I know a lot of people don’t give a hoot that the Swiss central bank chose this week to tie the fate of the Swiss franc to the nosediving, dying euro.
To some, Switzerland’s folly is just another scrap of bad news from muzzy-headed, irresponsible foreigners (at a time when we can’t even keep up with the idiocies perpetrated by our own domestic Irresponsibilistas). To others, who might once have looked to Switzerland as an example of what a country could be, it’s just another step on on that nation’s self-chosen downward path. From gold-backed money and financial privacy to fiat paper and total sellout. Old news.
But to me, watching Switzerland diminish itself is like watching an island of sanity sink under waves of financial madness. Half sad. Half terrifying. The last beacon falls in the storm. Now there’s only rocks and darkness.
I went on The Mental Militia Forums the other day and asked Silver (resident maven in all things to do with sound money) for his take on the subject. Though he was swamped with work, yesterday evening he delivered a long, thoughtful reply.
He agrees it was a sad move. But he seems to think there’s hope — hope that’ll come from those wonders of Swiss governance, the cussedly independent cantons. And Silver’s not the only one who says the Swiss National Bank just may not be able make the franc dive to the bottom along with all the world’s other fiat currencies.
Whatever else Switzerland has or doesn’t, that canton structure is as close to freedomista as it gets these days.
I’ll let Silver take it from here.
gawd…..freekin moneychangers……
Claire, I’ll admit right away that I am using Windows Vista; so is that why I got “There is a problem with this website’s security certificate.” when I clicked on both links?
lwoots … It’s not Bill Gates’s fault this time. 🙂 In a way, it’s mine. The links I used were https, not http. Mine are secure links that look for a site certificate. The site certificate at TMM isn’t “official” (because of cost).
So two ways to get around that: Instead of clicking on the links, copy and paste them and remove the “s” from https before hitting enter; or just accept the security exception. I can tell you from experience that there’s nothing malicious going on at TMM (unless you count the occasional appearance of a troll in the discussion forums). Either way, Silver’s post is worth a read.
Hope that helps.
BTW, I use the https links because I log in at TMM and that helps protect the login info from snoops. But if you’re only going there to read a post, no need for the “s” at all.
This weekend looks like that “moment” in Endgame. It’s really coming apart fast and there’s not much anyone can do about it. Swiss decisions are staggering as far as the end of economic sanity, but there’s more. The Germans are figuring out how to recapitalize their banks (after they default), Greek Two year bonds are now going for 55+ % (that ain’t sustainable) and the US just borrowed $500 billion, an event we were assured wouldn’t be necessary for another year with the debt deal. Governments will do all that’s necessary to keep the markets stable Monday morning, but there might not be much they can do any longer. The Fed went out of its way to interfere in the US market today with no positive effect. I’m thinking the day isn’t years, or even months off. I doubt if we’ve got weeks until the end of economics as we know it. And then there’s the Ben Bernank. He looks like a Zombie, to go along with our economy. Enjoy your weekend everyone. LOL
EN, I can’t disagree. It does feel as if the house of cards is starting to fall, as if the magician has pulled the last rabbit out of his hat.
Yet I wouldn’t put it past the global magicians of money to come up with one or two more tricks. I can’t imagine what those tricks might be. I only know that they’re pretty good at this magic act.
But as you imply with the sudden $500 billion borrowing … they’re having to come up with the tricks faster and faster and each one is less effective than the last.
One possibility they may be building up to this weekend: a diversion, a “terrorist” attack that commands the world’s attention while they scramble to reassert control (or find more excuses to justify things like eurobonds or suspensions of stock trading … or whatever). It would be risky as hell. But we’re talking about men and women whose desperation is matched only by their deviousness.
I don’t know … “It” could be this Monday (a Monday in September or October would be so classic for it). I wouldn’t be surprised. “It” could be next year. I wouldn’t be surprised at that, either.
I have a lot more to say, but the powers out (for no apparent reason) so I’ll just hit on a point u made. Things r going far to fast. This is classic John Boyd and his OODA LOOP stuff. The decision cycle is going far too fast for corrective action. Events are getting way ahead of decision making and decisions are being made too far behind the action. That was my impession listening to Obamas speech last night. Sure enough events made his Program look out of touch and the crisis actually reved up this morning.
On a related point (since Switzerland has now tied its fortunes to that of the Euro), UBS (Union Bank of Switzerland) has issued a report discussing the costs (economic as well as political) of a breakup of the Euro. I don’t have the entire report itself, but here’s a link to an article about it: http://www.zerohedge.com/news/bring-out-your-dead-ubs-quantifies-costs-euro-break-warns-collapse-banking-system-and-civil-war. (I don’t know if that will come through as a hyperlink or if you’ll have to cut and paste it into your browser.)
Very interesting stuff.
Laird, it is interesting. However, the important thing to remember here is that USB is protecting its interests by stating that the end of the world will come if Banks To Big To Fail (BTBTF) are not propped up. I have a feeling that civil war would be the recommended course if they thought it kept the BTBTF together.
Amusing quote for this entire mess:
“Some people seem to think there’s no trouble just because it hasn’t happened yet. If you jump out the window at the 42nd floor and you’re still doing fine as you pass the 27th floor, that doesn’t mean you don’t have a serious problem.” – Charlie Munger
Laird — Thanks for the link (which worked just fine). I saw that report a few days ago and didn’t know what to make of it for reasons similar to what EN states. It’s definitely interesting to see major players speculating on the breakup of the euro, no matter what their agenda.
And EN — Love the quote.
FYI, I just realized that at the end of that “ZeroHedge” article I previously posted there is a link to the full UBS report (via “Scribd”; if you log on there you can download the entire thing). The UBS analysts aren’t actually (or at least directly) advocating for additional bailouts of TBTF banks; what they are advocating is keeping the Euro together, with the claim that even if certain member states (Greece, Ireland, Portugal) should default on their debts the cost to the EU would be less than the costs of a monetary breakup. It’s not a bad analysis, although since there is no precedent to go by most the their assumptions are (necessarily) simply made up. They repeatedly claim that those assumptions are “conservative”, but I don’t know how they can legitimately make that assertion.
Another rationale given for maintaining the Euro (only briefly mentioned, but one I believe is very important to the authors of the report) is the ability of a unified Europe to have a “large voice” in world affairs, which would be muted if the Euro were to fragment. That’s a political argument, not an economic one.
A small but worthwhile analysis of some of the UBS predictions:
http://www.businessinsider.com/in-praise-of-flexibility-2011-9
Good article. Thanks for the link.