The Coming Mortgage Panic Set-Off By Swiss
During the 1980s, Australians were hit hard as banks had sold them mortgages in Swiss francs to save them on interest rates. The next shoe to fall is the Swiss Franc Mortgage Panic that will be part of 2015.75. Countless homeowners outside of Switzerland have been sold mortgages in Swiss francs. They will now see their monthly repayments skyrocket by 30% thanks to the Swiss abandoning the peg.
Switzerland cut interest rates to -0.75pc this morning, sending the franc soaring against the Euro as well as the dollar and British pound. We will see this hit again with the as the dollar rises further for the greater amount of outstanding loans globally are in dollars.
The other-side of 2015.75 is starting to look unfortunately as Socrates has been warning since 1985. This Big Bang will be the noise heard around the world. Those with mortgages in a currency other than the domicile which appreciates, beware.
Gold – The January Pop – On Schedule?
Back in December, we warned that gold would produce a pop and that the main resistance was in the 1250-1275 level. We now need a closing ABOVE 1250.50 tomorrow to confirm a further advance is possible. This is part of the interconnections. This forecast for a pop in gold into January was not “opinion”and it most definitely was not based upon any fundamental. Gold was basing even when the dollar was rising because the capital flows were sensing major problems in Euroland. I have warned that gold is NOT A HEDGE against inflation, it is a HEDGE AGAINST GOVERNMENT and that is what we are watching – the European hedge at the moment against the collapse of the Euro. In this context, gold and the dollar can rise together. Gold is not only a dollar influenced commodity.
Hopefully, people will start to notice that it is futile to argue against me when this is not my personal opinion. It is irrelevant as to what anything “thinks” v another or to pound one’s chest that they are right and everyone else is wrong. This is about reaching a new understanding that we ALL NEED EACH OTHER and the free movement of capital is essential to world economic growth and sustainability.
Raising taxes reduces disposable income and that can ONLY reduce economic growth. France with its insane 75% tax rate sent hoards of French to move to London abandoning their homes in Paris renting them out really cheap because they could not sell them. This is PRECISELY the deflationary aspect created by taxes and this is how Rome collapsed.
Theories about money supply have misled countless people and most of the manner in which analysis is conducted on a domestic level, prevents us from advancing economically from here. Politicians run promising to change whatever domestically, which may not even be possible given the global trend.
We have so much to learn and it seems there is no incentive to make that small step forward to save ourselves and our posterity from the same repetitive nonsense that clouds our future. We remain blind, deaf, and politically-muzzled with little hope of making life better. Political-correctness in analysis is killing us. It certainly is reducing our ability to survive what awaits us ahead.
Swiss Peg Collapses – The Euro’s Nightmare
On September 6th, 2011 the Swiss National Bank (SNB) was aiming for a substantial and sustained weakening of the Swiss franc after Swiss companies threatened to leave because the rising franc reduced their exports. The SNB would no longer tolerate a EUR/CHF exchange rate below the minimum rate of CHF 1.20. The SNB set out to enforce this minimum rate with the utmost determination and it began to buy Euros in unlimited quantities.
In 2012, I met with a member of that board to manage the peg – an academic. I explained it was a dangerous path for they would end up buying Euros at the high and ultimately sell it at the low when the free markets would break the peg.
Socrates has been warning about January for the last year. Here is the forecast array on a daily level and it pinpointed the rise in in volatility for today the 15th with a Panic Cycle and turning point due as well as we can see.
When we look at the Weekly, this was the week with the start of the Directional Change. Volatility and confusion will now prevail and the final low for the Euro against the Swiss is not yet in place. It looks like we have another two weeks.
What this proves is that FUNDAMENTAL analysis is really bogus because it boils down to opinion and nothing else. Everything is CONNECTED. How could the the computer project these targets and that the peg would fail? It is only monitoring capital flows. The abandonment of the peg is more than just a vote against the Euro. It is more than just the departure of the Greeks as a member.
The Swiss are bailing out of the peg because the European Central Bank (ECB) will more-likely-than-not begin buying sovereign debt of its member states. We are recommending to clients to off-load EVERYTHING you possible can to the ECB and say thank you very much. Our models are warning this is the culmination of the bond bubble and it is the ECB who is buying the top.
Germany offered Greece 100 year debt just to stay in the Euro. Greece should exit now while they can and DEFAULT on the debt owed. The system is so corrupt you would not believe what will happen here. Banks use member debt as RESERVES. Because this is government debt, it is considered “safe” and is not marked-to-market. As long as a member still pays something, then their debt is still reserve quality. If they default, then the banks are forced to show the loss.
The ECB will buy sovereign debt and the banks should be selling their Greek debt to the ECB before they default. Once a default takes place, there goes the European banking system. Now you can see WHY the Swiss had no choice but to exit the peg. They were buying Euros to support the peg and losing a fortune.
Our computer is warning this is not the end of the game, it is the beginning. Socrates has been monitoring the interconnections that are complex. No individual can possibly keep track of the ramifications from so many angles.
Swiss Abandon Peg to Euro – The Euro is Dead – Long Live the Swissy
The Swiss franc has risen by almost 30pc against the euro after the central bank shocked global markets by abandoning its long-standing peg to the euro imposed in 2011. The Swiss had no choice. They have been buying Euro at alarming amounts as smart money bet the Swiss would be far better at the end of the day than a Euro. As long as the Swiss was pegged to the Euro, the Swiss central bank was locked into swapping Swiss for Euros all the way down. They were buying Euro as it collapsed losing a fortune.
Yes at the Berlin Conference we forecast that (1) Greece would leave (2) Swiss would abandon the peg, and (3) the separatist movements in Europe will gain momentum by 2016.
The Swiss National Bank’s (SNB) move to scrap the exchange rate control was inevitable. Swiss stock markets plunged by more than 10pc after the announcement, while the euro-franc currency market descended into disarray. But once again, we do not need to be POLITICALLY CORRECT. I stated bluntly – no peg has EVER be able to withstand the pressure of reality. This was the outcome of the Asian Currency Crisis with their attempts at pegs, and let is not forget the collapse of Bretton Woods, which was a peg of the dollar to gold at $35 and then everyone pegged their currencies to the dollar.
PEG historically always fail. They are reflections of politicians simply trying to manipulate markets for political purposes. Free speech in economic analysis is mandatory. They killed Kondratief for that and even in 2007, some nations like Latvia jailed economists for saying there would be a recession.
It is interesting to say the least that free speech and economics do not always exist. There is the academic pressure to ban anyone who disagrees with mainstream. Then there is the press who will never report our forecasts for political reasons, then there are the major brokerage houses and banks who cannot retain their licenses if the contradict the government. So much for FREEDOM.
European Leaders Mourn Death of the Euro?
One of our readers made this photo to reflect another aspect of reality. The lack of political free speech in the European financial community led to analysts creating a code word for Greece leaving the Eurozone – GREXIT. They we forbidden to write about or even mention the possibility of anyone leaving the Euro, so they created a term to hide the subject. This was a common practice in the industry. When they could not complain about the Jewish bankers, they referred to them as the “Sweeds” (no offense meant to either).
The press now is out in force claiming Greece should stay in the Eurozone and if Greece leaves, this will not impact the Euro. All one needs do is look at the market performance to see this is just political propaganda desperate to save bureaucratic jobs in Brussels. Both the Euro has collapsed and the austerity program stripped-mined Greece. The unemployment has soared and Greek youth were forced to leave their own country just to find work. The Eurozone has been a total disaster and the first to leave will do the best.
Of course Greece should leave. Trade is a tiny fraction and the whole idea of the Euro pledging a nations assets to Brussels for loans in a depreciating currency that was the most BRAIN-DEAD design ever created is just insane. Greece should hop-skip-and-jump our of the Euro and sing “Free At Last”. They should leave their debts behind and say they no longer recognize Euro debt and it is yours. Get out of this disaster while you can and run as fast as you can.
Ministers from Brussels are also lying to the press and the public. They are desperately trying to claim that if Greece leaves, it will suffer and the Euro will remain unharmed. The markets are showing it is the other-way around. Just looking at a chart illustrates the lies.
Keep in mind that we may be the ONLY serious forecasting firm to be correct on the dollar, Euro, and global trend because we do not have to be POLITICALLY CORRECT. There are other analysts with whom I have spoken who are asking if they can join our firm because they are so tired of not being free to tell the truth.
Politicians can lie all the time. They can fool the majority and they can control mainstream media to ensure there is no opposite opinion. But they cannot lie to the markets.