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  #1641  
Old 22.04.2010, 15:07
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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The Swiss National bank just announced they bought 56 Billion euro in the first quarter 10 - that is more than in the whole of 2009.
Their objective is to keep the Swiss franc exchange rate steady - but at the cost of filling the cellars with a currency whose value is heading downwards.
Like Maggie Thatcher said "you can't beat the market" after her Chancellor spent most of the UK reserves trying & failing to prop up the UK£.
Watch out for the next round of SNB intervention.
Them sunumbitches know how to hurt the FX market (remember thursday evening before Good Friday?...LOL).

And I'll easily admit that we're short euroswissy (hedge) since....hmmm... last october.
Phew....

Paul
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  #1642  
Old 22.04.2010, 18:10
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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I think the Swiss government are doing this to lower the value of the Swiss Franc by selling it to buy Euros which either makes the Swiss Franc go down (more on the market) and the Euro go up (less on the market).

Not sure though; anyone have an explanation for the move?
As GenevaSculler says, that is exactly why they are doing this.

There are approx* $1,000 billion worth of Euros in circulation and $50 billion worth of swiss francs. The disparity in amounts of each currency in circulation means that this action affects the Swiss Franc much more than the Euro (as it's approx 100% of the physical CHF in existence, but only 5% of the physical circulating Euros). They're not really making the Euro go up, but mainly the CHF go down.

* figues in USD refer to the amount of physical notes in existence, which are massively increased in electronic numbers by fractional reserve banking.
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  #1643  
Old 22.04.2010, 19:39
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

Problem for Swiss manufacturing is, if devaluation works in the long term, which I bet it doesn't (and so will currency traders, which will be exactly why it won't) they will be getting a false competitive advantage, will get lazy, won't innovate, invest in capital, new techniques etc, and then will lose out in the long term anyway. Look at GB manufacturing, or more recently, US car industry etc.

As far as I know, devaluation never saved a manufacturing industry in the long term.

The other problem is, of course, you will import inflation, as all imports become more expensive. As if things weren't expensive enough already...
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  #1644  
Old 22.04.2010, 19:48
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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This doesn't look good:

Sovereign debt crisis at boiling point
Britain -- unlike Greece -- can no longer rely on soft measures to cut the structural deficit, such as increasing the share of women in the work force. Such low-hanging fruit has mostly been picked already.
Errrrm...have you been to GB recently? Seen the number of young single mums? Highest in Europe. Trust me, there's plenty of women to get into the workforce. Although think describing them as low hanging fruit is stretching it a bit. And how you do that in a recession is beyond me
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  #1645  
Old 22.04.2010, 20:03
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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Yep, I am one of the people that have been stating this for some time.

A lot of my statements are made from what I actually see in the real world, not from articles I read.

With regard to credit cards I have a few clients with credit card debts; these are a couple of examples:

1) £82,000 of debt on 9 cards in UK; gone back to New Zealand to live as no work in the UK anymore. No way and no intention of paying the debts.

2) UK client living in a Council House; £43,000 of credit card debts; "I don't give a fwck and have fwck all to give" is his attitude.
I lived with a guy in liverpool who had rinsed 3 cards 5k each and just moved about so the credit card companys never caught up with him. 5 years later he started getting credit card application forms through the post. I asked him what he was going to do; "apply for them of course. If these idiots are thick enough to give me a credit card again after I rinsed them last time, ha ha ha ha ha. Easy money."

He applied for 2, got one, and did exactly the same.

Another friend, in manchester. Never had a legal income, lives on an estate with his mum, has been signing on since he left school, has no possesions worth squat, everything in the house belongs to his mum. Applied for, and got, an unsecured loan of 2 1/2k after a guy selling them knocked on his door. He has no intention of paying it back, ever, and I wouldn't like to be the debt collector who knocks on his door.

Both occurred in summer 2008, height of the crisis. And people wonder why we had a crisis?

What the idiots in charge of the banks who were allowing such practices are still doing there, I'll never know
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  #1646  
Old 22.04.2010, 20:38
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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Problem for Swiss manufacturing is, if devaluation works in the long term, which I bet it doesn't (and so will currency traders, which will be exactly why it won't) they will be getting a false competitive advantage, will get lazy, won't innovate, invest in capital, new techniques etc, and then will lose out in the long term anyway. Look at GB manufacturing, or more recently, US car industry etc.

As far as I know, devaluation never saved a manufacturing industry in the long term.

The other problem is, of course, you will import inflation, as all imports become more expensive. As if things weren't expensive enough already...
One could argue that the swiss aren't devaluing relatively. They're just trying to keep up with the other currencies which are devaluing, which is pretty much all of them. If you don't keep pace with the global competitive currency devaluation, you're relatively revaluing upwards.

It's just as well the SNB sold most of Switzerland's gold and broke the gold link, otherwise the CHF would be well on the way to the moon by now.
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  #1647  
Old 22.04.2010, 20:57
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

If I had the cash, I would do what my friend at Goldman Sachs advised (over a drink) a few weeks back - short the pound and go long on gold and platinum. The dollar will drop, so will the euro, swiss franc also, but not as much. When all the major currencies go down, then you want to hold gold and platinum.
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  #1648  
Old 23.04.2010, 01:09
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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One could argue that the swiss aren't devaluing relatively. They're just trying to keep up with the other currencies which are devaluing, which is pretty much all of them. If you don't keep pace with the global competitive currency devaluation, you're relatively revaluing upwards.

It's just as well the SNB sold most of Switzerland's gold and broke the gold link, otherwise the CHF would be well on the way to the moon by now.
Ah, sarcasm. Obviously I am talking about something of which I know nothing. Forgive me. Please, explain how a currency devalues if not against other currencies? Or have I missed something?
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  #1649  
Old 23.04.2010, 01:41
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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Ah, sarcasm. Obviously I am talking about something of which I know nothing. Forgive me. Please, explain how a currency devalues if not against other currencies? Or have I missed something?
I'm sorry - not sure what you're talking about - I wasn't trying to be sarcastic?

Currencies continually devalue against most things most of the time. For example, the price of gold (although many define gold as a currency). Another obvious example could be how sterling has devalued massively against swiss property.

Currencies also devalue against consumables. Petrol is a good example.

Personally, I define the value of currencies by what you can buy with them.

There has never been a paper currency in history that has not reverted to it's intrinsic value. It's a pretty continuous process.

Last edited by carver; 23.04.2010 at 01:43. Reason: typo
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  #1650  
Old 23.04.2010, 09:06
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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Currencies also devalue against consumables. Petrol is a good example.

Personally, I define the value of currencies by what you can buy with them.
What you are talking about here Carver - in effect a decrease in a currency's purchasing power - is called inflation.

Devaluation is always used in reference to a currency's lower FX rates with other currencies. If the lower FX rates are intentional and managed - it's called currency devaluation. If it happens through normal market supply and demand it's called currency depreciation.
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  #1651  
Old 23.04.2010, 09:56
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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If I had the cash, I would do what my friend at Goldman Sachs advised (over a drink) a few weeks back - short the pound and go long on gold and platinum. The dollar will drop, so will the euro, swiss franc also, but not as much. When all the major currencies go down, then you want to hold gold and platinum.
Mmm...But Goldman are telling its clients to buy the pound.
http://www.telegraph.co.uk/finance/e...man-Sachs.html
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  #1652  
Old 23.04.2010, 11:44
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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What you are talking about here Carver - in effect a decrease in a currency's purchasing power - is called inflation.

Devaluation is always used in reference to a currency's lower FX rates with other currencies. If the lower FX rates are intentional and managed - it's called currency devaluation. If it happens through normal market supply and demand it's called currency depreciation.
Yes, good point - I am using the wrong definition.

This is because I personally can't see much difference between inflation and devaluation and think that they are both caused by excessive money printing, and both have the same effects.
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  #1653  
Old 23.04.2010, 11:57
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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Yes, good point - I am using the wrong definition.

This is because I personally can't see much difference between inflation and devaluation and think that they are both caused by excessive money printing, and both have the same effects.
Devaluation will make imports more expensive, but would not have an immediate effect on the prices of goods and services produced domestically (though obviously the production of those may involve the use of imports).
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  #1654  
Old 23.04.2010, 12:33
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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Problem for Swiss manufacturing is, if devaluation works in the long term, which I bet it doesn't (and so will currency traders, which will be exactly why it won't) they will be getting a false competitive advantage, will get lazy, won't innovate, invest in capital, new techniques etc, and then will lose out in the long term anyway. Look at GB manufacturing, or more recently, US car industry etc.

As far as I know, devaluation never saved a manufacturing industry in the long term.

The other problem is, of course, you will import inflation, as all imports become more expensive. As if things weren't expensive enough already...
You need to tell the British government - they've been counting on debasement of Sterling to get them out of a monster-sized hole but there's still a whopping balance of trade deficit and inflation is taking off. No sign of any meaningful pay rises for those in work and pathetic interest rates mean that your pounds lose value if you put them in the bank, so everyone productive or prudent enough to save is getting poorer.

Still, they've managed to keep houses mostly unaffordable - so credit where credit's due.
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  #1655  
Old 23.04.2010, 12:41
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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Devaluation will make imports more expensive, but would not have an immediate effect on the prices of goods and services produced domestically (though obviously the production of those may involve the use of imports).
Debasing your currency has an intrinsically inflationary effect. It's simple supply and demand.
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  #1656  
Old 23.04.2010, 12:48
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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Devaluation will make imports more expensive, but would not have an immediate effect on the prices of goods and services produced domestically (though obviously the production of those may involve the use of imports).
You would think so; but if you look at the UK; prices (apart from petrol/diesel) haven't really gone up that much.
You would think that because the GB Pounf has fallen against the US Dollar (from $2.0 to $1.6 to a GB£) you would think prices of goods from china would have gone up by 25% as the Chinese generally sell their goods in US Dollars.
The US Dollar hasn't moved against the Chinese currency so how come?
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  #1657  
Old 23.04.2010, 13:39
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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You would think so; but if you look at the UK; prices (apart from petrol/diesel) haven't really gone up that much.
You would think that because the GB Pounf has fallen against the US Dollar (from $2.0 to $1.6 to a GB£) you would think prices of goods from china would have gone up by 25% as the Chinese generally sell their goods in US Dollars.
The US Dollar hasn't moved against the Chinese currency so how come?
Prices aren't simply determined by currency fluctuations. The prices of Chinese goods in the UK haven't gone up by 25% because no one would by them.
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Old 23.04.2010, 13:41
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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Prices aren't simply determined by currency fluctuations. The prices of Chinese goods in the UK haven't gone up by 25% because no one would by them.
And that makes me believe that UK companies are not making profits and so makes the FT100 index going from 3800 to 5800 totally incomprehensible unless it is being hyped by the Investment Banks which i believe it must be.
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  #1659  
Old 23.04.2010, 14:00
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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And that makes me believe that UK companies are not making profits and so makes the FT100 index going from 3800 to 5800 totally incomprehensible unless it is being hyped by the Investment Banks which i believe it must be.
Well, I think they were making huge profits on Chinese imports before and now they are making reduced profits.
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  #1660  
Old 23.04.2010, 14:35
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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And that makes me believe that UK companies are not making profits and so makes the FT100 index going from 3800 to 5800 totally incomprehensible unless it is being hyped by the Investment Banks which i believe it must be.
Most FTSE100 have substantial overseas revenue streams . . . they are not dependent on the UK consumer and not even entirely on the UK economy.
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