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View Poll Results: Are you prepared to take a pay cut if you were faced with prospect of being laid off?
Yes, would happily take a pay cut rather than being laid off 13 16.25%
Yes, if I feel that prices will also be adjusted down by around the same percentage (20%) 6 7.50%
No, absolutely not, I don't think this is the way to go 32 40.00%
No, but I might reconsider as events unfold 12 15.00%
No opinion at the moment. 5 6.25%
Still digesting... 12 15.00%
Voters: 80. You may not vote on this poll

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  #41  
Old 16.01.2015, 18:22
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Re: Aftermath of SNB EUR Peg Discontinuation - Would you be happy to take a 20% pay c

Importers will benefit from some lower overheads (like the things that are imported). Retailers will benefit from lower cost of goods and <gasp> there may be a surge in consumer confidence and thus more spending.

They're already benefitting from competitive tax rates.

Certainly in the short term they're not going to move - certainly not into the Eurozone.

Nobody's been complaining about the oil price going down and 20% cheaper fuel have they?
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  #42  
Old 16.01.2015, 18:23
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Re: Aftermath of SNB EUR Peg Discontinuation - Would you be happy to take a 20% pay c

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Wait for the next inflation report.

SMI down nearly 14% in two days and there is probably more to come. The rest of the economy will follow soon. Fuel, imported goods, food costs, exporters will become less competitive, international companies can not justify the cost of the Swiss labour costs anymore, soon local businesses can not pay the salaries of their employees and then they ask them the question...

#callmedrdoom

I hope all of this doesn't happen but there is no other choice.

In 2011 the CHF went from 1.5 to 1.2 EUR yet a lot of companies stayed here. In 2015 in percentage terms, the drop is the same. It went from 1.2 to parity. Fingers crossed the companies will absorb the hit as they did in 2011.
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  #43  
Old 16.01.2015, 18:29
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Re: Aftermath of SNB EUR Peg Discontinuation - Would you be happy to take a 20% pay c

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In 2011 the CHF went from 1.5 to 1.2 EUR yet a lot of companies stayed here. In 2015 in percentage terms, the drop is the same. It went from 1.2 to parity. Fingers crossed the companies will absorb the hit as they did in 2011.
Hope dies last.
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  #44  
Old 16.01.2015, 18:35
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Re: Aftermath of SNB EUR Peg Discontinuation - Would you be happy to take a 20% pay c

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Hope dies last.
It is a good arguement thought right?

Just bury our heads in the sand, and enjoy a shopping trip across the border... for those of us that hate shopping, Switzerland should be nice and quiet this weekend.
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  #45  
Old 16.01.2015, 18:51
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Re: Aftermath of SNB EUR Peg Discontinuation - Would you be happy to take a 20% pay c

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Fuel, imported goods, food costs, exporters will become less competitive, international companies can not justify the cost of the Swiss labour costs anymore, soon local businesses can not pay the salaries of their employees and then they ask them the question...
That sounds very logical.

However, checking with the past I can't help but notice that CH booked a new record trade surplus every year since 2004 except 2010, when the balance was 5% below 2009.

I find it especially difficult to make sense of the record in 2011, which was about 20% above the previous one, based on the claim that the exchange rate is basically the sole deciding factor, as the Euro had been below 1.30CHF (i.e. down by 20% and more from previous year) basically all year.

The trade balance surplus didn't increase much afterwards, but increase it did, so even 1.20 obviously wasn't bad at all for the exporters. This makes the outrage from people such as Hayek look rather dubious (..fool me twice..).
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  #46  
Old 17.01.2015, 14:19
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Re: Aftermath of SNB EUR Peg Discontinuation - Would you be happy to take a 20% pay c

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I find it especially difficult to make sense of the record in 2011, which was about 20% above the previous one, based on the claim that the exchange rate is basically the sole deciding factor, as the Euro had been below 1.30CHF (i.e. down by 20% and more from previous year) basically all year.
What was the delta change of imports in 2011? If negative then obviously CH imported less, if flat then the exporters exported more. The appreciation of the CHF obviously hurts exporters, so the fact the trade surplus was +20% YOY is not due to the currency appreciation but probably due to the exporters re-adjusting, cutting costs and becoming more efficient and still remaining competitive in an environment where prices were going up left right and centre due to QE.

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The trade balance surplus didn't increase much afterwards, but increase it did, so even 1.20 obviously wasn't bad at all for the exporters. This makes the outrage from people such as Hayek look rather dubious (..fool me twice..).
Now assuming that the exporters are as efficient as they can be and with their margins squeezed down to the minimum they can be. If the central bank decides that the goods they sell to the world are worth 20% less in the local currency then it's basically economic suicide.

So the trade balance surplus might have been significantly more than previous years in 2011 but that's not because the currency appreciated but because the SNB struck a good balance by introducing the 1.2 cap so the currency didn't appreciate too much to completely debilitate the exporters.

What they completely screwed up is their cap exit strategy or lack of it. By abandoning the cap now and reducing deposit rates to -0.75% they are hoping that this will just sort itself out and settle somewhere where it doesn't hurt the exporters and the economy too much. Their hands were tied though as the ECB looks poised to "pump the jam" even more next week. (parden the terrible pun)

The SNB haven't ruled out further intervention in the currency market though so all options remain open as they obviously don't want the economy to be affected. However it is unlikely that any future intervention will be in the form of any further caps.

As another day passes on this alpine country... People are constantly asking themselves this; When will the local retailers adjust their prices? When will my filling up costs fall by 20%? Will they ever? Should I just cross the border and get what I need where it's cheaper?
And before you know it sales figures are falling and retailers are having to discount their prices to entice their customers to shop locally. They have no other choice.
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  #47  
Old 17.01.2015, 14:40
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Re: Aftermath of SNB EUR Peg Discontinuation - Would you be happy to take a 20% pay c

Well, I know what I would do.... Before even thinking of accepting 20% less, I would create a new thread on EF asking folks if I could live in Switzerland on $X salary. We haven't had one of those threads in a while
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  #48  
Old 21.01.2015, 10:37
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Re: Aftermath of SNB EUR Peg Discontinuation - Would you be happy to take a 20% pay c

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What if you can't get a payrise?
then you're not trying hard enough
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  #49  
Old 21.01.2015, 10:44
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Re: Aftermath of SNB EUR Peg Discontinuation - Would you be happy to take a 20% pay c

With jobs overseas now costing 20% less. I'd expect jobs which can be easily outsourced to disappear rather quickly.
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  #50  
Old 21.01.2015, 10:59
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Re: Aftermath of SNB EUR Peg Discontinuation - Would you be happy to take a 20% pay c

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As another day passes on this alpine country... People are constantly asking themselves this; When will the local retailers adjust their prices? When will my filling up costs fall by 20%? Will they ever? Should I just cross the border and get what I need where it's cheaper?
And before you know it sales figures are falling and retailers are having to discount their prices to entice their customers to shop locally. They have no other choice.
I popped into our local coop yesterday evening and noticed that a lot of fresh goods had those orange stickers on them reducing the price by 50%. It seems that sales must have already taken a hit and they are having to clear fresh produce at least.
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  #51  
Old 21.01.2015, 11:11
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Re: Aftermath of SNB EUR Peg Discontinuation - Would you be happy to take a 20% pay c

Since CH has a (very, by some standards) low unemployment rate and a good trade surplus, isn't it too too early to predict a catastrophe as many here are doing?

I am trying to figure out which industries will get the biggest hit. Perhaps those who are exporters but also very labor intensive? Watches maybe?

Am I wrong to say that it won't be a big deal for the pharmas since they have many production plants outside Switzerland and their margins are high?

Last edited by Capo; 21.01.2015 at 11:34.
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  #52  
Old 21.01.2015, 11:16
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Re: Aftermath of SNB EUR Peg Discontinuation - Would you be happy to take a 20% pay c

Well, I have some actual experience with this - albeit not 20%!

Back in 2001 I was working for a company which manufactured equipment used in semiconductor processing. In June of that year, we got a letter from the higher ups indicating that sr management was taking a 6 month pay reduction, and asked us if we would also comply - they were requesting a 5% reduction. Now, at this point I had only been with the company for 6 months, I was the 2nd income in a DINK couple, so I signed up and took a pay cut. Not sure what would have happened had I said no, I don't remember if there were others who said no - but I was willing to take a short term cut for the long term stability of the company.

The 5% decrease was from July - December 2001. Unfortunately, Sept 11 fell in that time, and sales, etc. were shot to hell.

On the 16th of Jan, 2002, I was on site at a customer in Grenoble, FR when my boss flew in for a meeting and proceeding to fire me (ok, I was laid off) - you see the post 9/11 repercussions were worse than expected.

So, going forward, I don't know if I were the main earner in a family if I would voluntarily take such a big pay cut...

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Since CH has a (very by some standards) low unemployment rate and a good trade surplus, isn't it too too early to predict a catastrophe as many here are doing?

I am trying to figure out which industries will get the biggest hit. Perhaps those who are exporters but also very labor intensive? Watches maybe? Cheese, chocolate?

Am I wrong to say that it won't be a big deal for the pharmas since they have many production plants outside Switzerland and their margins are high?
OH works for a US company whose budgets are calculated in US$. He and his team just got 20% more expensive overnight. And it isn't like they make money in CHF - I don't think very many of their customers are in CH...
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  #53  
Old 21.01.2015, 11:19
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Re: Aftermath of SNB EUR Peg Discontinuation - Would you be happy to take a 20% pay c

From Wiki 2009 top 25 exports.
Medicaments are number 1

1 5417 Medicaments $26,059MM 15.0%
2 5416 Glycosides & vaccines $14,373MM 8.3%
3 8851 Watches $11,694MM 6.8%
4 8996 Orthopaedic appliances $5,714MM 3.3%
5 8973 Precious jewellery $4,824MM 2.8%
6 3510 Electric current $4,184MM 2.4%
7 5148 Other nitrogen-function compounds $4,030MM 2.3%
8 7721 Switchboards, relays & fuses $3,438MM 2.0%
9 7284 Specialized industry machinery & parts N.E.S $3,098MM 1.8%
10 6812 Unwrought metals of platinum $2,789MM 1.6%
11 5156 Heterocyclic compound; nucleic acids $2,684MM 1.5%
12 5147 Amide-function compounds, excluding urea $2,396MM 1.4%
13 7149 Parts of gas & reaction engines $2,214MM 1.3%
14 8720 Medical instruments N.E.S. $2,100MM 1.2%
15 5415 Bulk hormones $1,718MM 1.0%
16 5413 Antibiotics $1,631MM 0.9%
17 5514 Odoriferous substances $1,417MM 0.8%
18 6672 Not mounted diamonds $1,318MM 0.8%
19 1110 Non-alcoholic beverages N.E.S. $1,269MM 0.7%
20 8939 Miscellaneous articles of plastic $1,237MM 0.7%
21 9310 Unclassified transactions $1,232MM 0.7%
22 7452 Non-electrical machines parts N.E.S. $1,145MM 0.7%
23 8960 Works of art $1,057MM 0.6%
24 7492 Valves $1,054MM 0.6%
25 7416 Heating & cooling equipment N.E.S. $1,034MM 0.6%
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  #54  
Old 21.01.2015, 11:20
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Re: Aftermath of SNB EUR Peg Discontinuation - Would you be happy to take a 20% pay c

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I think Switzerland is just going to have a nice big depression, like the one my grandparents lived thru, where people lost their jobs/businesses, and had to take menial employment where they could find it to keep the wolf from the door.

It was a poor country not so long ago, then it got too fat and wealthy, attracting too many people, now it has a major problem with social welfare, greedy countries ogling it, Africa trying to re-locate itself here, traditions going out the window, but still trying to live the consumer life.

All about to end.
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  #55  
Old 21.01.2015, 11:23
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Re: Aftermath of SNB EUR Peg Discontinuation - Would you be happy to take a 20% pay c

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Only if you are fixing at today's rates. What if you fixed at 3% years ago?

The thing is, not all prices in Switzerland will fall. We are likely to experience deflation too, so falling tax receipts will mean that the government might have to raise tax rates.

Of course governments don't like to miss an excuse to raise taxes.

But surely if overall costs go down, the government too should be able to make do with less.
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  #56  
Old 21.01.2015, 11:25
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Re: Aftermath of SNB EUR Peg Discontinuation - Would you be happy to take a 20% pay c

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12 5147 Amide-function compounds, excluding urea $2,396MM 1.4%
So they take the piss and sell the residue?
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  #57  
Old 21.01.2015, 11:25
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Re: Aftermath of SNB EUR Peg Discontinuation - Would you be happy to take a 20% pay c

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Of course governments don't like to miss an excuse to raise taxes.

But surely if overall costs go down, the government too should be able to make do with less.
Lowering tax rates usually increases tax collected as Mrs Thatcher proved in 1979
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  #58  
Old 21.01.2015, 11:59
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Re: Aftermath of SNB EUR Peg Discontinuation - Would you be happy to take a 20% pay c

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Lowering tax rates usually increases tax collected as Mrs Thatcher proved in 1979
http://en.wikipedia.org/wiki/Laffer_curve
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