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Meanwhile In Switzerland...
... The entire bond curve through the 5 year point is now negative (for the first time ever). At this rate, courtesy of the FX peg and the SNB's free put option, whereby EURs are converted into CHFs at a furious pace even as the facade of a collapsing Eurozone is itself crumbling, and the proceeds are use to buy Swiss bonds ever further into negative territory, we may soon have an entire bond curve trading at negative territory. Which, paradoxically, would lead to that Keynesian wet dream: the more debt Switzerland issues, the more money it would make courtesy of negative interest expense, literally, and the faster it would pay down its debt. Curiously, this may not be a bad offset to losses that the SNB is currently experiencing due to its currency peg. And some thought bizarro world was a sitcom construct.
Chart: BBG
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More Free Money:) I mean really free free money:)))))
Yodeling for money.
Gold is rockin-and-rolling today!
Shhhhh!
http://www.youtube.com/watch?v=VUw99nLJX64&feature=g-all-u
Gold to go parabolic!
It is finally behaving as expected. Europe bad should be good for gold. Not the other way around.
Why doesn't the SNB buy gold?
mainly because Uncle Sam would get mad at the Confederates. He already pushed them to sell quite a lot of their shiny in 2000. But since he is pushing them a lot, lately, eventually they could lose their tempers...
I paid myself back the $40 I owed myself and then splurged the $40 on a steak dinner with mashed potato pie. Then borrow some more from myself. Making money the easy way has never been easier.
Because they want to keep a fixed exchange rate to the Euro. (1 Euro ~ 1.2 CHF). The surrounding EU-zone is Switzerland's' most important trading partner, and as S. export of high quality industrial goods and tourism are important to the CH economy, an overly strong CHF is "bad for the economy". Last summer, the EUROCHF fell as low as 1.05 and exporters were outcrying loudly. So they enganged in the currency war, and started that peg last September (same time when the major gold-smackdown occured from the last all-time high in USDs).
Negative free money.....even better than just plain ole' free money.
"Pay to play" meets "Pay to pay."
More like "pay to keep your savings from melting down to syrup".
I'm not a bond junkie, but I've got to wonder why the 3 month is actually positive. Is there some kind of currency swap situation that enables this?
The true value of currencies measured in Gold is falling fast. Gold is about to erupt...
MASSIVE short covering.
The SNB meets Thursday and Saxo bank has increased margins ahead of the meeting. The peg is being pushed hard now as the shorts are running for the doors. Not being a bond wonk myself I would have thought the 3 month would be the perfect place to be to position for a change in the peg. Of course I've found over the years if I think something and the market thinks something else it's likely I'm the one who's wrong.
hehehe, wait until the 10y is negative...
Spain will be so jealous!
Spain is no Switzerland either.
the funny thing is that the Swiss are starting to talk about this floor as if it were a dam. now, of course, most people are scared of dams, but the Swiss (bless their little souls) are very fond of engineering and dams.
since the debate at the moment is mainly between setting the floor to 1.40 from 1.20 (i.e. cheapening the CHF vs the EUR) OR leaving it as it is, they will soon start to talk about printing more and buying something tangible with it (they are the prepper nation of the world). harnessing the power of this dam. we are not yet there, though
now, what could they buy with fresh notes that is tangible and a store of value? they already have bunkers, arms and ammo to last for three world wars... they already have foodpiles for several years... hmmm... any ideas?
FB calls!
The whole nation will be piling in on those $0.03 ITM calls.
Municipal bonds..... bitches.
Oooh..pick me pick me!
A whole buttload of bubbly American bonds; they will be consumed with liquidity preference.
I must say once these rates rationalize what happens next will be a sight to behold.
It's really strange to see people buy bonds on any measly uptick in the SPX....this is when you KNOW things are bad!
Hey, it's opposite day! Yea!!!
What could go wrong!
Too much money, chasing too few [SAVE] assets.
http://agstock.blogspot.com.es/
Fuckin A man, I'm gonna start my own country and sell negative bonds! Feel free to send me your money in advance. WTF
Always entertaining to see that in writing.
Some expressions are better left in the spoken word.
In this scenario ... is it better to hold CHF or Gold in the short term?
Hold on to your nutts...and gold too.
My nutts are price inelastic.
But, I meant if the CHFEUR peg was to break, Gold might get cheaper in CHF?
The difference will be that when the peg breaks, gold will be CHF3000 instead of CHF4000 per ozt, but it's price in EUR will rise by the minute.
Physical gold and silver.
If things change suddenly and violently you may find your local bullion dealer with his shutters down and your ability to convert to gold might be between nil and zero. The pursuit of profit must not make you blind to the possibility of large capital losses.
Things will not change suddenly and violently, without a prior warning atleast. Its a step by step process. Anyway dont worry about it.
Am I correct in thinking that, if adn when the CHFEUR peg breaks, Gold will go down in CHF for a while?
Why would you relate the two to Swiss gov bonds?
Well one thing is certain: the Swiss guards aren't going to invade anyone. Where "The Restoration" comes from after all is anyone's guess right now tho.
Things that don't make sense seem to dominate the financal and economic landscpe. Instead of recognising the signs and taking the exit with real assets, we are stuck like deer in headlights at the sight of a stock market that still shows movement thanks to the use of an electric money prod.
Operation Twist was meant to prevent negative nominal rates, but in aggregate, you're going to get negative nominal rates somewhere. This situation is the same as last year, where nominal rates turned negative on short dated treasuries, and gold saw a parabolic rise. What's next is German bunds going negative again. Or perhaps UK rates, being below 0.5% at the short end of the curve means that whatever their plan was, they ran into serious fiscal difficulties, and must allow negative nominal rates eventually.
Meanwhile, in Canada, selected treasury bill yields have fallen below the target rate.
http://www.bankofcanada.ca/rates/interest-rates/t-bill-yields/
Massive DEFLATION. Sure...gold will work. But not for anything with more than ten employees. The last time the dollar shortages could be met. How will it work this time?
If you have negative nominal rates, then there so happens to be one money-market commodity which you can rely on in a pinch for short term stores of value, without even having to take delivery. And, if need be, you can take delivery and store the bullion bars in a bank, because its a monetary asset.
Money For Nothin' And Chicks For Free
I like the "HELP for Explanation" at the top
Translation: Switzerland is "being-paid" to issue debt, so Switzerland can "make-lots-of-money" by "borrowing-more-money". (Weird, and counter-intuitive.)
Typically, a government "borrows-money" by issuing bonds. To borrow, the government must agree to "pay-interest" for that privilege (e.g., it "costs-something-to-borrow").
However, the "negative-interest-rate" we see today shows that people holding Euros are scared: They are willing to pay Switzerland for the privilege of loaning-their-money to Switzerland. This is because they are "selling-Euros" to "buy-bonds-denominated-in-(Swiss Francs)-CHF", because they trust the Swiss Franc more than they trust the Euro, and they are willing to "lose-money" to do it. (People are "divesting Euros", and Switzerland is making-a-profit as people are willing to lose-money to buy CHF.)
The result: Switzerland is literally "making-money-by-borrowing-money". Under this scenario, if Switzerland "borrowed-infinite-money", then it would be "infinitely-rich", and it could use those profits to pay off all debts, have great parties, and purchase empty-cities throughout Asia.
#WINNING!!
We could have done the same thing, but instead "we" decided to send all the money to a precious little country somewhere else, so we could go bankrupt.
I will gladly pay you 10 Euros today for 90 Swiss Francs tomorrow.
That's about 3 hamburgers
Ze wango ze contango.
The Euro IS a sitcom.
enjoy it while it distracts you from the main front
Bernanke is getting nervous. Everytime one of his stooges mentions stimulus PMs spike and more importantly oil does. He's floated this trial balloon enough already it's time to admit the truth; The banksters swarm all over the stimulus and turn it into commodity inflation. The working economy never sees a fuckin cent. Got it Dr.?
so risk0n isn't really risk0n? Hahaha!
the swissies should raise the peg to 1.25? L0L!!!
that fungicide can run like the wind! what a thoroughbred!
I think Henny Youngman said it best: Take my money please!
anti-matter
I'm consistantly nonplussed at that which I do not understand.
I'll ask the same question again. Why would the Swiss government not issue massive negative interest bonds and corner the PM market. Wouldn't take all that much.
The Swiss are enjoying the same advantage that has always accrued to the oil/military backed USD.
What's funny is that bizarro works out on paper and in charts, but not in the real world. For example, if my bank started making me pay interest to keep my money there, I'd tell them to go fuck themselves and just deposit enough to pay my bills. Is that where this is all going? Because if it is, we're way closer to doomsday than anyone dares mention. You can't run on negative interest rates anymore than you can run on a negative tank of gas.
Switzerland is the " Poster Child" , of " Fiat gone Wild"! Classic example of Monopoly Money!
This is so cool. Collectively, I do not trust the money I print (I just can't help printing. Then again I just might stop. I'm a bit crazy. I'm a Euro issuer wondering about the true meaning of GDP.). I trust the money (CHF) you print so much that I will give you interest in your money (CHF) if you sell me the money (CHF) you print and hold on to it for me (bonds). Lets see now, you print money (CHF) and hold on to it. I give you money in my currency (EUR). In time the money (bonds) you printed decays to zero. Net/Net I just give you money (Euros). You pick what currency to convert Euros into or to just spend it on goods. Perhaps this will not last long. Then again, I get to be like USA and print until...................? Oh wow, I think I just found the roots for new European monetary system including management of fear (thank you Bush for our new world order) and thus exchange rates. It looks like print and counter print. We have liquidity and mop-up . Look out USA we have a second means to print to infinity with its own debt ceiling debate about to emerge. All we needed was a socialist country with 70+ percent of the population working in the banking industry to get a strong handle on the cronyism to instill a process for trickle down. This is to good to be true. What am I missing...........Oh yeah how do we get the confidence into debt that are not Franc bonds? Wait, if you buy Euro debt with bonds(CHF) that are issued with negative interest rates, you can accept the loss once the bonds have decayed to zero. Ok, who has a calculator to sort out how long we need to extend and pretend once the Bush era is over.As Lt. Cmdr. Data might say... 'Processing. Processing. Stand by, processing'
In a few weeks Switzerland can buy with 50, 100 or 150 bill EUR half of Spain or provinces in the northern part of Italy. But, stop! Not yet rock bottom prices.
<feigns surprise>
http://www.zerohedge.com/news/teleportation-swiss-safety-pushes-record-n...
Why would the Swiss want to have any debt regardless?
And what do they do with the Euros they get now? Why would they want a currency now, which may crash and burn anytime, and promise to give someone in the future a solid, good for the ages currency?