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# It was expected I think it was expected from the outset that this would be a temporary peg/floor. There has been recent hints on this. # It's not a war Als

# It was expected I think it was expected from the outset that this would be a temporary peg/floor. There has been recent hints on this. # It's not a war Also, this isn't a 'currency war' in anyway. If there is any adjustment that other countries typically dislike it's devaluations, since that'll make their currency relatively more expensive, causing a short-term disadvantage for exporters [whom often line politicians pockets]. This was the opposite, a revaluation (or correction). Inconsistently people called this a 'currency war' when the floor was introduced too[1]. # Losses Sure, a few companies were bankrupted because of risky speculation, that happens all the time. It was foolish to believe that this floor would exist indefinitely, and thus any position making that assumption would obviously be very risky. Interestingly people lost money[2] when the floor was introduced only 3 years ago. Sometimes memory is short. [1] http://citywire.co.uk/money/have-swiss-won-currency-war-with-shock-and-awe-franc-move/a521772 http://citywire.co.uk/money/have-swiss-won-currency-war-with... [2] http://www.dailymail.co.uk/news/article-2037632/Kweku-Adoboli-Swiss-bank-UBS-unaware-blew-whistle-HIMSELF.html http://www.dailymail.co.uk/news/article-2037632/Kweku-Adobol...

Fizzgig 12y ago
Sorry to disagree, but: #It's not a war Yes, yes it is. Has been since the 70's. Anyone who tells you that currency markets aren't a function of State Power doesn't know what CB's do[1][2]. [The public side to this story is that the IMF wasn't informed prior to the move - work out why]. #Losses Heavily leveraged FOREX companies (aka day babies) were taken to the cleaners, and some banks / funds who had positions lost out. Look at the # of positions that were closed out for the real story. #Russia It's interesting to note who holds what in Swiss Banks, and in CHF. Just a thought[3][4] #HappyCamperFunTimes Rumor has it that HFTs are going to be heavily ganked very soon, to the tune of 60% through-flow. You didn't hear that here. [1]http://www.telegraph.co.uk/finance/2773265/Billionaire-who-broke-the-Bank-of-England.html http://www.telegraph.co.uk/finance/2773265/Billionaire-who-b... [2]http://www.cfr.org/about/membership/roster.html?letter=S http://www.cfr.org/about/membership/roster.html?letter=S [3]http://www.theguardian.com/world/2010/dec/08/wikileaks-us-russia-visa-mastercard http://www.theguardian.com/world/2010/dec/08/wikileaks-us-ru... [4]http://itar-tass.com/en/economy/769344 http://itar-tass.com/en/economy/769344
- beagle3 12y ago
  > Rumor has it that HFTs are going to be heavily ganked very soon, to the tune of 60% through-flow Ganked in the "stolen" sense, or in the "outnumbered" sense? Neither makes sense to me. I'm not hearing this here, but .. can you elaborate?
  - Fizzgig 12y ago
    Ganked - as in MMO style: a) With Legal rules made against a majority of HFT processes (edited - pathways is probably a weird weft for HN) b) With aggressive >contra algos employed to prevent certain HFT processes working c) With bandwidth / latency stingrays employed It's happening as we speak: a lot of players high up in the game are tired of HFTs. Note: this is all rumor, and plausible deniability has been engaged. You didn't hear it here, but it's gonna happen.
    - Fizzgig 12y ago
      Again, the downvotes. Ganked means "[i]killed without any ability to stop being killed[/i]" Aggressive control of HFT in the market is already on the books. Will it save the markets in the next phase? Nope, but it's on the books. Hilarious that no-one here is connected enough to know this. Be Seeing You.
      - jeffreyrogers 12y ago
        Thanks for posting this. It's interesting info. Sorry you're getting downvoted. I'm not really sure why that is.
      - Estragon 12y ago
        > control of HFT in the market is already on the books What are the relevant regulations?
        mahyarm 12y ago
        Well for example, there is a proposed transaction tax by some politician in the USA, targeting HFT processes. It wouldn't be painful for joe buying his mutual fund EFTs every month, but it will be for HFTs.
cynicalkane 12y ago
My impression is that economists generally thought the Swiss central bank would keep the peg, because why wouldn't they? There's no economic law stopping them and it was obviously good for the Swiss economy. The fear of central banks with large balance sheets is a powerful political force, one that economists don't really appreciate. The rational thing would be to keep the peg (or even better, target inflation or NGDP) but an unfortunate majority of politicians and voters are fearful of "printing money". Just as central banks around the world keep making the mistake of allowing falls in the inflation rate during a recession, economists keep making the mistake of assuming the next central bank will listen to them.
- Fizzgig 12y ago
  That's insane. No-one, and I mean [b]no-one[/b] thought the Peg would be kept. The issue was how it was broken, nothing more. http://www.ft.com/cms/s/8084cc9a-9cc5-11e4-971b-00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F8084cc9a-9cc5-11e4-971b-00144feabdc0.html%3Fsiteedition%3Duk&siteedition=uk&_i_referer= http://www.ft.com/cms/s/8084cc9a-9cc5-11e4-971b-00144feabdc0... http://www.telegraph.co.uk/finance/economics/11353686/QE-or-not-QE-That-is-the-question-facing-ECB-chief-Mario-Draghi.html http://www.telegraph.co.uk/finance/economics/11353686/QE-or-... http://www.telegraph.co.uk/finance/economics/11321355/Mario-Draghis-QE-hints-send-the-euro-to-a-four-year-low.html http://www.telegraph.co.uk/finance/economics/11321355/Mario-...
- fla 12y ago
  Keeping the peg means buying more and more euros. It's not sustainable.
  - Fizzgig 12y ago
    Exactly. Europe announcing QE on the scale of the US markets lead directly the CHF moves. My comment below that showed the media reporting of this is now "down-voted". >>Out. Funny. HN - the new Reddit.
  - tormeh 12y ago
    It was. The Swiss central bank just had to print francs to sell for euros. It wasn't like the rest of the world didn't want those francs. Remember that this floor was about keeping the franc down.
joshdick 12y ago
Clearly markets weren't expecting the change, or else they wouldn't've been so volatile after the announcement.
- dagw 12y ago
  They were expecting it long run, they just weren't expecting it that day. If you'd asked people last week if the peg would still be in place 10 years from now, most people in the market would have said "no". If you'd asked them if would still be in place 10 days from now, most would have said "yes".

Fizzgig 12y ago

Sorry to disagree, but: #It's not a war Yes, yes it is. Has been since the 70's. Anyone who tells you that currency markets aren't a function of State Power doesn't know what CB's do[1][2]. [The public side to this story is that the IMF wasn't informed prior to the move - work out why]. #Losses Heavily leveraged FOREX companies (aka day babies) were taken to the cleaners, and some banks / funds who had positions lost out. Look at the # of positions that were closed out for the real story. #Russia It's interesting to note who holds what in Swiss Banks, and in CHF. Just a thought[3][4] #HappyCamperFunTimes Rumor has it that HFTs are going to be heavily ganked very soon, to the tune of 60% through-flow. You didn't hear that here. [1]http://www.telegraph.co.uk/finance/2773265/Billionaire-who-broke-the-Bank-of-England.html http://www.telegraph.co.uk/finance/2773265/Billionaire-who-b... [2]http://www.cfr.org/about/membership/roster.html?letter=S http://www.cfr.org/about/membership/roster.html?letter=S [3]http://www.theguardian.com/world/2010/dec/08/wikileaks-us-russia-visa-mastercard http://www.theguardian.com/world/2010/dec/08/wikileaks-us-ru... [4]http://itar-tass.com/en/economy/769344 http://itar-tass.com/en/economy/769344

beagle3 12y ago
> Rumor has it that HFTs are going to be heavily ganked very soon, to the tune of 60% through-flow Ganked in the "stolen" sense, or in the "outnumbered" sense? Neither makes sense to me. I'm not hearing this here, but .. can you elaborate?
- Fizzgig 12y ago
  Ganked - as in MMO style: a) With Legal rules made against a majority of HFT processes (edited - pathways is probably a weird weft for HN) b) With aggressive >contra algos employed to prevent certain HFT processes working c) With bandwidth / latency stingrays employed It's happening as we speak: a lot of players high up in the game are tired of HFTs. Note: this is all rumor, and plausible deniability has been engaged. You didn't hear it here, but it's gonna happen.
  - Fizzgig 12y ago
    Again, the downvotes. Ganked means "[i]killed without any ability to stop being killed[/i]" Aggressive control of HFT in the market is already on the books. Will it save the markets in the next phase? Nope, but it's on the books. Hilarious that no-one here is connected enough to know this. Be Seeing You.
    - jeffreyrogers 12y ago
      Thanks for posting this. It's interesting info. Sorry you're getting downvoted. I'm not really sure why that is.
    - Estragon 12y ago
      > control of HFT in the market is already on the books What are the relevant regulations?
      - mahyarm 12y ago
        Well for example, there is a proposed transaction tax by some politician in the USA, targeting HFT processes. It wouldn't be painful for joe buying his mutual fund EFTs every month, but it will be for HFTs.

cynicalkane 12y ago

My impression is that economists generally thought the Swiss central bank would keep the peg, because why wouldn't they? There's no economic law stopping them and it was obviously good for the Swiss economy. The fear of central banks with large balance sheets is a powerful political force, one that economists don't really appreciate. The rational thing would be to keep the peg (or even better, target inflation or NGDP) but an unfortunate majority of politicians and voters are fearful of "printing money". Just as central banks around the world keep making the mistake of allowing falls in the inflation rate during a recession, economists keep making the mistake of assuming the next central bank will listen to them.

Fizzgig 12y ago
That's insane. No-one, and I mean [b]no-one[/b] thought the Peg would be kept. The issue was how it was broken, nothing more. http://www.ft.com/cms/s/8084cc9a-9cc5-11e4-971b-00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F8084cc9a-9cc5-11e4-971b-00144feabdc0.html%3Fsiteedition%3Duk&siteedition=uk&_i_referer= http://www.ft.com/cms/s/8084cc9a-9cc5-11e4-971b-00144feabdc0... http://www.telegraph.co.uk/finance/economics/11353686/QE-or-not-QE-That-is-the-question-facing-ECB-chief-Mario-Draghi.html http://www.telegraph.co.uk/finance/economics/11353686/QE-or-... http://www.telegraph.co.uk/finance/economics/11321355/Mario-Draghis-QE-hints-send-the-euro-to-a-four-year-low.html http://www.telegraph.co.uk/finance/economics/11321355/Mario-...
fla 12y ago
Keeping the peg means buying more and more euros. It's not sustainable.
- Fizzgig 12y ago
  Exactly. Europe announcing QE on the scale of the US markets lead directly the CHF moves. My comment below that showed the media reporting of this is now "down-voted". >>Out. Funny. HN - the new Reddit.
- tormeh 12y ago
  It was. The Swiss central bank just had to print francs to sell for euros. It wasn't like the rest of the world didn't want those francs. Remember that this floor was about keeping the franc down.

joshdick 12y ago

Clearly markets weren't expecting the change, or else they wouldn't've been so volatile after the announcement.

dagw 12y ago
They were expecting it long run, they just weren't expecting it that day. If you'd asked people last week if the peg would still be in place 10 years from now, most people in the market would have said "no". If you'd asked them if would still be in place 10 days from now, most would have said "yes".