Swiss, Germans Set To Unleash Capital Controls As European Companies Prepare For Euro End
Even as Eurozone leaders attempted to instill some meager sense of accomplishment following the latest (but certainly not last) Euro summit culminating with yet another 7-page term sheet which achieved absolutely nothing, and in fact succeeded in alienating the UK even more, the real game continues behind the scenes. And it is a game which the euro looks set to lose. As Bloomberg reports, in the aftermath of the Telegraph's latest report confirming what has been said here all about the collateral crunch in Europe, Europe's CEO are now actively preparing for the worst case outcome: the end of the Euro (despite UBS' and other banks' repeated calls that such an event would result in an end of the world). To wit: "Grupo Gowex (GOW), a Spanish provider of Wi-Fi wireless services, is moving funds to Germany because it expects Spain to exit the euro. German machinery maker GEA Group AG is setting maximum amounts held at any one bank. “I don’t trust Spain will remain in the euro zone,” said Jenaro Garcia, founder and chief executive officer of Madrid- based Grupo Gowex, which provides Wi-Fi access in 15 countries. “We moved our cash and deposits to Germany because Spain will come back to the peseta"... Contingency planning for an unraveling of the currency involves cutting investment, moving money to Germany, transferring headquarters to northern Europe from southern, and even going out of business." And to all the chatterboxes on CNBC repeating ad inf that a Eurozone collapse would be "manageable" here is a person who actually knows what he is talking about: "“How do you control an explosion in a controlled way?” Fiat SpA (F) Chief Executive Officer Sergio Marchionne told reporters in Brussels on Dec. 2. “That’s a contradiction in terms. This will be an implosion of some size with potentially disastrous consequences." He is right, and while the outcome is certain, it will not stop Europe's financial leader Germany from intervening in an attempt to prevent a surge in Deutsche Marks once the currency returns, and will likely set up capital control measures - that last bastion to every failing monetary system - to halt what is sure to be a record inflow of post-collapse DEM appreciating capital.
From Bloomberg:
The Bundesbank, Germany’s central bank, registered capital inflows of 11.3 billion euros ($15 billion) from non-banks in September, according to the breakdown of its current account published Nov. 9. That helped transform a deficit of 47.3 billion euros in Germany’s balance of other capital flows in August to a surplus of 700 million euros in September.
In another bid to end the debt crisis, European leaders added 200 billion euros to their warchest and tightened anti- deficit rules in what they called a “fiscal compact” at a meeting in Brussels. European stocks dropped and the euro was little changed as the plan disappointed some investors.
And confirming the case for capital controls, is Handelsblatt which reports that Switzerland is preparing contingency plans in the event that the €-crisis escalates.
The government would oppose a flight to the Swiss franc. In this context, a working group is examining and negative interest rates and capital controls, the Swiss Finance Minister Eveline Widmer-Schlumpf said in Parliament yesterday. At negative interest rates of foreign assets in CHF are subject to a penalty tax.
"We are certainly prepared for possible alternatives," Widmer-Schlumpf said on questions of deputies, the government would like to respond. To capital controls or negative interest rates, she said: "These are questions which are examined in this Task Force on the franc strength."
But just like any other centrally panned intervention this one too shall fail. What is more important, is that now that the concept of a EUR end is tangible, it will likely become a self-fulfilling prophecy:
Companies switched gears from preparing for a possible exit by Greece to some sort of currency breakdown after Italian Prime Minister Silvio Berlusconi’s government collapsed and 10-year Italian bond yields rose past 7 percent in November.
“A couple of weeks ago I would never have thought about having conversations on the probability of the euro disappearing, but now there is more speculation on such a scenario,” Wolters Kluwer NV (WKL) CEO Nancy McKinstry said in a Nov. 29 interview at the company’s headquarters outside Amsterdam.
The board of Wolters Kluwer, Europe’s largest tax and legal publisher with offices in Frankfurt, Milan, London and Phoenix, has spent more time on scenario planning, she said.
“We obviously have plans in place if something happens,” ABB Ltd. (ABBN) CEO Joe Hogan said in Zurich on Dec. 1. “They can never be as robust as you’d want them to be but we certainly are prepared if there is a crisis.”
The Swiss engineering company “updated what we would do” in the past few weeks, Hogan said. “We just keep updating and making our plan more and more detailed.’
Bayerische Motoren Werke AG, the world’s largest maker of luxury cars, has honed its plans developed following the 2009 financial crisis and is prepared to act if markets dive, Chief Financial Officer Friedrich Eichiner said in November.
The Munich-based carmaker’s response would include reducing production by as much as 30 percent and using its banking unit to directly tap central bank reserves. The company also has reduced its leasing portfolio to manage risks in case used car values decline.
In other words, what is certain is that nobody has any certainty what will happen, and the result would be a massive deleveraging wave of epic proportions. What is also certain is that the global central banking cartel (sans the ECB in the post non-EUR world), would do everything to halt said deflationary vortex, and will just hit the CTRL+P combination on every possible device in its arsenal to stave off the inevitable. What is then absolutely sure, is that the second to last step will be the realization of Bernanke's theoretical threat to dump money out of helicopters... with the final outcome being history repeating itself once again, in that no civilization has ever collapsed from a deflationary collapse but always from the authoritarian response to it, yet which has seen hard assets survive in fair value form for over 20 centuries.
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wot...no mention of the illustrious dollar?
Not yet. And to be fair the Bernank is nowhere near as ridiculous as that bunch across the pond. He is scary, but compared to the Euroclusterfuck, he is a pussy compared to the pros over there. For now. In any case long popcorn and overweight physical silver. And get some gold while at it.
We all know that, as a last gasp, the Central Bankers will PRINT, PRINT, PRINT ... so the only questions are (1) how much time will this buy; and (2) how much worse will this make the crisis?
The FED will print for the UK same as they did in 1927, notice how the UK just extracted themselves from the EU? Call them England, UK, British, All the more to FOOL you with, my Dear......
h/t Griffin, TCFJI (When the BAU hatches a profile, its easy to follow. Add'l h/t Criminal Minds tv show BF).
comments of 2 CEOs of comapny nobody has ever heard of before, lol! great evidence of capital flight ZH! way to go!
whats next? crude oil will not be used any longer in a month because the CEO of TinycompanyX believes renewables will be a solution in the next month and has invested $1000 in FSLR?
Stick a fork in this porker. It's done, sliced and diced.
Switzerland already preparing for recession as soon as war breaks out in Europe following euro collapse:
http://www.tdg.ch/actu/economie/seco-suisse-pourrait-rentrer-recession-2...
There was a cyclical weakening in the third quarter of 2011, observe the chief economist of the State Secretariat for Economic Affairs (SECO), in an interview published Saturday by the newspaper Aargauer Zeitung . It is quite conceivable that we see two negative quarters. However, as a whole, the Swiss economy is still doing well.
http://www.tdg.ch/actu/economie/seco-suisse-pourrait-rentrer-recession-2011-12-10
Bayerische Motoren Werke AG
It would sure be nice if there was some kind of monetary asset out there that wasn't subject to all that counter party risk and uncertainty.
yeah....
sigh
I'm scanning the periodic table of elements in search of something that could serve as a suitable monetary asset. I'm going in numerical order and am at #46, Palladium. I feel like I'm getting close so I'll let you know if I find something soon.
if you find something, test it out by showing it to babes. if they like it then we can probably use it as a medium of exchange. that's how i do my science experiments.
It is David Cameron who alienated the rest of the EU.
Furthermore, if corporations take precautions, it is not equivalent to predicting the outcome of the current situation.
Also, it is far too early to say the euro ship is sinking. My bets are that it floats into the furture - stronger that has been up until now - after the recession that will come in 2011.
Taking precautions can become a self-fulfilling prophecy.
viva la fiat
Plutonium.
Thanks, but palladium will do!!
My fear is that the government will put a 90% tax on the gain on this element when the rest of people "get it". How do protect yourself for this situation?
Baked beans, spam and ammo...put your money on it...these are assets you won't regret...
Good point dude, who the hell ever heard of these guys, what do they make buggies or somthin.. Bayerische Motoren Werke, sounds like the last thing they made was Frankensteen's wagon, ehh..
http://s1.hubimg.com/u/199760_f520.jpg
Ha, yeah thats the ticket..
http://greencarhugger.com/wp-content/bmw_m1homage_450_03.jpg
Agreed. This story is nonsense. Just an outlier, not a trend.
There is 0 chance that the 70 to 90 year old men that spent most of their lives setting up the New World Order will allow Europe, their crowning achievement, to dissolve back into petty sovereign nation states with disparate governments and cultures. They already got most of them speaking English, just another hundred years to normalize their cultures and it's game over.
Seriously, there is 0 chance of a European Union break up. Zero. I just wish I knew how to trade that fact via some outrageously leveraged bet, because this one is a sure thing.
brzezinski disagrees
Well, he should know.
Didn't Corzine make the same bet?
He was betting it would hold together but as they say, the market can stay stupid longer than you can stay solvent.
I think he also signed off on a mandatory seatbelt law against the citizens while New Jersey govenor...then promptly got into a crash in his SUV while not wearing one...life is full of these little ironies & cosmic balances...lol.
Exactly correct
http://money.cnn.com/2007/04/19/magazines/fortune/pluggedin_corzine.fort...
Fact Number One: Why was Corzine thrown around the inside of the vehicle? Simple - he wasn't wearing a seat belt. "It was not his habit," said a former aide, Scott Kisch, to Newsday. Kisch was Corzine's driver when he served in the U.S. Senate. "You had to tell him if you wanted him to wear it. I gave up early on."
Not wearing a seat belt happens to be a violation of New Jersey state law. It is also beyond stupid. I won't drive down my driveway to the mailbox without buckling up.
To paraphrase Ayn Rand: He chose to ignore the laws of physics and the risk of carelessness but he could not ignore their consequences.
Another fool who believes he can block the sun with his fat greasy thumb.
everybody can block the sun with his thumb its a matter of focal point, eyes and sun
http://www.thedailybell.com/3336/Anthony-Wile-500-Year-Old-Global-Roll-U...
frankenstein.................
I'm the older brother and I was passed over, I'm smart,.. I'm smart and I deserve respect...
SARC.... with a touch of Young Frankensteeen, get with the program..
the chances are slim that the euro will go down. I wouldn't make assumption that there is a zero chance though. This quarrel between the US and Eu old men( chase and some other houses in Europe) goes back a while ago. I would thoroughly enjoy some US houses bets against EZ and on eurobonds to give them at least significant pains . The old men did put a lot on the line to make it work on both sides of the pond. Greece and spain may leave, france and germany will stick together.
i am not as sure about the zero probability, but totally agree being very low. i find it fascinating how mostly americans and brits (who have seen their currencies devalue substantially in the last 10 years against the euro despite crisis and bullshit) do not understand that it is in fact per se a much stronger currency as it is at the moment, it doesnt have big flaws and it can certainly survive very well, even with a few govs. defaulting. but most importantly, you understand very little the kind of political commitment that has been invested and is still devoted to the project. We are talking about fiat currency in any case, so problems can always be solver if it has to do with money when it is fiat money if there is political commitment.
News: its not a euro crisis! its a crisis of confidence of some european governements debt situation, things have some link but its like saying a dollar crisis because california has too much debt.. its propaganda to get the fiscal unity moving as soon as possible.
rsi1: Only the little folks dare speak for the record....as ZH knows. From their lips to God's ears.
WTF Fiat is a tiny company?
So if the company is tiny the premise is invalid?
They should send these trolls to a few logic classes before turning them loose.......
BMW automobiles are somewhat obscure, very localized German market...
Yes, but in the statist definition of Big, an automaker aint big till it's been fed at the public trough long enough to grow a huge belly of taxpayer funded debt. BMW, Fiat, small potatoes....GM...now that's BIG.
Looks like a gaggle of Obummers' country cousins have logged on here tonite!
gm owns fiat (controlling) cept for the ferrari & maserati brands
Do your homework. BMW sell globally, particularly in US and Asia.
The ECB cannot print because it is against its charter. A Treaty change would be required and Draghi will not print without forcing the politicians to take the decisions they should be taking. The problem for Merkel is that she can't get any further bailouts (In the form of printing or whatever) through her own democratic processes.
So it's easier just to blame the Brits and continue to do nothing. Czech mate?
http://www.hussmanfunds.com/wmc/wmc111121.htm
The endgame is very clear to me...watch for a series of all 17 state emergency meetings which will be the meeting that the ECB is given "emergency powers" to print...you will want to be fully shorting the euro and buying metals as inflation will go through the roof
Ammo and guns.
Will need them to kill all the Mexicans with "BROWN PRIDE" tattooed across their chest liek the guy in your picture. Did you enjoy watching him get knocked out in 60 seconds on his first title defense by a white Brazilian?
I sure did.
kind of like republicans vs. democrats, albeit even uglier.
keep them uneducated and fighting amongst themselves.
I foresee a frenetic game of musical bank accounts, as Spanish companies sling their euros into Germany to escape the peseta, French companies rush their euros into Belgium to avoid the Return of the Franc, Italian corporations move all their funds to France to evade the resurrected lira, and Germans fling their money across the pond into Bernanke Bucks to dodge the resuscitated Deutsche Mark.
What's clear now is that absolutely no one knows where the ax falls next.
At least the velocity of digital money should pick up, as everyone rushes helter-skelter into his neighbor's basement to avoid the Eurocollapse tornado.
Velocity will come yes, but it will not be the velocity we are looking for.. At least that is if you are trying to time the HI inflection point in order to maximize debt into true assets (hard) that will take more time. Sheep being sheep after all, tough to stampede, even when they should..
Sure, currency transactions will bounce around like a free electron looking for a positive outcome.
Until a great, big, positive currency comes around backed by real money.
And whoever controls that currency will survive the bankpocalypse that is upcoming.
To fucking obvious. I am down EUR but very ready for games. Underwater short @ 1.3440 and feel like an idiot. I think it might dead cat hard before it dies and I also think it won't die so soon either. These sociopaths would clean up bringing the shit to 1.38 before letting go.
It's all shit and giggles for them anyways.
Nothing earned, nothing gained.
Peices of shit.
Yep, I'm drunk.
Sorry man. My bad. Can't afford the better meds.
Short at 1.3440 is not underwater.
Stay cool.
Knock off the sauce.
DO NOT GO ON MEDS.
"Yep, I'm drunk."
lol...and they never let poor Rudolph, play in any reindeer gaaames!...Merry Christmas!
People who post on ZH either inebriated or high on maradjuwana are a goddam embarassment to the good ol USA
:o
And i'm all 3 at the moment.
People who post on ZH either inebriated or high on maradjuwana are a goddam embarassment to the good ol USA
So let's say I'm some aborigine... High on something... & I stumble across an internet connection & make a post on ZH...
I guess I'm embarassing the USA (according to your premise)...
it would depend on the post
right, 6?
^*<right, slewie>*^
see?
You got it dude,
Some people just dont get our sense of humour.
Ah well.
Really? They supposed to follow footsteps of print master to satisfy your standards? For now just do concentrate on your popcorn.
the dollar is worthless and everyone knows it.
http://covert3.wordpress.com
http://expose2.wordpress.com
This is getting more and more desperate.
Hmmmm.........................Weren't we here with the CHF Swissie just a couple of months ago?.
CHF is already out, DM is a figment of........
Absolutely. Why DM when you can euro? I say stay long dollars cuz the demand destruction is beyond apocalyptic. As a consequence you should see a flood of merchandise--and this being Europe that would be pretty much whatever you want--provided you have greenbacks. Industry itself has already been moving to the USA--throw in an energy boom courtesy of the shale boon and this could be a profound "return of the King" moment. This will have potentially dramatic security implications however--all involving the Middle East and Greece of course... to me that's the big unknowable and not "gold." gold doesn't move armies--that's debt. And as the record shows "you can set the price of gold from your bedside" if the armies that are moving are that big.
what
stop picking on disabled vet....hes a disabled vet.......
And just like the phrase "Sick and Tired" BANK RUNS always go with capital controls. Got Physical?
You don't need "physical" if you don't have any money in the banks. You are hedging. Get real yourself.
Interesting thought...No country has ever collapsed because of a deflationary collapse, but always from the authoritarian response to it. Has any told Benny that?
sunny
A fairly sweeping statement that. What is it based on? Not denying it, but, seems like it should be supported in some way. A few references please?
I think all the great and not so great empires were debasing their coins when they fell (thus inflationary). I know a lot were.
Supported in some way? How about 80 thousand years of human history.
typo or exaggerating by a power of ten?
That's like saying... Nobody ever died by jumping off a high building... They died from splatting on the pavement below...
WHAT? There has never been a Fiat currency- based economy in history that has survived. Except The US in temporium. Read The Creature from Jekyll Island, or, just read the footnotes on each page.....
Collapse is deflationary. So it is the end game..always.
a society can survive or even thrive in a deflationary environment IMO it is the debasement of the coinage and in modern times the printing of money to make up increasing shortfalls that is the end game. Imagine this whole thing had collapsed when Nixon closed the gold window, all of the western powers could conceivably been in a better place than they are now. It has been the printing, artificially low interest rates and central planning of the last 40 years (interest rates more like last 25 years) that have made a serious but manageable problem into one that threatens the stability of the whole world.
You are missing an important aspect of this whole thing, POWER and CONTROL.
Had it gone to shit with Nixon, all those in power would have to be removed forcibly and tried for treason etc. A major power shift, or the perception of one would have had to have happened.
I agree that a deflationary environment is in general good for the savers and creators of things of real value. Their labor and investment capital is treated with respect. However, we are long past any sort of workable solution without the BRICS steping up and being the adults and the truth of the matter is that none of them really want to do that as it would crush their export markets overnight and lead to more social revolution. Hard to be taken seriously while you ar killing your own.
so is the kill off of the human project
once the JIT system hits the mat...6 billion gone in under a year...goon squad comes topside...scapes bodies off sidewalk...rinse and repeat...those left standing either get shot in the head or work in slave camps for a cot and cup of gruel.
peak everything is only temporary (temporarily)
The 'human project' failed when the species exceeded 3 billion
500,000 million is where we are headed
google "georgia guidestones" then read Common Sense Renewed (not T. Paine's Common Sense, but "RC Christianson's")
REALLY, all those FRN's I have are going to get super, super valuable and then society will collapse because apparently my paper is too valuable mmm, seems almost counterintuitive...
What say your worker bee??
you mean your petrodollars?
here's the world's greatest secret - the petrodollar died in 2008 with the peaking of oil.
your FRN (read petrodollars) are worth less and will continue to be worth less as more are needed to buy less oil.
The real economy is deflating while the financial economy is inflating.
Perfect recipe for hyperinflation, followed by either new national currencies, or NWO.
Sunny...
Try 'This Time Is Different' by Reinhart and Rogoff. The book covers the last 800 years of economic collapses.
Here is a WSJ review of the book... http://online.wsj.com/article/SB10001424052748703298004574459001609215112.html
"Keynes did not add any new idea to the body of inflationist fallacies, a thousand times refuted by economists… He merely knew how to cloak the plea for inflation and credit expansion in the sophisticated terminology of mathematical economics." Ludwig von Mises
Snidley, dont you think Cameron has totally shown the uk up for what it is?
A nation run by the london banking cartel - and sod the ordinary people.
In 1970, a 6 per cent return for a risk-free government investment seemed good. Then came the inflation of the 1970's.
‘Bond vigilantes’ – a term coined in the 1980s – forced governments around the world to control inflation. Never again would they allow politicians to slowly rob them through the expansion of money and rising prices.
Now the bond vigilantes are at it again, except this time they are demanding monetary expansion. Governments that don’t print money are punished, and those that do are richly rewarded with yields below 2 per cent, or even 1 per cent.
The UK has had four rounds of quantitative easing (QE), or money printing, and its 10-year bonds, have fallen from 3.8 per cent to 2.3 per cent in six months. The US Fed has had the TARP, QE 1, QE 2 and the Twist, printing money like there’s no tomorrow, and yet the 10-year Treasury bond is stuck at a 2 per cent yield.
The eurozone, on the other hand, is being tormented by the bond vigilantes, who are using the lash of bond yields to demand that the European Central Bank falls into line and prints money. The ECB has bought €209 billion worth of bonds since May 2010; in the past three months its balance sheet has expanded at an annual rate of 77 per cent, but it’s not enough.
With €1.2 trillion of European government debt to be refinanced in 2012, the bond market is putting big pressure on the ECB and Germany to abandon their ‘conservative’ ways and print more money.
How on earth did we get to this point, where the bond market vigilantes have gone from demanding monetary discipline to demanding the exact opposite?
The world’s marginal fixed interest 'prudent' investors have gone from being long-term risk managers to short-term yield arbitrage stealers.
What they want is cheap money. They don’t give a monkey's about inflation or deflation – just give us a fix of near-zero interest rates so we can make easy profits on the carry.
There was a time when European and American governments might have satisfied bond markets and lowered the interest rate on their long-term debt simply through tight, responsible fiscal policy.
Not any more. What’s required now is a willingness to create euros and dollars, and to keep the price of money down in the short-term so the hedge funds that control marginal pricing can continue to get rich – at least until the inflation catches up with them. But they’ll be long gone by then, or so they believe.
So Merkel is taking the right approach. Basically tell the financial markets to get stuffed, refuse to print more money and change the paradigm - painful though it will be.
http://www.businessspectator.com.au/bs.nsf/Article/bond-markets-yields-g...
The bond vigilantes aren't 'rewarding' countries whose CB's print - they are being outbid by those same CB's at bond auctions.