office it is easy for them.

I suppose this is the ultimate form of regulatory capture.

Will trading on inside info ever be prosecuted again?

Oh I forgot. Prosecutions are for little people and mid level independent hedge funds.

Tue, 09/06/2011 - 08:43 | 1637830 chinaguy
chinaguy's picture

Currency intervention, I'm shocked

Tue, 09/06/2011 - 08:45 | 1637836 SheepDog-One
SheepDog-One's picture

Yea lets 'invest' in ham fisted total central govt control everywhere....this should end well.

Tue, 09/06/2011 - 08:45 | 1637838 Central Wanker
Central Wanker's picture

Yesterday, you could go to CHF or Gold for a safe haven. Today, you just have... Gold!

Tue, 09/06/2011 - 08:46 | 1637841 Oh regional Indian
Oh regional Indian's picture

When the trade looks so good, it's probably really bad for you. No such thing as a free lunch in money/forex markets. If the swiss can peg (a 7 sigma event as someone said) then China can surely de-peg?

No safe havens, no free lunches. This is a preservation of capital time. Leave the mad swing trading tot he madmen with inside knowledge.

V

http://aadivaahan.wordpress.com/2011/09/05/water-branding-and-thoughts/

Tue, 09/06/2011 - 08:50 | 1637857 SheepDog-One
SheepDog-One's picture

Gamble the 'sure trade' against the Maniacal Monetizers and insane desperate central planners....no thanks not me I'm out.

Tue, 09/06/2011 - 09:12 | 1637942 ManufacturedOpinion
ManufacturedOpinion's picture

That is a lame article by Oh Regional Indian.

I suggest y'all just skip over the spam.

Tue, 09/06/2011 - 09:41 | 1638058 Oh regional Indian
Oh regional Indian's picture

Newbie, are you going to be my troll bitch? 

V

Tue, 09/06/2011 - 08:48 | 1637842 Ancona
Ancona's picture

WOW!

I'm 'gonna make some popcorn and sit back to watch the show today. This should be good!

Tue, 09/06/2011 - 09:03 | 1637910 Snidley Whipsnae
Snidley Whipsnae's picture

dow futures down 252... sp futures down 30...

Yes, should be an entertaining day... for those clever rascals sitting on the sidelines with physical gold...

Tue, 09/06/2011 - 08:48 | 1637843 gwar5
gwar5's picture

Good morning, Sovereign Simon.  

 

All of the rapidly changing events and bizarre goings-on are banker primal screams of DESPERATION. Lack of signals to the market before radical shifts in policy indicates to me that they are so desperate they no longer even care if everybody knows they are just making it up as they go along. This is all so FU.

 

 

 

 

Tue, 09/06/2011 - 08:53 | 1637864 SheepDog-One
SheepDog-One's picture

Everyone is now totaly desperate, and CNBC and Bloomberg arent even reporting on any Eurozone market collapse or currency mayhem or the fact we're opening near -300 down. Anything to keep 401K robots calm. 

Tue, 09/06/2011 - 08:56 | 1637881 Withdrawn Sanction
Withdrawn Sanction's picture

"Lack of signals to the market before radical shifts in policy indicates to me that they are so desperate they no longer even care if everybody knows they are just making it up as they go along."

Spot on. "desperation" and "Swiss" are 2 words not usually associated w/ea other. Double whammy.

Tue, 09/06/2011 - 08:49 | 1637846 Quintus
Quintus's picture

Hildebrand has essentially just bet the entire Swiss economy on a strategy of doing an 'Unlimited amount' of the very thing he has tried many times before yielding nothing but failure and massive book losses.

Central Bankers are a conservative lot.  Swiss Central Bankers even moreso.  This decision can ONLY have been taken in the light of there being absolutely no alternative.

This is 'Last roll of the dice, all or nothing' stuff, and CBs just don't do that.  Unless the 5% chance that this will not result in the total hyperinflationary collapse of the Swiss economy looked like good odds when compared with the alternatives.

The SNB just sounded the 'Abandon Ship' alarm folks.  Whatever is going on behind the scenes in the Eurozone is about to blow up.

Tue, 09/06/2011 - 08:50 | 1637851 Pretorian
Pretorian's picture

Look EUR?USD some 1 woke up Bernanke to reverse margin call since cant do shit on eur/chf/. 300 pips up 300 pips down.  CRY GOLDY BITCH CRY

 

 

 

Tue, 09/06/2011 - 08:49 | 1637855 lolmao500
lolmao500's picture

With immediate effect, they raise the margin on silver and gold yet again in Shangai.

Tue, 09/06/2011 - 08:49 | 1637856 oogs66
oogs66's picture

if qe2 worked because it devalued the dollar, actions like this won't help

 

Tue, 09/06/2011 - 09:41 | 1637858 NuYawkFrankie
NuYawkFrankie's picture

As the ground trembles, as we stare into the abyss the rush is on to that Uber Safe Haven, that paragon of virtue, that anchor in a sea of instability, that timeless asset recognised as such since antiquity... well, since 1945 at least (no, not gold Virginia... but nice try my dear, now run along) - the US Dollar!  Take a bow UNCLE BUCK!

All those Swissie promoters/hustlers/idolators (good morning Marc, Gerald, Robert, Bob Steve...)  just got a royal kick in the bollocks - OUCH!

Oh my! No one can say that the gods don't have a  sense of humor! Too funny for words! LOL!!!

 

Tue, 09/06/2011 - 09:53 | 1638098 GoldBricker
GoldBricker's picture

Prisoners of the system! Love the avatar!

Tue, 09/06/2011 - 10:01 | 1638131 Rusty Shorts
Rusty Shorts's picture

...ah yes, the US Dollar, the mark of the Beast Bitchez.

 

ECONOMIC THREAT LEVEL

Harmonious. :)
Content. ;)
Indifferent. :-
Discontent. :/
Almost fucked. :( 
Totally fucked. :0 -------------You are here------------

Tue, 09/06/2011 - 18:40 | 1639876 Max UK
Max UK's picture

Gerald Celente already announced on KWN that he is out of the CHF, and now 100% into gold, as being the only safe haven. He saw the writing on the wall regarding the Swissie, and communicated that publicly.

Tue, 09/06/2011 - 08:51 | 1637860 topcallingtroll
topcallingtroll's picture

"You can borrow swiss francs at zero percent interest"

No I cant. Only the banks and the politically connected wealthy can.

It is now the perfect carry trade currency for insiders. The swiss ventral bank has made it clear thete is no downside risk, for now.

I can get a 5.25 percent rate. I suppose I can pick up a few crumbs the oligarchs dont want, but not without risk in my case.

Tue, 09/06/2011 - 08:54 | 1637869 SheepDog-One
SheepDog-One's picture

Yea who gets to borrow Francs at 0%? Not you or me thats for damn sure.

Tue, 09/06/2011 - 09:06 | 1637920 Snidley Whipsnae
Snidley Whipsnae's picture

tct... get in the pool with the big boys and they will drown you...

Tue, 09/06/2011 - 09:24 | 1638004 j0nx
j0nx's picture

Yes, and things are this way because we the people allow it to continue. Nothing more, nothing less.

Tue, 09/06/2011 - 08:53 | 1637863 Moneyswirth
Moneyswirth's picture

Something wicked this way comes.  

Tue, 09/06/2011 - 09:06 | 1637921 Dismal Scientist
Dismal Scientist's picture

I think you'll find its already here

Tue, 09/06/2011 - 08:53 | 1637865 Irish66
Irish66's picture

Euro finally break 1.40?

Tue, 09/06/2011 - 08:55 | 1637875 Temporalist
Temporalist's picture

Spam!  It's not just for economists and PhDs.

http://www.freeimagehosting.net/e916f

Tue, 09/06/2011 - 08:55 | 1637878 fwchiro
fwchiro's picture

So there should be margin hikes and a flight to the relative safety of the USD for gold's final pullback before $2500? (Hoping, anyways)

Tue, 09/06/2011 - 08:58 | 1637886 Moneyswirth
Moneyswirth's picture

What are the drones on CNBC saying?  Have they wheeled Liesman out yet to "analyze" the ramifications that this Euro market meltdown on Fed policy?  Or are they still bitching about how idiotic the gold bugs are? 

Tue, 09/06/2011 - 08:58 | 1637887 mess nonster
mess nonster's picture

"Ventral bank" that's classic. I'll use it.

Tue, 09/06/2011 - 09:07 | 1637918 Mitzibitzi
Mitzibitzi's picture

Yup, added to my repertoire, too.

Tue, 09/06/2011 - 08:58 | 1637888 ItsDanger
ItsDanger's picture

Cant say I feel sorry for the Swiss.  A neutral country for so long gets dragged into this mess by its own greed.  They needed to manager their currency risk exposure better instead of leaving it open ended.  Too late now.

Tue, 09/06/2011 - 08:58 | 1637889 Seasmoke
Seasmoke's picture

looks like gold/silver have won the game of survivor

Tue, 09/06/2011 - 09:05 | 1637913 jekyll island
jekyll island's picture

Again.

Tue, 09/06/2011 - 09:00 | 1637894 dogbreath
dogbreath's picture

to stop the carry trade shouldn't they adjust their interest rates so there isn't a trade

Tue, 09/06/2011 - 09:04 | 1637900 jekyll island
jekyll island's picture

This just in... the SNB has instituted a floor on the exchange rate for Gold.  A spokesperson for the bank released a comment:  "No longer will we allow our citizens to enjoy the ability to buy gold at a discount while awaiting the collapse of the Euro.  It is patently unfair and gives our country an unfair advantage." 

Furthermore "currency appreciation brought on by flight to safety has hurt our economy, we prefer to be in the same sinking boat as the PIIGS, why should we position ourselves for success while Europe implodes? It doesn't make sense to us." 

Tue, 09/06/2011 - 09:10 | 1637933 mess nonster
mess nonster's picture

If SNB is paying attention to major swiss corps, banks, etc, tourism... then it MUST devalue...the dynamic has taken over, and all proaction becomes reaction...exacerbating the destructive cycle, and everything that is done now only intensifies the cataclysmic whirlwind.

Tue, 09/06/2011 - 09:02 | 1637908 Sutton
Sutton's picture

Ben's gonna be pissed.  Now he's gonna buy PIIG paper , a garlic flavored Operation Twist.

Tue, 09/06/2011 - 09:03 | 1637911 DosZap
DosZap's picture

Game changer, this a.m. Gold was at $1921.00+ and rising, and now.................the Swiss eat crap, and the world is alll safe yet again,Merkels shills will self desruct, the courts will go with her, and the world is ready for the Beast.

Nice............

Ok, USD go UP, GOLD down,and I empty my cash reserves.

Tue, 09/06/2011 - 09:08 | 1637926 monopoly
monopoly's picture

And this the last country left with any credibility. Now, hanging out in the bar with the rest of the worthless creatures.

Tue, 09/06/2011 - 10:00 | 1638130 SilverRhino
SilverRhino's picture

And this WAS the last country left with any credibility...

Tue, 09/06/2011 - 09:08 | 1637927 mantrid
mantrid's picture


Precious metals are now all alone as the only forms of sound money that are truly safe havens.

that means they will be targeted next. and without mercy.

Tue, 09/06/2011 - 09:15 | 1637956 mess nonster
mess nonster's picture

Unless outright confiscation is announced, there is no force that can collapse PMs. Everybody will have gold to sell now. Oh, to be God, and have accurate knowledge of the paper/physical spread! A mere mortal would die from the sheer fright of it.

Wed, 09/07/2011 - 15:57 | 1643393 mantrid
mantrid's picture

they didn't confiscate CHFs yet they took away its safe haven status.

 

taxation, regulations.. life will be much harder if they turn gold market to uranium-like market...

Tue, 09/06/2011 - 09:12 | 1637944 The Deleuzian
The Deleuzian's picture

I'm definitely going to the liquor store today...

Obviously, everything is on the table.. Even dog/cat marriages

Tue, 09/06/2011 - 09:16 | 1637959 newark18
newark18's picture

If this is true, why did gold spike down on the news of the CHF ceiling?  Would we have seen a reverse correlation?  

Tue, 09/06/2011 - 09:17 | 1637963 GFORCE
GFORCE's picture

This was always coming. Japan next. The ultimate safe haven until they're er, not. Few nosebleeds afer the chf move I'd imagine. A few 200% leveraged accounts taken out.

Tue, 09/06/2011 - 09:18 | 1637974 SirPlayomic
SirPlayomic's picture

I can't understand why people would buy a fiat currency as a safehaven, it makes no sense to me. What really gets me confused is the people doing this are more connected and most of them far clever than I, so what makes them do it? Why would they have bought paper over gold? Greed? Shortsightedness? what?

greedion.com - yes, once its live, I will buy advertising space at zerohedge!

Tue, 09/06/2011 - 09:22 | 1637988 newark18
newark18's picture

I could have sworn that the franc was based (at least a certain percentage) on gold.  In other words, I thought the franc was the only gold backed currency.  

Tue, 09/06/2011 - 09:32 | 1638030 SirPlayomic
SirPlayomic's picture

Even if it was though, which of course it isn't, why would people put money into something where they have to trust in the honesty and integrity of central bankers? "Yes good sir, of course our currency is backed in gold *cough* *cough*". Is there really any such things as a paper-game "safehaven", even if it is allegedly backed with gold? Reminds me of chat I had with a financial adviser, he said I should by insurance against a financial meltdown. That left me speechless, especially since he couldn't see what was wrong with his advice. Crazy world. I'll stick to the phyz.

Tue, 09/06/2011 - 10:21 | 1638187 chubbar
chubbar's picture

The terms of the IMF are that no country can back their currency with gold. Gee, wonder why? Fucking crooks.

Wed, 09/07/2011 - 16:03 | 1643410 mantrid
mantrid's picture

legal tender law? you're not allowed to pay your debts and vows with anything other than state controlled money. and these have guaranteed liquidity by those states. now, gold is still a small market when compared to FOREX.

Tue, 09/06/2011 - 09:20 | 1637979 The Deleuzian
The Deleuzian's picture

Hep!!

PM's: Last men standing

Tue, 09/06/2011 - 09:22 | 1637991 adr
adr's picture

Or this is just the catalyst to launch the World Currency backed by the basket of gold holdings  becuase the separate world currenices have just caused too many problems and a single world currency solves all imbalances just like the uro was suppossed to solve Europes problems.

Remember in central planning land the reason why it didn't work was becuase it simply wasn't big enough.

Tue, 09/06/2011 - 09:23 | 1637995 Downtoolong
Downtoolong's picture

This is exactly the kind of shit that makes me want to pull  all my money (what's left of it) out of the financial markets and buy a pig farm (not a PIIG farm).

Every time I hear the phrase TBTF banking I laugh. If this isn't failure, what is?

 

Tue, 09/06/2011 - 09:25 | 1638006 tradewithdave
tradewithdave's picture

Think twice before you borrow in Swiss francs at zero percent, only to get stuck paying back the loan in Special Drawing Rights at 15%. They just laid the SNB on the altar of the Euro-Dollar merger. They don't need it, they have the BIS for backdooring the equity in the consolidation.

Dave Harrison
www.tradewithdave.com

Tue, 09/06/2011 - 09:31 | 1638022 ToNYC
ToNYC's picture

 

Net result is interest income is not available since it is as all paper is, a function of confidence. Confidence is tested and neutralized; SNB's turn came today. They had no choice but to take flame.

Tue, 09/06/2011 - 09:35 | 1638039 tradewithdave
tradewithdave's picture

Just told the wife...make reservations...we're going to Switzerland on vacation. Buy the plane tickets, but hold off on the hotel reservation....we got another 30% easing to come before we lock in the room and the meals.

Tue, 09/06/2011 - 09:57 | 1638115 QEsucks
QEsucks's picture

Ladies,ladies...please!

Tue, 09/06/2011 - 09:59 | 1638119 QEsucks
QEsucks's picture

dup

Tue, 09/06/2011 - 10:18 | 1638174 fonestar
fonestar's picture

Stupidest move ever by the Swiss.

Tue, 09/06/2011 - 10:29 | 1638213 PulauHantu29
PulauHantu29's picture

Holders of Swiss Francs just took a 10% haircut?

Awesome!

Tue, 09/06/2011 - 14:26 | 1638968 robertocarlos
robertocarlos's picture

How could we ever afford to buy a Swiss chocolate bar if the Franc didn't fall?

Tue, 09/06/2011 - 15:08 | 1639154 fiddy pence haf...
fiddy pence haff pound's picture

my gold is Swiss, and my oil Libyan (i.e. five-finger discount prices). 

Tue, 09/06/2011 - 16:17 | 1639311 o-antonio-maria
o-antonio-maria's picture

Quote: "The Swiss government has basically told the world that they will print as much money as it takes, and buy up as much crap sovereign debt as they can, to competitively devalue the currency.

This essentially puts Switzerland in the same sinking boat as Italy, Greece, and Portugal…"

NOT EXACTLY: competitively devaluating their currencies for ages are Japan, China and... USA! That is why that they ask for zero costs for their money (Japan and USA) or keep national currency value as sovereign security issue (China). One cannot count only on gold you know... So what else? Have you thought about euros under this light?

Tue, 09/06/2011 - 17:08 | 1639557 defencev
defencev's picture

That is what SOB wrote recently about Swiss Franc. You really need to understand that this guy has no slightest idea what he is talking about.

 

 

You see, the Swiss franc is one of the few currencies that have given investors some sense of comfort recently; Switzerland inspires confidence and stability, and the worse things get in the United States and Europe, the more investors pull their money out of the dollar and euro, and park it in the Swiss franc.

It's all about supply and demand. Increased demand for the Swiss franc coupled with expanded supply of dollars and euros has caused the franc to surge over the last weeks and months. It wasn't too long ago that it would take 1.20 francs to buy a US dollar. Now it takes $1.40 to buy a single franc.

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