Posted on 03/22/2023 6:18:36 PM PDT by SeekAndFind
ZURICH—The chairman of Switzerland’s largest bank received an urgent call last week. On the other end were three top Swiss officials who delivered an ultimatum dressed up as a proposal. UBS Group AG UBS needed to rescue its failing rival, Credit Suisse CS Group AG.
For any country, it would be a financial emergency. For Switzerland, the stakes verged on existential. Its economic model and national identity, cultivated over centuries, were built on safeguarding the world’s wealth. It wasn’t just about a bank. Switzerland itself needed rescuing.
It was Thursday, barely 24 hours into an escalating banking crisis and Credit Suisse was hemorrhaging deposits. The 167-year-old national institution appeared days away from bankruptcy. To keep it alive until the weekend, the central bank was about to quadruple a credit line of more than $50 billion. U.S. and U.K. regulators called their Swiss counterparts to make sure they didn’t let Credit Suisse bring down global markets.
Finance Minister Karin Keller-Sutter, central bank head Thomas Jordan and financial regulator Marlene Amstad had dialed Colm Kelleher, the UBS chairman, to present two options that were really only one: Buy Credit Suisse without a chance to fully understand its vast and complicated balance sheet—or let it fold in a protracted unraveling that UBS’s own executives worried could shatter Switzerland’s credibility as a global banking center.
Over WhatsApp, Swiss diplomats asked each other nervously whether they should move their deposits from Credit Suisse.
After a series of frantic calls and government-orchestrated meetings in Bern, UBS agreed to swallow Credit Suisse for $3.2 billion. To seal the deal, the government, which had vowed after the 2008 crisis never again to use public money to save a bank, hastily used emergency laws to do exactly that.
(Excerpt) Read more at wsj.com ...
Switzerland used to be an uber safe neutral place to park your wealth with exceptional strong privacy and a currency backed by something.
Today they are just another debt fiat currency globalist country.
Switzerland went off the gold standard 22 years ago.
Switzerland went off the gold standard 22 years ago.
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Yeah, but didn’t their banks start handing over information to foreign governments on depositors much more recently? Information that supposed helped foreign governments (like the US) tax (and prosecute) people? One might argue that what the Swiss did is ethical, but in doing so they destroyed their reputation as a neutral banking haven with strong privacy protections.
In 2018.
This didn’t seem to hurt Swiss banks at the time as relatively little of their deposits were covered by the change in the law. And the old laws certainly weren’t impermeable. They were obliged to release the Marcos money in 1998 for instance.
I suspect the real problem is the conservative Swiss were caught by the post Covid inflation and the loss of value of their bond investments, just like SVB.
167 years of reliable reputation disappeared... 48 hours AFTER a $50 BILLION backstop.
Just how bad is this banking ‘non-crisis’?
The disadvantages of the gold standard are that it constrains national monetary policy and that the price of gold fluctuates if it is not kept stable by being the backing for the world’s major currencies with its value controlled by central banks working in concert. The better strategy is to accumulate gold in the national treasury and central bank but not use it formally as backing for your currency. And that is what Switzerland, the US, and other developed nations are mostly doing.
Switzerland, the country that claimed it was neutral in WWII, but made a lot of money by allowing Nazis to hide what they stole from Jews.
Switzerland sold its soul to the US Treasury and Brussels, starting in 2009.
I actually had a close friend working for Wegelin Bank, a private Swiss Bank formed in 1741, which did not report on its holdings for American or EU citizens to their governments - totally legal according to Swiss law.
But US Treasury charged them with “money laundering,” bankrupted them, and demanded the Swiss end 600 years of private banking, and threatened financial and legal sanctions against Switzerland. So they caved, became a financial outpost of the US Government, and UBS and Credit Suisse got to continue to play on Wall Street.
Now its just UBS....
This statement makes no sense. The ADVANTAGE of a gold is that is constrains national monetary policy. Fascist/Marxist politicians want to be able to print money to infinity to fund their social/political engineering schemes. Its exactly what is happening in the USA now. If a currency is tied to gold (which none are now) which has limited in its supply, then gold price will simply reflect an insane political monetary policy.
If the USA had a gold standard, woke-leftist-progressivism and their 1000 social-engineering schemes would simply NOT exist.
The Brazilian dilemma in the 1980s, Crisis de la deuda latinoamericana. Banks worked together to loan Brazil money, when Brazil could not make payments the banks realized that this default would be a bank killer! The banks refinanced the debt to bail out Brazil. Now Swiss banks are pulling the reverse. We die, you die threatening Switzerland.
If the USA kept on a gold standard, Fr Knox would be even emptier than it is.
https://www.moneyandbanking.com/commentary/2016/12/14/why-a-gold-standard-is-a-very-bad-idea
There is no doubting that getting away from the gold standard has lessened the frequency and severity of recessions and it’s basic Econ 101 that eventually all your gold will be taken away. Fiat currency isn’t perfect, but material backing is far worse.
No, its made them worse. 1980s, Asian financial crisis, 2008 GFC - and what's coming in 2023 and 2024
And also - who's going to take away all your gold? Its economics 101 that if you "lose" your gold, you will have to devalue your currency to get it back.
Much of the cause of the Depression was that the US and France prompted worldwide deflation by buying up gold, growing their stocks of gold bullion, but not adding it to their monetary base by issuing equivalent additional currency. This policy of gold accumulation caused a relative decrease in the world's supply of gold as the monetary base. This depressed the general price level, thereby making debts more costly in real terms and impossible to service for many borrowers.
That is why the US went off the gold standard as part of ending the Depression. Sadly, Hoover and FDR also did much that aggravated the Depression. They let the banks fail, did not expand the money supply to remedy its previous decline, and adopted regulations that disrupted and burdened economic production.
Another defect of the gold standard is that it can empower dangerous countries like Russia and China that are major gold producers. Gold mining and refinement are also environmentally damaging operations, and a wave of new gold production could prompt inflation.
Countries can also engage in economic warfare by accumulating or selling gold so as to manipulate its price. Consequently, a gold standard requires that the world's central banks collaborate so as to maintain gold price stability. As explained, failure to do so helped trigger the Depression -- which was last century's great spur to war and Leftism.
I recommend you read the article I cited.
“Finally, consider a crude measure of financial stability: the frequency of banking crises. From 1880 to 1933, there were at least 5 full-fledged banking panics: 1893, 1907, 1930, 1931, and 1933. Including the savings and loan crisis of the 1980s, in the past half century, there have been two.”
In here: https://content.time.com/time/subscriber/article/0,33009,840572,00.html
This shows you the lead-up that led to either losing the backing or the gold itself.
Again, you cite its main advantage as a fault. What is wrong with deflation? The USA had general deflation for 50 years from the civil war until the Federal Reserve was created. It was an incredible time of growth in the USA, with stable prices and the highest rise in real wages ever. Inflation is THEFT by whomever controls the money supply of your wages and your savings.
There is, in practical terms, NO difference between a criminal counterfeiting US dollar bills in his basement, and the Federal Reserve and US government monetizing massive debt to allow Fed.gov spending. It all debases the currency and your purchasing power.
The upshot of your argument is that "central planners" need control over money supply, to reach "economic goals."
Funny how we reject Soviet-style central planning over most commodities, but never question it for our money supply.
“During the early post war years, a great deal of money from dormant accounts was initially transferred to so-called collective accounts. The same applied to individual safe-deposit boxes.
Then came the day when these assets disappeared into the bank’s “undisclosed reserves”.
A bank has three different balance sheets. The first is the published balance sheet accessible to shareholders. Discussed at the annual general meeting and released to the press, this is the bank’s public report and account. Then there is the balance sheet drawn up for the fiscal authorities. “Undisclosed reserves” are contingency funds set aside to cover losses and bad debts that might, if worst came to worst, endanger the bank’s survival. The third and only “true” balance sheet is known only to the board of directors – in the case of some large banks, to the chairman and his inner circle alone. It is plausible to assume that dormant Holocaust assets worth millions of francs were buried in Swiss bank’s undisclosed reserves immediately after the war.
later
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