Frank26: IMO this is a time of ........ RI's. A few more weeks.
But once again I reiterate ......... Sadly not all world currencies will go up in value. Some have been targeted to go down ........ Some to Fall. And IMO ........ There is nothing that these countries can do about it.
I will not be with You on KTFA PREMIUM tomorrow. We leave early in the morning. So please take this thought I share with You today.
IMO ....... This is a process that will take about three more weeks to complete it's rounds.
IMO ....... Right around the time gas price will start to climb.
The CBI is expressing how they are going to help with their economy. Good because for over 10 years the program rate they have has crippled that goal.
Think about this too:
Abadi did a super presentation at Davos telling Powerful World Countries that Iraq is going to help build World Economies !!! This is an International Alliance Conference !!!
Seriously ....... What right does Iraq have to say and promise this at 1166?
When THEIR OWN ECONOMY needs an International Rate to solidify this New ALLIANCE with this INTERNATIONAL community they just made promises to !!!
It's that simple. Meanwhile they use the story of Dassh ONCE AGAIN as cover.
BTW ........ The Franc has a job to do ........ Lets see if it can finish in the next few weeks. It's march ........... Will be very evident.
TY NEWSHOUNDS .......... Superior Work
walkongstick: Did Swiss Bank’s Franc Surprise Signal Start of a Currency War?
By Benjamin J Cohen | January 21, 2015
Currency wars have been predicted for years. Outright monetary battles were last seen during the Great Depression of the 1930s, when governments competed to devalue their currencies to gain market advantage. But since the return to floating exchange rates in the 1970s, the risk of renewed competitive manipulation has hovered over the monetary system like a dark cloud.
The only question, it seemed, was: who would be the main culprit? Would it be the United States, pushing around exchange rates through the machinations of the Federal Reserve? Would it be Japan, hoping to reverse years of stagnation by engineering a depreciation of the yen? Or might it be the eurozone, seeking an escape from its problems?
Who would have guessed that, remarkably, it might turn out to be none other than Switzerland—perhaps the stodgiest monetary power on the face of the earth? The Swiss franc has long been regarded as one of the world’s most dependable currencies, prized by investors as a stable and secure haven for their wealth. Yet a few days ago, with one bold stroke, the Swiss National Bank succeeded in severely destabilizing financial markets around the world.
Franc Becomes a Haven
The act itself was deceptively simple. Since 2011, the Swiss franc had been firmly pegged to the euro at a cap of 1.20 francs. Prior to that it floated freely, and 1 euro equaled as much as 1.68 francs back in 2007 before the financial crisis increased its value as a haven.
To ensure the franc didn’t trade below the cap, the Swiss National Bank spent enormous sums selling francs and buying up euros and other currencies to keep the franc from increasing in value. In other words, when traders and investors were buying francs, driving up their value, the central bank was selling them in similar quantities to keep the currency stable.
Then, last Thursday, the peg was removed, allowing the franc to move freely. Henceforth, the Swiss National Bank would refrain from buying up euros, dollars, or anything else to keep the franc from appreciating.
Repercussions, however, were anything but simple. Almost immediately, the franc soared by as much as 30 percent before settling down at around parity to the euro—that is 1 to 1—causing massive dislocations for investors and financial institutions around the globe. Particularly hard hit were banks such as Germany’s Deutsche Bank and Britain’s Barclays PLC, both of which had invested heavily in securities directly tied to the Swiss exchange rate. Eastern Europeans, who had borrowed heavily in francs to take advantage of low interest rates, now suddenly faced more onerous debt-service burdens. Currency traders everywhere suffered losses. Ripples from the shock spread widely.
Nor were the Swiss themselves spared. The currency’s abrupt rise immediately translated into higher prices for Swiss output in world markets, damaging sales prospects. “Words fail me,” said the chief of the Swatch Group, one of the country’s biggest exporters. It “is a tsunami: for the export industry and for tourism, and finally for the entire country.” Swiss stocks fell like a stone.
An Increasing Burden
So why did Switzerland do it? The peg was originally intended to counter large-scale inflows of capital fleeing the crisis-ridden eurozone and other trouble spots. The National Bank pledged to provide all the francs needed to satisfy foreign demand. The currency would not be allowed to become more expensive.
Over time, however, cost of the peg became increasingly burdensome. Sales of newly created francs greatly expanded the bank’s balance sheet, threatening domestic inflation. Since 2011, the monetary base (commercial bank reserves held at the central bank plus the currency in circulation) has quintupled, and in recent months inflows had actually accelerated. Notably, much was coming from wealthy Russians eager to get rid of their incredible shrinking rubles.
The final straw appears to have been the prospect the European Central Bank launching a program of buying billions of euros worth of government bonds in an effort to lower interest rates and boost inflation, which could begin within days. The ECB’s program, known as quantitative easing, essentially amounts to printing new money, increasing how much is in circulation.
Evidently the Swiss authorities feared that much of this newly created eurozone cash would slosh across their borders, adding to inflationary pressures. Letting the exchange rate go seemed the safer option.
Longer-term consequences, though, could be grave. Most obviously, many in Switzerland will suffer from the currency’s rise—everyone from the makers of cuckoo clocks to the employees of ski resorts. Worse, the reputation of the Swiss National Bank could be damaged, perhaps irreparably.
In reality, the bank had little choice. The tide of incoming capital was swelling, and with asset returns at all-time lows, there was little room for further interest-rate reductions to curb foreign appetite for the franc. Switzerland was caught in the classic dilemma that theorists call the Unholy Trinity—the mutual incompatibility of monetary policy autonomy, currency stability, and capital mobility. Unable to directly restrict financial inflows, the bank chose to sacrifice exchange-rate stability for the sake of restoring domestic monetary control. The decision was not unreasonable.
But the way the Swiss went about their decision has upset many. The bank acted entirely on its own, without any consultations with monetary authorities elsewhere. “I find it a bit surprising that [the Swiss] did not contact me,” said Christine Lagarde, managing director the International Monetary Fund, in a classic diplomatic understatement. In fact, many central bankers were incensed by Switzerland’s unexpected unilateralism. The bank had always been regarded as a prudent and reliable member of the central bank fraternity. Could the Swiss still be trusted?
More broadly, would anyone now trust any central bank? If the stodgy old Swiss could behave with such abandon, who might not be similarly tempted? Central bankers traditionally pride themselves on their sense of community, communicating often to share views and signal intentions. But now some might feel that they too have the right to act unilaterally in what they regard, rightly or wrongly, as their legitimate self-interest. If so, a currency war could indeed erupt, as long predicted.
Frank26: Currency War ? ...... LOL ........
Next thing You know they will start to call it a GCR... LOL !
Once again ............ STUPENDOUS ARTICLES ........ TY !!! !!! !!!
walkingstick » January 21st, 2015, 11:20 am
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Zochowski: MORNING ALL!!!
HAVE MY OWN THOUGHTS ON THIS..........
AM REFRAINING MYSELF FROM SAYING MUCH MORE OTHER THAN I CHOOSE TO RESPECTFULLY DISAGREE..............
YES, I AGREE TO DISAGREE.............NOT MEANING TO OFFEND OF COURSE....
TIME WILL TELL........................... G/B M/Z
ricklibby: Hi Z; what's the disagreement on? time frame or currency devaluing and revalueing? at least 5 shown have devalued and Japan and other [free trade countries]ready to do the same.
IMO the process of monitary exchange rates being revised is well underway but not near finished. this has been in process for over two years and now in a little faster paced move. The SWISS elected to start the process or were volunteered so what's up in your opinion. rick
Zochowski: MORNING "RICKLIBBY"
LOL LOL HUMMMMMMMMM..........
IN ANSWERING YOUR QUESTIONS, LOL LOL, WILL I BE OVERSTEPPING MY "FENCELINE", PER SAY, LOL LOL OR NOT??????
HERE ARE SOME ITEMS I AM IN DISAGREEMENT WITH............
AS YOU KNOW THIS DUMB OLE TURKEY HAS BEEN FOLLOWING A DIFFERENT "SCENT TRAIL/GAME TRAIL", LOL LOL ONE THAT IS LESS TRAVELLED........HENCE MORE INVISIBLE............AND SEEN THRU OLDER EYES.........
NOT SAYING ALL IS WRONG..............HOWEVER I ALSO READ TYPE N INTERPRETE TALK IN A DIFFERENT WAY THAN MOST.........
JUST FOR DISCUSSION, AM WATCHING THINGS DEVELOP FASTER THAN THE TIMEFRAME GIVEN, TO B BLUNT.............
CASE IN POINT, THE SWISS DID WHAT THEY DID IN 5 MINUTES, HAS ROCKED MARKETS, HAS FOLDED BUSINESSES, HAS GIVEN REST OF WORLD A "HEADS UP" APPROACH.............
IMO, THE SWISS STARTED, SO BETTER GET ON THE BANDWAGON BEFORE IT LEAVES THE STAGING AREA............
OTHERS HAVE SWIFTLY FOLLOWED SINCE AS YOU HAVE STATED..........THIS HAS HAPPENED IN REVERSE, FROM ALL PREPARING FIRST IN CONJUNCTION TO A GCR, INSTEAD OF A GLOBAL "BANG" TO THEN ADJUST ACCORDINGLY...........WOULD BE EASIER TO GLOBALLY TRANSITION, IMO.........
ALSO BELIEVE THIS WAS A PLAN TO SEE "HOW IT GOES WITH ONE MAJOR CURRENCY FIRST" SCENERIO............LOL LOL, AS I ALSO BELIEVE THAT NO ANNOUNCEMENT WILL COME UNTIL "AFTER" IT IS DONE.........THEREFORE NO PREEMPTIVE BETS/INSIDER TRADING.......
TO CONTINUE, IMO, IRAQ HAS BEEN READY BUT ARE BEING TOLD TO STALL........
SO THE REST OF GLOBAL CURRENCIES CAN BE STABILIZED FIRST, WHICH HAS BEEN HAPPENING BEFORE OUR EYES INCREMENTALLY OVER THE LAST 3 OR 4 WEEKS.........TILL SWISS MADE THIER MOVE........
NOW ITS A RUSH TO ADJUST AS IN ALL PROBABILITY THESE COUNTRIES ALL HAVE IQD IN THE VAULTS TO STABILIZE THIER OWN CURRENCY AGAIN ONCE THE HAMMER DROPS...........
HAVE MORE TO SAY, WITH OTHER TIES GLOBALLY AS I HAVE PROBLY TYPED TOO MUCH ALREADY, LOL LOL, BUT SINCE YOU ASKED SO ELOQUENTLY, I FIGURED I WOULD GIVE A "SHORT" ANSWER.........LOL LOL