Why should the Swiss central bank action matter to you? - Yahoo Finance
Interesting financial development that a lot of people would likely not pay attention to, but it can be a tipping point.
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The shadow gov't continues to make tons of money by swinging the market to and fro. Why else do you think there is no stated reason from the Swiss central bank about this action? Because it is coordinated with all other central banks in the world to manipulate economies, and move markets in their favor.
January 16, 2015
The Central Bankers Are Losing Control
Yesterday the Swiss National Bank (SNB) shocked the world by abandoning the 1.2 currency peg between the Swiss Franc and the Euro.
This peg had been in place since 2011 and the head of the SNB had repeatedly stated that it would be kept forever.
Most analysts are talking about the decision to drop the peg (and the decision to cut interst rates even further negative) as a positive because they indicate that the European Central Bank or ECB will likely be announcing a QE program next week.
This is very dangerous thinking… and as usual it is based on the hope of stocks moving higher.
The SNB’s decision to drop the peg is not a calculated decision. It is an open admission that CENTRAL BANKS ARE LOSING CONTROL.
Consider the following: 54% of Swiss GDP is exports. Most of this is to the Eurozone. So a stronger Swiss Franc would CRUSH damage the Swiss economy.
In this context, the SNB’s decision is akin to political suicide. In one day, the SNB lost between $60 billion and $100 billion, an amount equal to 10%-15% of Swiss GDP.
This is an absolute disaster. It would be as if the Federal Reserve lost over $1.5-$2.5 trillion in a single day.
You only see this kind of move out of complete desperation. Central Bankers are some of the career-risk focused people on the planet. They NEVER do anything that could damage their ability to remain in power. A MAJOR Central Bank would do something like this for only one reason: the ALTERNATIVE was systemic collapse.
This decision will very likely cause the head of the SNB his job. And the political backlash from Swiss citizens will be dramatic (there are already bank runs underway in Switzerland).
Whether or not the ECB announces a QE program next week is irrelevant, as is the performance for stocks. All that matters is that we now know that the system is on red alert.
This morning, various FX brokers are blowing up. Hedge funds that had positions based on the Swiss peg will likely implode. The ripples are just beginning to be felt. It will be weeks before we know the full damage.
Now is the time to be preparing.
The rest is just background noise.