50-1 leverage on some currency bets. In surfing the BIS website this weekend I found out that of the world's total $563 TRILL in otc interest rate bets, 2/3 are denominated in Euro's and Dollars.....and approx 1% in Swiss Francs.
Imagine a "kid's" see saw with 1,000 lbs balanced on each end straining the ability of the overall structure. But to someone driving by in their car they'd see perfect balance and no movement. Of course, a rain drop on either side, a sneeze, or a gust of wind could upset the balance. The bigger risk is if it cracks in the middle and both sides just fall to the ground.
Swiss action will fuel a temporary metals bear market rally. Few months away from a major bull. The dominoes are all lined up to make 2015 a very good year for gold.
The real question is how will the euro take the Swiss hit. We should know shortly.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
"It's a Mystery" says the SNB was playing the short gold trade and needed to get out with gold now making a strong move. And they were able to get out at extremely low levels vs. the SF.
Some pretty convincing charts. They first entered their effective gold shorts on Sept 6th, 2011 when gold peaked in dollar terms and they pegged the SF to the Euro. Gold in Euro terms also hit a parabolic peak at this time. They probably/possibly bailed on them this past Thursday when gold hit a massive low vs. the SNB...essentially around the 2008 lows. A good story...with or without a tin foil hat. Don't forget that the Swiss sold off 1300+ tonnes of CB gold during the ECB sales at fairly low levels ($500-$600/oz).
Cannot link so you'll have to cut n' paste outside the forum. (linked below by derryb....thanks)
Way too many coincidences here to believe silver was not manipulated to the short side in previous decades. I never knew before that a "silver pool" was organized from 1967-1971 to suppress silver much like the London Gold Pool had done to gold from 1962-1968. And for the first time it explains to me why silver peaked 2 years ahead of gold in 1967 (gold peaked in 1969). Didn't know that The Nixon era Cost of Living Council openly imposed a $1.61 an ounce price cap on domestically mined silver! Whacky times.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>..... It may not affect you, but it affected a lot of world investors, especially in Europe. Specifically, the quite numerous Polish and Hungarian homeowners with mortgages in Swiss Francs just saw their monthly payments go up by 15%. That must be sweet. They did nothing wrong. >>
Well it appears that yes they did. For reasons I frankly do not understand, they agreed to a many-years-long contract, involving repeated payments to be made in a foreign currency. I have very little experience of foreign currency and trading it. However, 'over the years', I DO know that currencies fluctuate in relation to each other. Over 20 to 30 years SOMETHING is going to happen. I remember the Japanese yen at 330 to the dollar. Canadian dollar to yankee dollar ratio has varied enormously in my lifetime. So yeah, if one agrees to a mortgage denominated in a currency other than one's own, I call that speculating.
<< <i> And you want to call them speculators, gamblers, schmucks, and chumps? >>
Just s + g for these unfortunates.
<< <i> This is only one example of being fine one day and "toast" the next morning. There are probably hundreds of them via the rule of "unintended consequences." Hopefully, the govts of those nations do something to lessen this blow to homeowners. What else are they supposed to anchor their mortgages in, rubles? yuan? pesos? pounds? dollars? Lira? Their national currencies are the Zlotny and Forint....probably not good choices either. >>
Honestly, I dunno. Seems like one number on the dice is as good as another when one is gambling.
<< <i> Not that I care about hedge funds but I'm sure some of them just may have collapsed by heavy bets on EUR/CHF staying above the floor or around the 1.20 level. While it is at parity now during the announcement it fell from 1.2 to 0.75, a 38% drop for those shorts or hedges forced to get out near the low. During instantaneous algo action like this even programmed stops can't guarantee you'll get out (ie a stop at say 1.15 or 1.10 might not even get executed until 0.80). >>
Yes some did. They were greedy pigs and they got slaughtered. Schmucks and chumps.
He saw the SNB unpegging as inevitable. Interesting that he says informing the IMF (or anyone else) ahead of the move would have made the situation worse. The IMF & Friends would have front-run the move to line their pockets. The whipsaws would have been worse. >>
Leaving the unfortunate Poles and Magyars equally screwed and a different set of greedy pigs unduly enriched.
Many, many perfect transactions with other members. Ask please.
Well it appears that yes they did. For reasons I frankly do not understand, they agreed to a many-years-long contract, involving repeated payments to be made in a foreign currency. I have very little experience of foreign currency and trading it. However, 'over the years', I DO know that currencies fluctuate in relation to each other. Over 20 to 30 years SOMETHING is going to happen. I remember the Japanese yen at 330 to the dollar. Canadian dollar to yankee dollar ratio has varied enormously in my lifetime. So yeah, if one agrees to a mortgage denominated in a currency other than one's own, I call that speculating.
It's not hard to understand at all. Following the stress of the world banking crisis in 2007-2011 would you want your mortgage denominated in Polish Zlotny's or Swiss Francs? Note that SF's have been one of the few safe haven currencies for the past 50 years. The Zlotny has experienced many extreme bouts of inflation and depression. On the Hungarian side, was the worst hyper-inflations of the 20th century (42 Quadrillion %/month). I don't see the decision to use Swiss Francs to be dumb at all....unless as a typical J6P you would know that eventually all currency pegs fail given enough time. It's not something I would have been aware of 5-10 years ago. Sure, over 20-30 yrs something is bound to happen. Those SF mortgages became Euro pegged on Sept 6th, 2011.....not 20-30 yrs ago. There wasn't even a Euro 20 yrs ago. If you live in Poland, Hungary, Greece, Spain, Portugal, Argentina, Venezuela, Columbia, Zimbabwe, and other similar nations, I wouldn't necessarily want my life savings tied to such volatile currencies that have been at times subject to massive revaluations. And just because a currency gets revaluated doesn't mean your mortgage or other debts will be downsized. If there's ever a reset/devaluation on the dollar you can be sure your mortgage will be "adjusted up" such that you owe the same % of pre-adjusted money. Having your assets (bank accounts, bonds, etc.) in some of these currencies....now that's real speculating.
In short, living today is speculating. Anything you put your money into short of current consumption is speculating. It's not the 1960's any more. Buying something in US dollars today at 6 year highs is an extreme form of speculation. Doesn't matter if you're buying stocks, bonds, real estate, etc.
<< <i>Well it appears that yes they did. For reasons I frankly do not understand, they agreed to a many-years-long contract, involving repeated payments to be made in a foreign currency. I have very little experience of foreign currency and trading it. However, 'over the years', I DO know that currencies fluctuate in relation to each other. Over 20 to 30 years SOMETHING is going to happen. I remember the Japanese yen at 330 to the dollar. Canadian dollar to yankee dollar ratio has varied enormously in my lifetime. So yeah, if one agrees to a mortgage denominated in a currency other than one's own, I call that speculating.
It's not hard to understand at all. Following the stress of the world banking crisis in 2007-2011 would you want your mortgage denominated in Polish Zlotny's or Swiss Francs? Note that SF's have been one of the few safe haven currencies for the past 50 years. The Zlotny has experienced many extreme bouts of inflation and depression. On the Hungarian side, was the worst hyper-inflations of the 20th century (42 Quadrillion %/month). I don't see the decision to use Swiss Francs to be dumb at all....unless as a typical J6P you would know that eventually all currency pegs fail given enough time. It's not something I would have been aware of 5-10 years ago. Sure, over 20-30 yrs something is bound to happen. Those SF mortgages became Euro pegged on Sept 6th, 2011.....not 20-30 yrs ago. There wasn't even a Euro 20 yrs ago. If you live in Poland, Hungary, Greece, Spain, Portugal, Argentina, Venezuela, Columbia, Zimbabwe, and other similar nations, I wouldn't necessarily want my life savings tied to such volatile currencies that have been at times subject to massive revaluations. And just because a currency gets revaluated doesn't mean your mortgage or other debts will be downsized. If there's ever a reset/devaluation on the dollar you can be sure your mortgage will be "adjusted up" such that you owe the same % of pre-adjusted money. Having your assets (bank accounts, bonds, etc.) in some of these currencies....now that's real speculating.
In short, living today is speculating. Anything you put your money into short of current consumption is speculating. It's not the 1960's any more. Buying something in US dollars today at 6 year highs is an extreme form of speculation. Doesn't matter if you're buying stocks, bonds, real estate, etc. >>
I certainly thank you for your explanation regarding the 'why?' of the Poles and Hungarians having gotten mortgages in foreign currencies rather than in their own. Too bad they didn't go with Mother Russia as they would now owe much smaller amounts in the greatly depreciated ruble. They gambled and as it turns out, they bet wrong.
------- Mortgages typically last for 20 to 30 ( in some cases 40!) years. That was the cause of my referring to such time periods. Not that any given period of time had to transpire in order for an event to occur. ----- In any case the 'peg' of 1.2 to 1 has only been in existence for 3 years, so the denomination of the IOUs in francs in 2011 would seem to imply a free-floating Swiss franc at that time. And a free-floating franc is what we again have today. So how have these folks been dis-advantaged? Except that a gift they've received for 3 years has now ended? ------ And, on the bright side, Swiss shoppers in border towns are getting fabulous bargains!
Many, many perfect transactions with other members. Ask please.
The Swiss, at a heavy cost to tourism and exports, decided to remove their peg to the euro. Tells you what they think the future holds for both the euro and the european union. I too, wouldn't want my future tied to either. "Biting the bullet now" is something all central banks should learn to do.
"The difference between the past 6 years and today is that central banks can and will no longer prop up the illusionary world of finance. And that will cause an earthquake, a tsunami and a meteorite hit all in one. If oil can go down the way it has, and copper too, and iron ore, then so can stocks, and your pensions, and everything else."
"I promise you the the days 2% margins on retail FX are over. Want to play in the FX sandbox? Be prepared to put 20% down. There are no profits left with that leverage, so the retail FX biz will disappear for a few years."
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Let's trot this gem out again, and all enjoy it one more time:
FDR called a bank holiday in 1933 as a result and subsequently devalued the dollar by 75% by raising the official gold price from $20.67 to $35 in January of 1934.
Looking forward to celebrating the centennial of this event in 2034-- that's my target retirement year to start collecting social security checks, but will take any excuse to recap it in the meantime..
By all means, let's trot it out if it makes sense. The FED doesn't want to see the dollar at lofty levels any more than the Swiss want to see Swiss Francs elevated. Rather than devaluing the dollar directly like FDR did (by absorbing gold back into the US treasury), the Swiss could be buying gold with stale Euro's. Don't wait to 2034 to celebrate the 100 yr anniversary as this currency war will be mostly over in the next 5-10 years.
FDR called a bank holiday in 1933 as a result and subsequently devalued the dollar by 75% by raising the official gold price from $20.67 to $35 in January of 1934.
Funny how gold is now the one priced by the value of the other.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
While it's true you don't fight the FED....you also don't fight Indian gold/wedding season, Chinese New Year, and the Franc’s mauling of the dollar. >>
Link not working but I assume its a link showing the "fact" that the Rupee and Swiss Franc have been kicking the US dollars azz. More "fact" would be to show that while the Franc has appreciated 28% against the US dollar over the last 10 years, it is also has the same value against the dollar as it did 4 years ago. The Indian Rupee has lost nearly 50% of its value vs the US dollar over the last 10 years and is roughly the same as 2 years ago.
Seems the Swiss are doing ok, probably even the exporters. An interesting summation from MS on Central Bankers for future historians:
"These fools thought the world needed 2% inflation, thought they could end the business cycle and recessions, and thought they could steer the global economy like a car on a curvy, mountainous roadway. The actual result was a series of economic bubbles of increasing magnitude, culminating with the currency crises of [date]."
Lacy Hunt generally agrees. All this QE has generally contracted the economy.
China will make a currency move. It will be market moving
MJ
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
China still has a ways to go to catch up with other central banks in their gold holdings ratio, so I would expect any currency move on their part to not be designed to strengthen metal prices. At least not while they are still in the accumulation mode.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i> I would expect any currency move on their part to not be designed to strengthen metal prices.
In their own currency? >>
In whatever currency they use to buy metals. US Treasuries?
Even though they hold US debt (which they are insane to expect to ever cash in) they are probably looking at doing whatever they can to temporarily weaken the dollar.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Further cuts in interest rates. Seems to be a popular song these days and China remains well behind the international curve. Should result in strengthening of currencies against the dollar in countries that receive the resulting higher demand from China.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
The US is the 2nd largest importer to China (just behind Japan). Germany's exports to China are about 2/3rd of the USA. How would Germany's exports increase while the US would not?
US exports to China amounted to $153.6 billion or 7.9% of overall Chinese imports.
China announced today at least a 60% raise for 39 million government and public employees. Now that's some creative QE!
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>China announced today at least a 60% raise for 39 million government and public employees. Now that's some creative QE! >>
Putting money directly into the hands of consumers is certainly more effective than giving money to banks if the idea is to stimulate consumer consumption. It is also more effective at creating inflation. QE in the US was never intended to stimulate consumption or to create inflation.
...so at least China has a plan and is sticking to it.
A $200/month increase for 39 million is about $8 billion, or about 1/10 what Euro is trying to do. However Europe and the US could not just hand out money as little of it would actually enter the system. Americans and Europeans already have "everything" including debt--which would be paid off. The Chinese do not have "everything" and would therefore use it to acquire things.
". . . problem with currency wars — no one wins and everyone loses. Currency wars don’t create growth; they just steal growth temporarily from trading partners until the trading partners steal it back with their own devaluations."
Look for the next big surprise to involve the US$.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Putting money directly into the hands of consumers is certainly more effective than giving money to banks if the idea is to stimulate consumer consumption. It is also more effective at creating inflation. QE in the US was never intended to stimulate consumption or to create inflation.
See cohodk, you do get it.
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>Swiss Franc resumes its downtrend vs the "worthless" US dollar. >>
"worthless" is not the same as "worth less." Guess you really don't get it.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>Putting money directly into the hands of consumers is certainly more effective than giving money to banks if the idea is to stimulate consumer consumption. It is also more effective at creating inflation. QE in the US was never intended to stimulate consumption or to create inflation.
<< <i>Swiss Franc resumes its downtrend vs the "worthless" US dollar. >>
"worthless" is not the same as "worth less." Guess you really don't get it. >>
When its "worth less" I'll climb aboard your train but it seems to me to only be "worth more", >>
Six months of deflation during 100 years of devaluation is what is worthless. It'll take another 100 years of deflation to come even close to giving you back the value you lost.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>Swiss Franc resumes its downtrend vs the "worthless" US dollar. >>
"worthless" is not the same as "worth less." Guess you really don't get it. >>
When its "worth less" I'll climb aboard your train but it seems to me to only be "worth more", >>
Six months of deflation during 100 years of devaluation is what is worthless. It'll take another 100 years of deflation to come even close to giving you back the value you lost. >>
Heres a really neat concept that some people try.....instead of losing dollars, get more of them. That way, even if a few get "stolen" you still have more than you started with.
Six months of deflation during 100 years of devaluation
The US dollar rising against other currencies is not deflation. And the dollar has had many, many strong periods relative to other currencies int he last 100 years. Just in the last 30 years the dollar has been remarkable strong from 1981 to 1985 (global decline in interest rates ), and from 1995 to 2001. There have been many other periods of strength, but what you may find most interesting is that the dollar increased during periods of economic strength as well as global panic. Not a bad bellweather.
Six months of deflation during 100 years of devaluation
<< <i>The US dollar rising against other currencies is not deflation. And the dollar has had many, many strong periods relative to other currencies int he last 100 years. Just in the last 30 years the dollar has been remarkable strong from 1981 to 1985 (global decline in interest rates ), and from 1995 to 2001. There have been many other periods of strength, but what you may find most interesting is that the dollar increased during periods of economic strength as well as global panic. Not a bad bellweather. >>
I didn't say that a dollar rising against other currencies (an increase in the dollar index) is deflation. My unedited comment was "Six months of deflation during 100 years of devaluation is what is worthless. It'll take another 100 years of deflation to come even close to giving you back the value you lost."
A dollar rise against other currencies gives the dollar added value only when it is purchased using those weakened currencies or when spent on the purchase of goods that are imported from the country with the now weaker currency. It does not add value to purchases of US goods and services. Any currently experienced gains in purchases of US goods and services are the result of deflation and not a strong dollar index. You continue to incorrectly believe that a gain in the dollar index is a gain in the dollar's domestic value and forget that a strong dollar index is simply the result of weakened foreign currencies that make up the index, some of which are purposely weakened to support that country's exports.
I can now get more Mercedes for my money because of a weak euro (strong dollar index). The processed West Texas crude that I put in it is cheaper because of deflation.
Was it Nero that played while Rome burned? Maybe he thought the warnings were just a conspiracy theory.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
All I care to know is that I can buy a lot more gold and silver today than a year ago with the same worthless dollars. Isnt that what we all really care about on a PM forum?
But, I also know that real estate in New Zealand is getting more affordable. And will be a lot more attractive when the the $NZ loses another 10-20%.
Comments
50-1 leverage on some currency bets. In surfing the BIS website this weekend I found out that of the world's total $563 TRILL in otc interest rate bets, 2/3 are denominated in Euro's and Dollars.....and approx 1% in Swiss Francs.
Imagine a "kid's" see saw with 1,000 lbs balanced on each end straining the ability of the overall structure. But to someone driving by in their car they'd see perfect balance and no movement. Of course, a rain drop on either side, a sneeze, or a gust of wind could upset the balance. The bigger risk is if it cracks in the middle and both sides just fall to the ground.
The real question is how will the euro take the Swiss hit. We should know shortly.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
http://https://www.bullionstar.com/blog/koos-jansen/
Some pretty convincing charts. They first entered their effective gold shorts on Sept 6th, 2011 when gold peaked in dollar terms and they pegged the SF to the Euro. Gold in Euro terms also hit a parabolic peak at this time. They probably/possibly bailed on them this past Thursday when gold hit a massive low vs. the SNB...essentially around the 2008 lows. A good story...with or without a tin foil hat. Don't forget that the Swiss sold off 1300+ tonnes of CB gold during the ECB sales at fairly low levels ($500-$600/oz).
Cannot link so you'll have to cut n' paste outside the forum. (linked below by derryb....thanks)
Pilgrim Society silver players of the 1960's to 1980's
Way too many coincidences here to believe silver was not manipulated to the short side in previous decades. I never knew before that a "silver pool" was organized from 1967-1971 to suppress silver much like the London Gold Pool had done to gold from 1962-1968. And for the first time it explains to me why silver peaked 2 years ahead of gold in 1967 (gold peaked in 1969). Didn't know that The Nixon era Cost of Living Council openly imposed a $1.61 an ounce price cap on domestically mined silver! Whacky times.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>.....
It may not affect you, but it affected a lot of world investors, especially in Europe. Specifically, the quite numerous Polish and Hungarian homeowners with mortgages in Swiss Francs just saw their monthly payments go up by 15%. That must be sweet. They did nothing wrong. >>
Well it appears that yes they did. For reasons I frankly do not understand, they agreed to a many-years-long contract, involving repeated payments to be made in a foreign currency. I have very little experience of foreign currency and trading it. However, 'over the years', I DO know that currencies fluctuate in relation to each other. Over 20 to 30 years SOMETHING is going to happen. I remember the Japanese yen at 330 to the dollar. Canadian dollar to yankee dollar ratio has varied enormously in my lifetime. So yeah, if one agrees to a mortgage denominated in a currency other than one's own, I call that speculating.
<< <i>
And you want to call them speculators, gamblers, schmucks, and chumps?
>>
Just s + g for these unfortunates.
<< <i>
This is only one example of being fine one day and "toast" the next morning. There are probably hundreds of them via the rule of "unintended consequences." Hopefully, the govts of those nations do something to lessen this blow to homeowners. What else are they supposed to anchor their mortgages in, rubles? yuan? pesos? pounds? dollars? Lira? Their national currencies are the Zlotny and Forint....probably not good choices either. >>
Honestly, I dunno. Seems like one number on the dice is as good as another when one is gambling.
<< <i>
Not that I care about hedge funds but I'm sure some of them just may have collapsed by heavy bets on EUR/CHF staying above the floor or around the 1.20 level. While it is at parity now during the announcement it fell from 1.2 to 0.75, a 38% drop for those shorts or hedges forced to get out near the low. During instantaneous algo action like this even programmed stops can't guarantee you'll get out (ie a stop at say 1.15 or 1.10 might not even get executed until 0.80). >>
Yes some did. They were greedy pigs and they got slaughtered. Schmucks and chumps.
<< <i>
Armstrong's view of it all
He saw the SNB unpegging as inevitable. Interesting that he says informing the IMF (or anyone else) ahead of the move would have made the situation worse. The IMF & Friends would have front-run the move to line their pockets. The whipsaws would have been worse. >>
Leaving the unfortunate Poles and Magyars equally screwed and a different set of greedy pigs unduly enriched.
It's not hard to understand at all. Following the stress of the world banking crisis in 2007-2011 would you want your mortgage denominated in Polish Zlotny's or Swiss Francs? Note that SF's have been one of the few safe haven currencies for the past 50 years. The Zlotny has experienced many extreme bouts of inflation and depression. On the Hungarian side, was the worst hyper-inflations of the 20th century (42 Quadrillion %/month). I don't see the decision to use Swiss Francs to be dumb at all....unless as a typical J6P you would know that eventually all currency pegs fail given enough time. It's not something I would have been aware of 5-10 years ago. Sure, over 20-30 yrs something is bound to happen. Those SF mortgages became Euro pegged on Sept 6th, 2011.....not 20-30 yrs ago. There wasn't even a Euro 20 yrs ago. If you live in Poland, Hungary, Greece, Spain, Portugal, Argentina, Venezuela, Columbia, Zimbabwe, and other similar nations, I wouldn't necessarily want my life savings tied to such volatile currencies that have been at times subject to massive revaluations. And just because a currency gets revaluated doesn't mean your mortgage or other debts will be downsized. If there's ever a reset/devaluation on the dollar you can be sure your mortgage will be "adjusted up" such that you owe the same % of pre-adjusted money. Having your assets (bank accounts, bonds, etc.) in some of these currencies....now that's real speculating.
In short, living today is speculating. Anything you put your money into short of current consumption is speculating. It's not the 1960's any more. Buying something in US dollars today at 6 year highs is an extreme form of speculation. Doesn't matter if you're buying stocks, bonds, real estate, etc.
Liberty: Parent of Science & Industry
<< <i>Well it appears that yes they did. For reasons I frankly do not understand, they agreed to a many-years-long contract, involving repeated payments to be made in a foreign currency. I have very little experience of foreign currency and trading it. However, 'over the years', I DO know that currencies fluctuate in relation to each other. Over 20 to 30 years SOMETHING is going to happen. I remember the Japanese yen at 330 to the dollar. Canadian dollar to yankee dollar ratio has varied enormously in my lifetime. So yeah, if one agrees to a mortgage denominated in a currency other than one's own, I call that speculating.
It's not hard to understand at all. Following the stress of the world banking crisis in 2007-2011 would you want your mortgage denominated in Polish Zlotny's or Swiss Francs? Note that SF's have been one of the few safe haven currencies for the past 50 years. The Zlotny has experienced many extreme bouts of inflation and depression. On the Hungarian side, was the worst hyper-inflations of the 20th century (42 Quadrillion %/month). I don't see the decision to use Swiss Francs to be dumb at all....unless as a typical J6P you would know that eventually all currency pegs fail given enough time. It's not something I would have been aware of 5-10 years ago. Sure, over 20-30 yrs something is bound to happen. Those SF mortgages became Euro pegged on Sept 6th, 2011.....not 20-30 yrs ago. There wasn't even a Euro 20 yrs ago. If you live in Poland, Hungary, Greece, Spain, Portugal, Argentina, Venezuela, Columbia, Zimbabwe, and other similar nations, I wouldn't necessarily want my life savings tied to such volatile currencies that have been at times subject to massive revaluations. And just because a currency gets revaluated doesn't mean your mortgage or other debts will be downsized. If there's ever a reset/devaluation on the dollar you can be sure your mortgage will be "adjusted up" such that you owe the same % of pre-adjusted money. Having your assets (bank accounts, bonds, etc.) in some of these currencies....now that's real speculating.
In short, living today is speculating. Anything you put your money into short of current consumption is speculating. It's not the 1960's any more. Buying something in US dollars today at 6 year highs is an extreme form of speculation. Doesn't matter if you're buying stocks, bonds, real estate, etc. >>
I certainly thank you for your explanation regarding the 'why?' of the Poles and Hungarians having gotten mortgages in foreign currencies rather than in their own. Too bad they didn't go with Mother Russia as they would now owe much smaller amounts in the greatly depreciated ruble. They gambled and as it turns out, they bet wrong.
-------
Mortgages typically last for 20 to 30 ( in some cases 40!) years. That was the cause of my referring to such time periods. Not that any given period of time had to transpire in order for an event to occur.
-----
In any case the 'peg' of 1.2 to 1 has only been in existence for 3 years, so the denomination of the IOUs in francs in 2011 would seem to imply a free-floating Swiss franc at that time. And a free-floating franc is what we again have today. So how have these folks been dis-advantaged? Except that a gift they've received for 3 years has now ended?
------
And, on the bright side, Swiss shoppers in border towns are getting fabulous bargains!
The SNB is the first to throw in the towel
"The difference between the past 6 years and today is that central banks can and will no longer prop up the illusionary world of finance. And that will cause an earthquake, a tsunami and a meteorite hit all in one. If oil can go down the way it has, and copper too, and iron ore, then so can stocks, and your pensions, and everything else."
SNB Post Mortem
"I promise you the the days 2% margins on retail FX are over. Want to play in the FX sandbox? Be prepared to put 20% down. There are no profits left with that leverage, so the retail FX biz will disappear for a few years."
Excellent explanation of SNB action
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
While it's true you don't fight the FED....you also don't fight Indian gold/wedding season, Chinese New Year, and the Franc’s mauling of the dollar.
Swiss France and Indian Rupee are out playing the USDollar
FDR called a bank holiday in 1933 as a result and subsequently devalued the dollar by 75% by raising the official gold price from $20.67 to $35 in January of 1934.
Looking forward to celebrating the centennial of this event in 2034-- that's my target retirement year to start collecting social security checks, but will take any excuse to recap it in the meantime..
Liberty: Parent of Science & Industry
Is Denmark going to follow the Swiss and unpeg as well?....this could lead to a peg shortage!
What about China unpegging from the dollar?
Dollar COT shorts at 10+ year highs. Changing of the guard?....some interesting gold, miner, stock, and currency charts here.
Funny how gold is now the one priced by the value of the other.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>Maybe the Swiss will end up buying that same gold they sold off over the past 15 yrs.
Swiss Franc and Indian Rupee are out playing the USDollar
While it's true you don't fight the FED....you also don't fight Indian gold/wedding season, Chinese New Year, and the Franc’s mauling of the dollar. >>
Link not working but I assume its a link showing the "fact" that the Rupee and Swiss Franc have been kicking the US dollars azz. More "fact" would be to show that while the Franc has appreciated 28% against the US dollar over the last 10 years, it is also has the same value against the dollar as it did 4 years ago. The Indian Rupee has lost nearly 50% of its value vs the US dollar over the last 10 years and is roughly the same as 2 years ago.
Knowledge is the enemy of fear
Seems the Swiss are doing ok, probably even the exporters. An interesting summation from MS on Central Bankers for future historians:
"These fools thought the world needed 2% inflation, thought they could end the business cycle and recessions, and thought they could steer the global economy like a car on a curvy, mountainous roadway. The actual result was a series of economic bubbles of increasing magnitude, culminating with the currency crises of [date]."
Lacy Hunt generally agrees. All this QE has generally contracted the economy.
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>China will make a currency move. It will be market moving
MJ >>
To weaken or strengthen the yuan?
Knowledge is the enemy of fear
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
In their own currency?
Knowledge is the enemy of fear
<< <i> I would expect any currency move on their part to not be designed to strengthen metal prices.
In their own currency? >>
In whatever currency they use to buy metals. US Treasuries?
Even though they hold US debt (which they are insane to expect to ever cash in) they are probably looking at doing whatever they can to temporarily weaken the dollar.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>
<< <i> I would expect any currency move on their part to not be designed to strengthen metal prices.
In their own currency? >>
In whatever currency they use to buy metals. US Treasuries?
They are probably looking at doing whatever they can to weaken the dollar. >>
What could they do? Realistically.
Knowledge is the enemy of fear
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Knowledge is the enemy of fear
US exports to China amounted to
$153.6 billion or 7.9% of overall Chinese imports.
1. Electronic equipment: $22.9 billion
2. Machines, engines, pumps: $15.5 billion
3. Oil seed: $13.7 billion
4. Aircraft, spacecraft: $13.6 billion
5. Medical, technical equipment: $11.1 billion
6. Vehicles: $10.8 billion
7. Plastics: $6.3 billion
8. Woodpulp: $4.3 billion
9. Organic chemicals: $4 billion
10. Copper: $3.5 billion
Germany's exports to China amounted to
$94.2 billion or 4.8% of overall Chinese imports.
1. Machines, engines, pumps: $24.6 billion
2. Vehicles: $22.6 billion
3. Electronic equipment: $12.5 billion
4. Medical, technical equipment: $8 billion
5. Plastics: $3.1 billion
6. Pharmaceuticals: $3.1 billion
7. Aircraft, spacecraft: $2.9 billion
8. Copper: $2 billion
9. Iron or steel products: $1.9 billion
10. Organic chemicals: $1.4 billion
Knowledge is the enemy of fear
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>China announced today at least a 60% raise for 39 million government and public employees. Now that's some creative QE! >>
Putting money directly into the hands of consumers is certainly more effective than giving money to banks if the idea is to stimulate consumer consumption. It is also more effective at creating inflation. QE in the US was never intended to stimulate consumption or to create inflation.
The wage increase was planned years ago...
http://www.huffingtonpost.com/2012/02/08/china-minimum-wage_n_1261752.html
...so at least China has a plan and is sticking to it.
A $200/month increase for 39 million is about $8 billion, or about 1/10 what Euro is trying to do. However Europe and the US could not just hand out money as little of it would actually enter the system. Americans and Europeans already have "everything" including debt--which would be paid off. The Chinese do not have "everything" and would therefore use it to acquire things.
Knowledge is the enemy of fear
". . . problem with currency wars — no one wins and everyone loses. Currency wars don’t create growth; they just steal growth temporarily from trading partners until the trading partners steal it back with their own devaluations."
Look for the next big surprise to involve the US$.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Knowledge is the enemy of fear
See cohodk, you do get it.
I knew it would happen.
<< <i>Swiss Franc resumes its downtrend vs the "worthless" US dollar. >>
"worthless" is not the same as "worth less." Guess you really don't get it.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i> [ REFRESH ] Thread Title: Swiss Franc action, almost -1% interest rate now, pop for gold?? >>
I'm still waiting but not "holding my breath." Gold will "pop" when you least expect it. Any other way, we'd all be millionaires.
<< <i>Putting money directly into the hands of consumers is certainly more effective than giving money to banks if the idea is to stimulate consumer consumption. It is also more effective at creating inflation. QE in the US was never intended to stimulate consumption or to create inflation.
See cohodk, you do get it.
And someday you will also.
Knowledge is the enemy of fear
<< <i>
<< <i>Swiss Franc resumes its downtrend vs the "worthless" US dollar. >>
"worthless" is not the same as "worth less." Guess you really don't get it.
When its "worth less" I'll climb aboard your train but it seems to me to only be "worth more",
Knowledge is the enemy of fear
<< <i>
<< <i>
<< <i>Swiss Franc resumes its downtrend vs the "worthless" US dollar. >>
"worthless" is not the same as "worth less." Guess you really don't get it.
When its "worth less" I'll climb aboard your train but it seems to me to only be "worth more", >>
Six months of deflation during 100 years of devaluation is what is worthless. It'll take another 100 years of deflation to come even close to giving you back the value you lost.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
And someday, when I have time, I may try to beat you at your own game.
I knew it would happen.
<< <i>
<< <i>
<< <i>
<< <i>Swiss Franc resumes its downtrend vs the "worthless" US dollar. >>
"worthless" is not the same as "worth less." Guess you really don't get it.
When its "worth less" I'll climb aboard your train but it seems to me to only be "worth more", >>
Six months of deflation during 100 years of devaluation is what is worthless. It'll take another 100 years of deflation to come even close to giving you back the value you lost. >>
Heres a really neat concept that some people try.....instead of losing dollars, get more of them. That way, even if a few get "stolen" you still have more than you started with.
Six months of deflation during 100 years of devaluation
The US dollar rising against other currencies is not deflation. And the dollar has had many, many strong periods relative to other currencies int he last 100 years. Just in the last 30 years the dollar has been remarkable strong from 1981 to 1985 (global decline in interest rates
Knowledge is the enemy of fear
<< <i>The US dollar rising against other currencies is not deflation. And the dollar has had many, many strong periods relative to other currencies int he last 100 years. Just in the last 30 years the dollar has been remarkable strong from 1981 to 1985 (global decline in interest rates
I didn't say that a dollar rising against other currencies (an increase in the dollar index) is deflation. My unedited comment was "Six months of deflation during 100 years of devaluation is what is worthless. It'll take another 100 years of deflation to come even close to giving you back the value you lost."
A dollar rise against other currencies gives the dollar added value only when it is purchased using those weakened currencies or when spent on the purchase of goods that are imported from the country with the now weaker currency. It does not add value to purchases of US goods and services. Any currently experienced gains in purchases of US goods and services are the result of deflation and not a strong dollar index. You continue to incorrectly believe that a gain in the dollar index is a gain in the dollar's domestic value and forget that a strong dollar index is simply the result of weakened foreign currencies that make up the index, some of which are purposely weakened to support that country's exports.
I can now get more Mercedes for my money because of a weak euro (strong dollar index). The processed West Texas crude that I put in it is cheaper because of deflation.
Was it Nero that played while Rome burned? Maybe he thought the warnings were just a conspiracy theory.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
But, I also know that real estate in New Zealand is getting more affordable. And will be a lot more attractive when the the $NZ loses another 10-20%.
Who needs a TV?
Knowledge is the enemy of fear