Whatever the Swiss do in the current banking crises there is one thing they should avoid. (Continue reading ...)
The Swiss should not panic. Iceland biggest mistake during the banking crises of 2008 was to panic. At that time the banks in the UK where also having trouble and the British government took a 95% stake in many banks. In Iceland it was 100% but this 5% difference is insignificant. Britains Gordon Brown diverted the attention to Iceland but the main difference to how this banking crises affected the economies of Iceland and Great Britain was a result of panicy measures that Iceland took. Iceland really suffered wheras Great Britain did not. UKs current problems have nothing to do with this period but rather Brexit.
We should be aware that these banking crises are orgastrated by people / organizations that want to make money from the crisis.
Governments of countries whose financial system are under attack should keep their calm and not be influenced by the deceiptive words of those that are trying to make a killing from the crises.
Unlike other governments at the time Icelands government debt was around zero. Yet this was the country that suffered the most from the banking crisis of 2008. This just does not make sense! Similarly in Switzerland the government is not in debt as far as I am aware.
The Swiss government should be prepared to let Credit Suisse go into bankruptency preceedings. The fear of this happening should not prompt you to sell off your exposure in Credit Suisse for pennies to the dollar, because in the end there will be enough assets for the receivership to pay up. Anyone who claims otherwise is trying to get people to panic sell and to recover the true worth himself.
The Swiss government should resist giving UBS, Credit Suisse on a silverplate. They will obviously try to get the price down, because it does not matter for them if they buy the bank or if it goes under. If it goes under they have gotten rid of competion. However UBS should be careful what they wish for because Credit Suisse is not just about Credit Suisse but about confidence in Swiss as a banking country.
If Credit Suisse would go into bankruptency preceedings this would not lead to unemployment in the near future as more people would be required to run both the receivership and the day to day operations of the domestic banking that could be kept alive.
The Swiss Franc should not be prompt up. The faster and deeper it falls now the faster will be the recovery. Forget about expensive loans from the IMF or any country to prop up the currency as these loans will have to be repaid depressing the currency in the future and prolonging the crises.
The lesson all governments should learn is that the current banking scenario is nonsense from start to finish. The financial system should not be used to subsidise the rich with negative real interest rates. Banking should not be about creating monopolies or oligopolies. Swiss banking should not be about hiding money, but rather about letting people who have money leave some of it with prudent Swiss bankers, so as not to have all their eggs in the same basket. Banking should be about lending money from people that want to earn interest on their deposits and those deposits should be invested as diversly as possible into investments that pay enough to pay the depositors and a fair charge from the bank itself. In times of crisis, when a run is made on a bank, the government or regulators should slow down the process. Banking should stay completly away from ponzi schemes like crypto currencies as the intrensic value of crypto is zero (those that say otherwise like the World Economic Forum should be chastened for that). Overvalued property prices should be recognized as such and should not be counted as a reliable investment. Banks should not be pedlers of Snake Oil neither the risk in overvalued property should be thorougly explained to property buyers. Short term greed and wishful thinking should not prevail.
Markets can move in unpreditable fashions, without logic and processes can be mishandled. The text here is the opinon of the author.
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The blowing up of the North Sea gas pipes
I does not really matter who did it.
However news reports and discussions about it miss some important points.
Some of the discussion goes on Telegram channels fed by the Russian propaganda machine. Their simplistic argument was something to the tune that the Americans said the pipeline would be dead if it ever came to an invasion of Ukraine and they would guarantee that. But that does not mean that the US blew up the pipeline. The missing part is that Russia wanted to punish Europe for not allowing them to take over Ukraine. Russia wanted to bring down the power infrastructure in Europe in a similar way they have been attempting to destroy the electric infrastructure in Ukraine with missile attacks. Germany had agreed that the Nord Sea 2 pipeline should not be put into operation given the Russian invasion of Ukraine. Russia itself had halted the delivery of gas through Nord Sea 1 and was running out of excuses for not resuming gas deliveries. First they said they needed a turbine from Siemens that was being repaired in Canada, and when they finally got that they still did not deliver, so what better excuse not to resume gas deliveries then a blown up pipeline. Russia may also have hoped for a major rift between the US and Germany if they could acertain the blame on the US.