What happened to the Swiss franc?

[PCA]

Thought I was banned, hehehe.

However the SF manipulation was one of the biggest mistakes a national bank can make. First of all opposing a similar thing carried out in 2011 and then which is even more absurd of an idea trying to compete with USD and it's latest run in order to underline their country's long lasting privileged role (trial of resurrection) in Finance as a save haven and investment paradise for tax avoiders.

This will have dire consequences for Switzerland, well except for expats temporarily.

The economy will bleed in a big way from one of the dumbest decisions in financial history.

Gruetzi

[Oceanbat]

Thought I was banned, hehehe.

However the SF manipulation was one of the biggest mistakes a national bank can make. First of all opposing a similar thing carried out in 2011 and then which is even more absurd of an idea trying to compete with USD and it's latest run in order to underline their country's long lasting privileged role (trial of resurrection) in Finance as a save haven and investment paradise for tax avoiders.

This will have dire consequences for Switzerland, well except for expats temporarily.

The economy will bleed in a big way from one of the dumbest decisions in financial history.

Gruetzi

Yep. But damned if they do. Damned if they don't. If the ECB starts QE. Think of what they would have had to do to defend the peg. This is the world we live in now. Central bank intervention by lead by people who don't know what they are doing.

OB

Edit: ECB not EU

Edited January 17, 2015 by Oceanbat

[Anthony5]

Thought I was banned, hehehe.

However the SF manipulation was one of the biggest mistakes a national bank can make. First of all opposing a similar thing carried out in 2011 and then which is even more absurd of an idea trying to compete with USD and it's latest run in order to underline their country's long lasting privileged role (trial of resurrection) in Finance as a save haven and investment paradise for tax avoiders.

This will have dire consequences for Switzerland, well except for expats temporarily.

The economy will bleed in a big way from one of the dumbest decisions in financial history.

Gruetzi

Yep. But damned if they do. Damned if they don't. If the ECB starts QE. Think of what they would have had to do to defend the peg. This is the world we live in now. Central bank intervention by lead by people who don't know what they are doing.

OB

Edit: ECB not EU

The people at the Central Banks know very well what they are doing, they only don't give a flying fag if you lose your life savings by their actions.

In fact, I think their actions are actually meant to make you lose your life savings. It puts them in a better daylight than if they just confiscate it.

[PCA]

Certainly central banks know what they are doing and indeed it is not in the public's interest, never was.

QE by ECB has been a normal thing since years so to justify this decision with the danger that the Euro currency will drag down the SF unjustified is a blunt misunderstanding of the situation.

This is a pride issue in the first place in order to stand out (maintaining stability and 'growth') and the hope in glance not having to chime in with the rest of most European countries and their economical downslide. However I do understand the sentiment and have to express a sort of sympathy that Switzerland as well as the UK never joined into the European Union which has and continuously will bring Europe further down. Much more than we have seen.

As for the currency markets this is not a tragedy, neither is it for the stock markets. Less people will participate but that doesn't mean things will not go higher (stock markets) or swinging in a very volatile way (currencies).

Gold investors will lose and I am pretty certain that we'll see 800 within the next 2 years.

Am I talking too much now? - Yeah

[Oceanbat]

Thought I was banned, hehehe.

However the SF manipulation was one of the biggest mistakes a national bank can make. First of all opposing a similar thing carried out in 2011 and then which is even more absurd of an idea trying to compete with USD and it's latest run in order to underline their country's long lasting privileged role (trial of resurrection) in Finance as a save haven and investment paradise for tax avoiders.

This will have dire consequences for Switzerland, well except for expats temporarily.

The economy will bleed in a big way from one of the dumbest decisions in financial history.

Gruetzi

Yep. But damned if they do. Damned if they don't. If the ECB starts QE. Think of what they would have had to do to defend the peg. This is the world we live in now. Central bank intervention by lead by people who don't know what they are doing.

OB

Edit: ECB not EU

The people at the Central Banks know very well what they are doing, they only don't give a flying fag if you lose your life savings by their actions.

In fact, I think their actions are actually meant to make you lose your life savings. It puts them in a better daylight than if they just confiscate it.

That is true they don't care. Penalize the public for saving. Force you into high risk asset classes to get any sort of decent return. It's all ok until it's not.

OB

[SheungWan]

Thought I was banned, hehehe.

However the SF manipulation was one of the biggest mistakes a national bank can make. First of all opposing a similar thing carried out in 2011 and then which is even more absurd of an idea trying to compete with USD and it's latest run in order to underline their country's long lasting privileged role (trial of resurrection) in Finance as a save haven and investment paradise for tax avoiders.

This will have dire consequences for Switzerland, well except for expats temporarily.

The economy will bleed in a big way from one of the dumbest decisions in financial history.

Gruetzi

Yep. But damned if they do. Damned if they don't. If the ECB starts QE. Think of what they would have had to do to defend the peg. This is the world we live in now. Central bank intervention by lead by people who don't know what they are doing.

OB

Edit: ECB not EU

The people at the Central Banks know very well what they are doing, they only don't give a flying fag if you lose your life savings by their actions.

In fact, I think their actions are actually meant to make you lose your life savings. It puts them in a better daylight than if they just confiscate it.

That is true they don't care. Penalize the public for saving. Force you into high risk asset classes to get any sort of decent return. It's all ok until it's not.

OB

'They don't care', whereas on the other hand I am sure you are a very caring person......Now which savers exactly have suffered as a result of the SNB move?

[thailiketoo]

Thought I was banned, hehehe.

However the SF manipulation was one of the biggest mistakes a national bank can make. First of all opposing a similar thing carried out in 2011 and then which is even more absurd of an idea trying to compete with USD and it's latest run in order to underline their country's long lasting privileged role (trial of resurrection) in Finance as a save haven and investment paradise for tax avoiders.

This will have dire consequences for Switzerland, well except for expats temporarily.

The economy will bleed in a big way from one of the dumbest decisions in financial history.

Gruetzi

Yep. But damned if they do. Damned if they don't. If the ECB starts QE. Think of what they would have had to do to defend the peg. This is the world we live in now. Central bank intervention by lead by people who don't know what they are doing.

OB

Edit: ECB not EU

The people at the Central Banks know very well what they are doing, they only don't give a flying fag if you lose your life savings by their actions.

In fact, I think their actions are actually meant to make you lose your life savings. It puts them in a better daylight than if they just confiscate it.

How have Swiss savers lost life savings as a result of this?

[thailiketoo]

Correct me if I'm wrong but don't traders determine the market price? Don't the FX traders have to have a certain percent of the cash on deposit and if there is too much movement they get a margin call to put up more money?

As far as I know this is exactly what didnt happen with the companies that went bust over the last couple of days; they were obliged to assume the losses.

FX trading is different to trading in stocks and it is the latter than interests me more, though I appreciate that it is not the topic of this thread. Even so, people trading (as opposed to investing) both do generally deal with derivatives or leveraged representations of the item rather than the actual item itself. I am against this.

What are these currency derivatives and on what markets are they traded.

[Swiss1960]

Thought I was banned, hehehe.

However the SF manipulation was one of the biggest mistakes a national bank can make. First of all opposing a similar thing carried out in 2011 and then which is even more absurd of an idea trying to compete with USD and it's latest run in order to underline their country's long lasting privileged role (trial of resurrection) in Finance as a save haven and investment paradise for tax avoiders.

This will have dire consequences for Switzerland, well except for expats temporarily.

The economy will bleed in a big way from one of the dumbest decisions in financial history.

Gruetzi

Yep. But damned if they do. Damned if they don't. If the ECB starts QE. Think of what they would have had to do to defend the peg. This is the world we live in now. Central bank intervention by lead by people who don't know what they are doing.

OB

Edit: ECB not EU

The people at the Central Banks know very well what they are doing, they only don't give a flying fag if you lose your life savings by their actions.

In fact, I think their actions are actually meant to make you lose your life savings. It puts them in a better daylight than if they just confiscate it.

How have Swiss savers lost life savings as a result of this?

Maybe not yet lost (paper only), but massively endangered / devalued, since the Swiss stock market crashed in line with the CHF going up... more than 10% just in the last 2 days...

People who have their life savings in private pension funds (pillar 3 in Switzerland) will see a massive devaluation in assets, when they have higher risk profiles for the investment of their money (i.e. shares instead of bonds) and might have lost up to 30% of the value of their private pension fund within days only

Company pension funds (pillar 2 in Switzerland) will see the value of their assets also going down massively - and if they are now under financed (value of assets lower than the legal limit with regards to expected pension payments), then company pension funds might either lower the future payments, lower the interest payd or even request additional payments from the employees to finance the gap

Government pension fund (AHV, pillar 1 in Switzerland) will also see a massive financing gap and might lower the future payments, increase the amounts decudted from salary or raise the entry age for the AHV

while most of it at present is "only" paper value, it definitely will have an impact on everybodys future payments, whether cash out or pensions

[chris2004]

The price of fine Swiss watches will become even higher overnight for overseas dealers.

If you can afford a $10,000 watch you can probably afford a $12,000 one.

[marcusd]

""When a country's currency gains in value, it makes goods made in that country more expensive on the global market.""

THAILAND TAKE NOTE. Your baht and your exports are way out of sync with currencies around the world and you will soon only be selling to a local market.

[marcusd]

The price of fine Swiss watches will become even higher overnight for overseas dealers.

And they all tell the same time. SO does all your mobile phones. Just another gimmick many are fooled into believing are INVESTMENTS.

[marcusd]

Leveraged currency traders-are they investors or gamblers?

If you made money then you were an investor, if you lost money then you were a gambler.

A bit more complex than that.

If you wear ordinary clothes, sit in a field and watch chickens fighting and bet 100 on the result you are a gamble and therefor a criminal.

If you wear a suit, sit in an office and watch computer screens and bet 100 million on currency fluctuations you are an investor and engaged in a legitimate business.

Following on from that, if the criminal loses his 100 it might mean his family eat noodles instead of rice that day.

If the investor looses the 100 million it is probably not his money anyway for he has borrowed most if not all of it.

And from there : If the criminal gets caught he may spend time in jail.

While the investor may be deemed to big to fail and gets bailed out by the Govt so is able to give himself a bonus and carry on and do the same thing again.

And the people who were gullible enough to loan the investor money wonder where their savings have gone and how they can now survive on what little they have left.

An excellent post saying it in really simple terms. Playing computer games with currencies and stocks is all hype. What happens really is done at dinner parties vacations and on the golf tournaments.

I know as I have been there.

Take BHP Billiton, no debt, huge resources (getting pounded yes but people need oil gas and steel and soon they will go up) and take Rio Tinto who has HUGE debts.

All share market speculation. BHP is backed solidly with assets and NO DEBT and huge cash flows but their shares are so undervalued. Rio is massively in debt same fields of enterprise. Share traders like Rio. Why? They are gamblers with YOUR pension funds. NO CONCRETE information behind their trading. Oh I heard this today - shares up. Oh I was wrong, shares down.

And you think you can win? Believe me, in a few years BHP BILLITON will Be BHP BIlliton RIO TINTO. They tried before and will do so again.

We cannot possibly win against the big players.

The banks near on destroyed the economy as we know it a few years back and what did they learn?

THE TAX PAYER WILL SAVE US

[timewilltell]

What you are,issuing is that you need to have someone on the other side to buy your currency of choice or someone to sell to in order to sell back a stock you no longer want or someone who has a stock you want to buy who is willing to sell it to you. It is called a market and the auction process ensures spreads are small. Imagine if you got sick and epwanted to sell your Apple stick to pay the medical bills in an emergency and there were no sellers at the time. The spread could be enormous without traders. Equally if you want to exchange currency you might find a job finding someone in say the UK who wants to exchange with you - or of course allow the banks to gouge you with a terrible rate.

Unlike real investors who are in for the long term, the speculators generally don't own the actual thing they are trading; they just buy and sell derivatives of some type. This provides no liquidity at all and is of no benefit whatsoever to anyone except those who buy and sell the same derivatives.

Well cash is just a derivative. Speculators also buy and sell stock and absolutely provide liquidity for everything is traded in cash at the end of the day which as I said is just a derivative itself based on nothing but trust for it is certainly not backed by assets.

[timewilltell]

Correct me if I'm wrong but don't traders determine the market price? Don't the FX traders have to have a certain percent of the cash on deposit and if there is too much movement they get a margin call to put up more money?

As far as I know this is exactly what didnt happen with the companies that went bust over the last couple of days; they were obliged to assume the losses.

FX trading is different to trading in stocks and it is the latter than interests me more, though I appreciate that it is not the topic of this thread. Even so, people trading (as opposed to investing) both do generally deal with derivatives or leveraged representations of the item rather than the actual item itself. I am against this.

What are these currency derivatives and on what markets are they traded.

They would be currency options and futures probably.

[Naam]

The price of fine Swiss watches will become even higher overnight for overseas dealers.

If you can afford a $10,000 watch you can probably afford a $12,000 one.

notwithstanding the fact that the price of real fine Swiss watches is a multiple.

[Oceanbat]

Thought I was banned, hehehe.

However the SF manipulation was one of the biggest mistakes a national bank can make. First of all opposing a similar thing carried out in 2011 and then which is even more absurd of an idea trying to compete with USD and it's latest run in order to underline their country's long lasting privileged role (trial of resurrection) in Finance as a save haven and investment paradise for tax avoiders.

This will have dire consequences for Switzerland, well except for expats temporarily.

The economy will bleed in a big way from one of the dumbest decisions in financial history.

Gruetzi

Yep. But damned if they do. Damned if they don't. If the ECB starts QE. Think of what they would have had to do to defend the peg. This is the world we live in now. Central bank intervention by lead by people who don't know what they are doing.

OB

Edit: ECB not EU

The people at the Central Banks know very well what they are doing, they only don't give a flying fag if you lose your life savings by their actions.

In fact, I think their actions are actually meant to make you lose your life savings. It puts them in a better daylight than if they just confiscate it.

That is true they don't care. Penalize the public for saving. Force you into high risk asset classes to get any sort of decent return. It's all ok until it's not.

OB

'They don't care', whereas on the other hand I am sure you are a very caring person......Now which savers exactly have suffered as a result of the SNB move?

Interest rates are negative.

OB

[Tomtomtom69]

Even from a Swiss (dummy) perspective, this move was to be expected, but of course, the timing obviously surprised the whole market community...

but when you look at the foreign currency accounts of the SNB in the last months (going up by +20 Billion in Euro and Dollar each month), when you look at the CHF/EUR exchange rate over the last weeks (scrapping around 1.20nn) and when you read that the ECB will start to print massive money starting as early as next week in order to buy government bonds, then it was pretty clear the the exchange limit to the Euro was not anymore sustainable for the SNB.

Bad news for Swiss export and Swiss Tourism and the expectation by some major banks (i.e. UBS) is that growth in 2015 will drop from 1.8% expectation to 0.5% expectation... Good news for all shopping tourists to Germany, for all Swiss travelers and most of the Swiss expat community who receives salary and / or pensions in Swiss Franc...

The future will show what will happen within Switzerland... since I can not read tea leaves, I will not make any comments about the future...

Good for me too, as I just received a big transfer from my family to pay off my car loan early. Apart from getting a big boost in Thai Baht terms overnight (something like 60000 Baht extra!) I'll also save interest and will finally be able to take my car to neighboring countries after the bank gives me back the blue book I don't have to worry about the stupid restriction that effectively prevents you from taking a Thai car abroad when it's on finance.

Anyway, while this is a good gain now, over time I'd like to see the Swiss Franc drop off a bit for the sake of the economy. But it doesn't have to drop too much - the way it was about a year ago was pretty good.

[Tomtomtom69]

Even from a Swiss (dummy) perspective, this move was to be expected, but of course, the timing obviously surprised the whole market community...

but when you look at the foreign currency accounts of the SNB in the last months (going up by +20 Billion in Euro and Dollar each month), when you look at the CHF/EUR exchange rate over the last weeks (scrapping around 1.20nn) and when you read that the ECB will start to print massive money starting as early as next week in order to buy government bonds, then it was pretty clear the the exchange limit to the Euro was not anymore sustainable for the SNB.

Bad news for Swiss export and Swiss Tourism and the expectation by some major banks (i.e. UBS) is that growth in 2015 will drop from 1.8% expectation to 0.5% expectation... Good news for all shopping tourists to Germany, for all Swiss travelers and most of the Swiss expat community who receives salary and / or pensions in Swiss Franc...

The future will show what will happen within Switzerland... since I can not read tea leaves, I will not make any comments about the future...

Good for me too, as I just received a big transfer from my family to pay off my car loan early. Apart from getting a big boost in Thai Baht terms overnight (something like 60000 Baht extra!) I'll also save interest and will finally be able to take my car to neighboring countries after the bank gives me back the blue book I don't have to worry about the stupid restriction that effectively prevents you from taking a Thai car abroad when it's on finance.

Anyway, while this is a good gain now, over time I'd like to see the Swiss Franc drop off a bit for the sake of the economy. But it doesn't have to drop too much - the way it was about a year ago was pretty good.

[Tomtomtom69]

CHF/THB of 38 is a "knee-jerk" reaction. Long term CHF/THB will average between 33 to 35.

Futures Trading (margin trading) is a Zero-Sum Game. For every 1 Dollar winner, there is a 1 Dollar loser (minus commission)

---------------------------------------------------------------------------------------------------------.

The Swiss-Export oriented companies had now over 3 years time to prepare for the inevitable. It was clear from the very beginning that that the EURO/CHF peg was not designed for eternity.

Swiss Exports will get more expensive. Fine. But with the same highly valued CHF one can import things much cheaper (How about fuel, food, and everything else.) How much more spending money will this put into the pockets of Swiss-Consumers?) and therefore fuel the domestic-economy?

-------------------------------------------------------------------------------

To me it's clear: The Swiss Export-Tycoons have already taken up this subject (once more) to put pressure on the comparatively high income level of the Swiss working populace. They will not rest, until they have managed to knock down the lower income segment to the "Hartz 4 / Eternal Temporary Employment-Level" as it has been gloriously implemented in Germany and basically in the rest of the "Western-World" already. (Europe/USA.)

As Warren Buffet said (probably the most successful long-term investor alive). = There is a global Class-War raging, and we (the people that own 90 % of all tangible assets of this world will win this war thanks to "Globalization".

The future looks bright. Cheers.

How will the Swiss export tycoons lower the value of the CHF?

No need for that. As far as their capacity to produce goods from worldwide production facilities is concerned (Swiss Chocolate made in Brazil") can turn them from exporters to importers in no time at all. Perfectly legal. As far as their "Private Assets" are concerned they are extremely diversified. Ranging from a currency basket to real estate in the Caribbean to Chinese porcelain rarities dating back to the beginning of China. A well diversified crowd. A currency spike as experienced recently is only a "blimp" on their computer screen.

Unfortunately, common mortals have no opportunities to diversify in such a manner. I can make such statements as mentioned above, because I was an an active member of the Circus for 35 years.

Fortunately, now I am retired and no longer a member of the Circus.

Cheers.

How I know this?

Interestingly however many Swiss companies are NOT opening production bases abroad and are still producing goods in Switzerland for export to world markets, in spite of high wages and a strong currency over the last few years. Examples include Toblerone for example, which you can find on supermarket and 7-11 shelves throughout Thailand for around 30 Baht +/-. Similarly, for watches.

By contrast, at the first sign of "tough times ahead" Australian manufacturers close shop and skip the country, leaving hundreds if not thousands of people out of work.

[smccolley]

The price of fine Swiss watches will become even higher overnight for overseas dealers.

If you can afford a $10,000 watch you can probably afford a $12,000 one.

Its OK, you can still get one for 300 baht on the beach...

[Suradit69]

Always gratifying to see traders and brokers getting shafted and losing their shirts, jobs and future. All margin trading trading of stocks and currencies should be banned globally, and all short-term trading should be taxed at 200%. Then we might get back a little bit of sense in markets.

Yes currency traders, even very small scale retail traders, can typically use 50 X 1 leverage in the US and up to 200 to 300 X in other markets. At least playing the slot machines you know how much you're going to lose and the casinos are more cautious about extending credit than are banks & brokerages.

All the flimflam is driven by greed & by financial speculators whether in the exchange rates or the pricing of commodities like oil or copper. Supply & demand changes don't merit 5% or 7% daily price movements. Swings of that magnitude are caused by market futures speculators ... people long oil futures caught by margin calls or people short the Swiss Franc who find their $10,000 "investment" is now a $150,000 debt with repayment due now.

The decision to cut the peg to the Euro, just as the OPEC decision to keep pumping oil (and to keep announcing the fact over and over), had/have easily determined consequences to the financial markets and the world economy ... but hey who cares?

Two brokerage firms in London and New Zealand have announced huge losses and will have to close. A New York-based currency broker said clients suffered significant losses, and it needed an emergency loan to stay in business.

Breaks my heart ...

[KittenKong]

Unlike real investors who are in for the long term, the speculators generally don't own the actual thing they are trading; they just buy and sell derivatives of some type. This provides no liquidity at all and is of no benefit whatsoever to anyone except those who buy and sell the same derivatives.

I'll give you a D- for a spirited meandering effort to try and understand a market which you don't.

Very kind.

When I run out of money I'll be sure to ask you for lessons. But don't hold your breath.

[SheungWan]

The price of fine Swiss watches will become even higher overnight for overseas dealers.

If you can afford a $10,000 watch you can probably afford a $12,000 one.

notwithstanding the fact that the price of real fine Swiss watches is a multiple.

....but enough to pick up an Omega Seamaster, assuming one can do without knowing which phase of the moon one is in.