Friday 19 August 2011

n-Euro German Swiss Risk Bets--Can we save ourselves from our children's riots?


Source: http://www.zerohedge.com/news/europes-last-resort-very-much-doomed-maginot-line-part-deux

2. You don't need to know a whole lot about European history to understand how vain European projects are. As the financial markets continue their "risk off" trend with rumours of illiquidity now billowing not from the Tragic Greek Chorus but from Switzerland which has taken $200million from the US Fed Swap Line, which may seem infinitely tiny in the scheme of things, but which can be infinitely levered, we have one of four trap doors to enter: (1) the SNP (central bank of Switzerland) genuinely needs US Dollars because even though it can print CHF, it doesn't want any more EURO exposure, and would rather take USD appreciation risk, which maybe means, THEY KNOW THE FED is going to do a QE3; (2) as Tyler Durden believes, the liquidity lines in Europe are in big trouble, and the SNP is just acting as front cover for some European bank(s) which is/are now in acta mortis; or as my wife (no expert in finance, but what a brain) thinks (3) this is a HEAD-FAKE by the SNP to scare off the already terrified Euro-holders from buying any more Swissies. Of course, if the $200mill purchase by the SNP is not a head-fake and they are not try to butress a European bank or banks, then the last possible alternative is (4) one of the two big Swiss banks is in trouble. At this point, if you decide to take a bet, you have a 1 in 8 chance of getting it right. That is, take the 4 choices as equi-probable and (4) again being equi-probable. What's clear is that all choices in the above bad for market sentiment.

3. As our children grow up and realise what we with our banking and political systems have done--basically lie, cover-up, and lie again--they are going to get pissed off. IF WE START TELLING THEM THE HONEST TRUTH NOW, THEY might (pretty please) SPARE US.

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