Thursday, January 15, 2015

Swiss gnomes blow a hole through their own economy’s head, creating a bloody object lesson that American conservatives will almost certainly ignore

Conservative economic theorist
at work
“A strong dollar is one of our greatest weapons against inflation. Anyone who doubts the value of a strong currency should look at the postwar performances of Japan, Switzerland and West Germany.”
-Ronald Reagan, economics genius of 
sainted memory, March 2, 1984

There’s got to be a secret Holy Place somewhere. You know, deep underground, in a steel vault, a shrine where the cult worshippers of Ayn Rand and Ronald Reagan go to wave their hands above their heads and speak in tongues.

I’m almost certain that, mingling in the crowed of worshippers with Tea Party congressmen and conservative presidential candidates, there is a clutch of grim-faced Swiss gnomes who fall into trances during which they see heavenly visions of gold bars and tight money.

Intoxicating vapors

This week, no doubt high on the fumes given off by a moldering copy of Ayn Rand’s Atlas Shrugged, the Swiss set the Swiss Franc  free from its limits in relation to the weakening Euro.  Why?

Chris Bailey’s Tumblr suggests, “ What they are worrying about in reality is that as the European authorities appear to have little option but to push the euro down further. Do the Swiss really want to follow the euro down and down and down progressively cutting their international purchasing power? Not at all.”

That’s the reasoning. It was about as strategic and insightful as your run-of-the-mill winner of the Darwin Awards, given to “individuals who protect our gene pool by making the ultimate sacrifice of their own lives.” They do this through their "astoundingly stupid judgment."

Who qualifies for
a Darwin Award?

One example of a potential Darwin Award winner might be this guy, who blew his own brains out while while trying to demonstrate gun safety to his girlfriend by putting a gun to his head and pulling the trigger. 

If they ever create a Darwin Award for the suicidal economic consequences of a financial decision, I would plead with the nominating committee to move the Swiss to the head of the list. The fallout from their economic decision came as quickly as a bullet out of the muzzle of a Mauser.
LONDON (Reuters) - Frantic foreign exchange trading after the Swiss National Bank scrapped its euro cap on the franc took $100 billion(65.52 billion pounds) off the value of Switzerland's blue-chips on Thursday, putting them on track for their biggest one-day fall in at least 25 years. 
The Swiss SMI index (.SSMI) slumped 10 percent, with stocks including Swatch (UHR.VX), luxury-goods firm Richemont (CFR.VX) and cement-maker Holcim (HOLN.VX) down between 11 and 15 percent in what some traders described as "carnage" 
Swatch Chief Executive Nick Hayek called the SNB's decision "a tsunami" for Switzerland's economy.
Hey, to paraphrase the late Senator Everett Dirksen, lose a hundred billion bucks here and another hundred billion bucks there and pretty soon you’re talking real money.

So now the much richer Swiss can afford anything they want from abroad with the savings they have in the bank, but it’ll be harder and harder to earn a dime's worth of Francs, as the price of their goods soar out of control on international markets. Which is actually going to make them a lot poorer.

Uh, Tea Party folks? 



Patricia said...

Stupid is as stupid does, Jennay!

Cirze said...

Great catch!

But I didn't know you were writing an international economics blog.

Now I do.

Love ya!