Swiss Franc Not Connected (Pegged) to the EU - 1/15/15

[JohnyMac]

I am surprised that I have heard no chatter concerning the Swiss Franc will not be part of the € as of January 15, 2015. WOW, this is the shot heard around the world but is not talked about on American media. Have any of you heard this?

 Here is an article outlining this action.

Here is another one.

In short, Greece is planing on pulling out of the EU too. Once this happens the little Dutch Boy will not have enough fingers to plug the flood of  €'s coming through the dike. Germany, Belgium, Italy, etcetera, etcetera...

Now couple this news and action with Russia refusing to trade in petrodollars anymore; will the other BRIC countries follow suit. Remember, Russia dumped $118B in US Treasury Bonds back in March 2014. Now they are dumping another $70B. They are working towards having no US dollars in their treasury. WHY?

I am not an economist however there seems to be a lot of low Richter scale type of rumbles happening in the world of finance. Will these 2.5 or 3.5 jolts turn into a massive 7, 8 or 9 earthquake around the world?

Just be a where and keep your ears to the rail road tracks. 

[Nemo]

Get an extra can of beans when you go grocery this week. (an extra to the extra you get every week)

Nemo

[DMCakhunter]

JM,
Yes, there have several articles on CNBC.
The Swiss removed their floor to the Euro because trying to maintain the peg was costing them a lot of money, which would only get worse when the EU started their own QE program.
Germany won't leave the Euro because it artificially keeps costs / expenses low. If Germany had their own currency, it would be valued much higher. So high that they could not compete in global trade.
Greece, here is a perfect example of a country living beyond its means until it ran out of other peoples money. They should leave the Euro,  return to the drachma or something new, then devalue it and climb out of their hole. To be successful, they will have the completely change their mentality on business, employment and welfare.

[JohnyMac]

Great analysis DMC!

Now that ECB is going to QE, I suspect this is a last ditch effort to save the EU from going into a Recession at the end of Q1.

[DMCakhunter]

It would seem to be. European currency wars, will have to see if the other non-euro countries sit idle and let their currencies appreciate or if they join them in the race to be competitive.
Will see what the Greek elections bring on Sunday, either the same old thing or they tell the EU bankers to piss off.
Depending on how far the EU goes down the devaluation path, the more the US dollar appreciates, the less competitive we are on exports. Then the layoffs will begin, eventually setting us up for another round of QE, if we can afford it.

[Nemo]

Don't worry, QE will get it going right away.  After all the US did it and are still doing it.  obummer knows best, he is with the government.

Several charts there you need to see so I only brought over part of it.

Nemo


http://www.bloombergview.com/quicktake/europes-qe-quandary

Europe’s QE Quandary
Why the ECB is Finally Buying Bonds
By Jana Randow | Updated Jan 22, 2015


It’s the new conventional wisdom: When all else fails to make economies grow, create new money and buy government bonds. That’s the formula dubbed quantitative easing, or QE. Most economists think it helped keep the U.S. and the other countries that used it – Japan and the U.K. – from tumbling into a catastrophic depression. Could it work in Europe, too? It’s difficult for the 19-nation euro area to do the same thing, partly because of different interpretations of European Union rules, and partly because of concern it could undermine efforts to push governments to do more to revive their economies. But now that the European Central Bank has exhausted most other options, it’s  pressing ahead with full-blown QE.

The Situation

Six years after the Federal Reserve began QE in the U.S., Europe’s fragile recovery is lagging the rest of the world and a drop in prices is threatening to make things worse. ECB President Mario Draghi overcame opposition on the central bank’s Governing Council on Jan. 22 and unveiled a plan to buy government bonds as part of an asset-purchase program worth about 1.1 trillion euros ($1.3 trillion). The prospect for stimulus sent the euro tumbling earlier in the month to its lowest level against the dollar in a decade. In October, the central bank began buying covered bonds — a type of debt secured by a pool of loans, such as mortgages — and added asset-backed securities in November. Despite the controversy, asset purchases aren’t new to the ECB. It bought sovereign debt from countries like Greece, Spain and Italy in 2010-2012, and covered bonds in 2009-2012. In June, it became the first major central bank to take one of its main interest rates below zero. The ECB is still providing cheap funding to any bank that needs it in its regular operations — a sort of temporary, on-demand version of QE.