Discussion in 'Economics' started by MohdSalleh, Feb 24, 2009.

  1. http://moneynews.newsmax.com/streett...utm_medium=RSS

    Economist Warns Switzerland Could Go Broke

    Monday, February 23, 2009 10:05 AM

    By: Julie Crawshaw Article Font Size

    Economist Artur Schmidt says Switzerland could go broke because Swiss banks extended billions in credit to Eastern European countries which now can't pay back the money.

    “Switzerland, like Iceland, is threatened with a potential national bankruptcy,” Schmidt told the Swiss daily Tagesanzeige.

    Loans made in Swiss francs stimulated rapid economic growth in many Eastern European countries, Schmidt says, making Swiss currency very important.

    Swiss banks lent francs to local banks, which in turn lent them to their customers. Such loans were especially attractive because interest rates were much lower than required for loans in local currency.

    The system worked as long as exchange rates between Swiss and Eastern European currencies remained reasonably stable.

    Now Eastern European currencies are falling and more borrowers are having problems repaying their loans.

    “Because of the devaluations of the national currencies, the debt to Switzerland has increased by more than one-third,” Schmidt notes.

    “Many of the Eastern European countries have serious payment difficulties and are virtually bankrupt.”

    Schmidt says the value of Switzerland’s currency could drop severely or its credit rating could be massively downgraded, creating economic trauma in a country traditionally regarded as a stronghold of financial stability.

    “The franc could become an unstable, soft currency,” Schmidt says.

    “Then Switzerland would perhaps be forced to abandon the franc and take on the euro.”

    According to a report from the Bank for International Settlements, worldwide franc-denominated loans of about $675 billion are in circulation, with about $150 billion of that total from Switzerland.
    Reply With Quote
  2. Daal


    How come, I was told the swiss bankers were supposed to be the smartest guys in the room
  3. Actually very surprising to me that the swiss banks would extend themselves as alleged. It's not like they are new to the banking business.

    There must be more to it. Can't imagine anyone betting the house on a 3rd world housing boom.
  4. It's amazing how stupid and greedy people really are.

    Everyone is tied into this tulip inspired bubble, there really is no idea exactly where this fiasco will end. :p

    All I can say is ... LOL. :D
  5. Illum


    lol indeed.

    I wonder why the Swiss are going to go down for these guys. Just let the banks fail and let the good ones take over. Surely they are not as dumb/corrupt as we are. They are dwarfed by these loses, just let it go...
  6. You said it GREED. When everyone else (other banks) are making money then join the club.
  7. Perhaps there is another angle.

    Rothschilds and the battle of Waterloo come to mind.

    Lets say for example that you think the majors are going to fall due to all the central bank spending. You want to buy the Franc but doing so will cause it to spike and rise causing you to pay higher and higher prices.

    If there is stories of the Swiss banking in trouble and the Franc falls it gives you months to move into the Franc without having to keep paying higher and higher amounts.

    I currently am not short or long the Franc but I have been looking at it as an inflation hedge. I just can't help to think that the first move is usually the wrong move.

    Of course you could say that buying the Franc was the first and wrong move and now the real move is at hand.
  8. Are you proposing that the banking dilemma is all hype so that some entity can get into Francs, or are you proposing that some entity effected the sacrifice of the swiss banks somehow in order to get into francs cheaply?
  9. These stories keep popping up on all countries, currencies, continents....

    Europe is bankrupt, their banks dwarfing their countries GDP have a 25 trillion black hole....

    The US is bankrupt, biggest debtor in the history of the world, have taken on the multi trillion liabilities of AIG and Fannie and Freddie already forget about C en BaC, it's 2 biggest banks, trading at pennystock levels...

    The Swiss are in deep doodoo obviously...

    The Brits, forget about it.

    Eastern Europe?:mad:

    Russia and the Middle East: Bankrupt or near bankrupt if this slump in oil continues much longer...

    China? Thousands and thousands of factories closing every day and they have vowed to keep their currency weak to promote exports but exports to who?

    Japan? Already has a 200% debt to GDP and their export down 50% from one year ago!

    Anyone knows how the Moon is doing these days..?

    #10     Feb 25, 2009