Wednesday 7 September 2011

rettungsschirm or golden parachute

As the banking principalities and condominiums across Europe scramble to prevent a broad loss of faith and strengthen a united front when it comes to the membership or rich and poor participants, the Swiss have quietly made a significant change to their monetary policy and a concession of a measure of their independence.

Because of the relative weakness of the US dollar and uncertainty surrounding the euro, the Franc has become very attractive to investors, who are hording Franc and as a result pricing out of range for their competitors. For Switzerland, however, the Franc has become a victim of its own success and reputation, since this over-valuation is hurting exports, tourism and the day-to-day activities of residents. With the exchange rate obscenely favourable, the Swiss are crossing borders to do their grocery shopping and are reluctant to forego its worth at home. In order to dampen the rush to collect Francs, the Swiss have decided to peg the Franc to the euro, setting an upwards threshold for its price. This move might put the breaks on the stockpiling, and might also preserve some of its reputation as a safe and protected harbour amid all this turmoil. On the other front, complying with the demands of foreign tax authorities, though I suspect that this will be just temporary, has already besmirched Switzerland somewhat. Yoking one's success to the euro seems like a pretty smart and subtle move, with the recognition that no market is insular, but I do think it is significant that the Swiss would be willing to sacrifice a small part of their national aloofness--for the right cause.  To stop exclusively playing the host and become a player, a partisan in order to make economic conditions better for ordinary people shows that priorities are not muddled.
Meanwhile, both H and I, have been continuing to save our pennies, although I have ritualized the long-standing process with a monthly trip to the bank with my Sparschwein and savings' book. Piggy banks are dogged and always solvent, and I like to think that these small contributions of money-at-rest can help shore up the union. As for Switzerland and the EU, I am sure that there are enough talent and resources and treasure discovered and undiscovered to withstand a crisis of confidence.