CH--DAY 2

Citigroup lost $150 million.  Ditto DeutschBank.  There's blood all over the place but so far only one or two real horror tales where a firm might go under.  Citigroup can well absorb the number as the market seemed to recognize, the stock price barely moving.  If they got aggressive early on they could have probably made it all back in the morning but I guess aggressive trading for one's book is a no-no these days.  Probably might take them now two or three days to get square.  But not for everybody else.  The repercussions from this are just beginning to be felt.

Remarkably, everyone is mad at the Suissies.  "They said they would support the peg," wailed one clown on the telly this morning who was clearly long and very wrong the Euro.  Of course it didn't bother him to be trading when the SNB had his back(side).  Take your losses, shut up and carry on.  Ain't nothin' guaranteed these days.

Well, except for QE coming to the Eurozone near you it appears.  Not a soul today so much as whispered the thought that Mario would not move on the 22nd; the only issue left outstanding was how much.  It better be big said everyone or else we are in real trouble as though that's not what we are in right now.  Super Mario is facing the Super Liquidity Trap of a lifetime.  Whatever number he comes up with comes right Over Here into Treasuries or stays Over There in Bunds and whatever the Dutch have these days, or into Gold.  One place it does NOT go is into a liquidity pool to stimulate economic growth in Europe...no   matter   how   the   plan   is   structured.  But the poor bugger has to do it because the whole world expects it of him.  I'm tellin' ya, "Sr, Il Presidente"  is sounding better and better.

One overlooked aspect to this whole mess is where does Switzerland come out in all of this?  I can remember many years ago in London getting the FT on one particular day of the week--I forget witch--to read the unemployment numbers.  Switzerland would report on a regular basis unemployment of 345...or...293...or...401...or, as it happened one day...2.  We haven't  seen that for a while and we will not be seeing that anytime soon.  The Swiss have just made themselves uncompetitive and the result of that little fact is going to be interesting to watch.  The again, as the Swiss Miss who used to work for me despite being twice as smart put it today, "Who needs exports anyhow."  If you manage gazillions of international funds as does she, I guess you CAN put it that way, and when you look at it rightly, that's what Switzerland does. It's not really a country, it's a state of mind.  She also pointed out that under some agreement signed when the Pope was a Protestant, certain cantonals got a cut in the profits of the SNB and since the peg, there have been damn few of those.  Ah, Federalism!  In the end, because the town of Underskiliften came up a bit short of the ready at the start of the year and jumped up ugly, the entire international financial world takes one right between the horns.  It's truer than ever before.  You can't make this stuff up.

Holiday Over Here on Monday.  It will be all about Somewhere Else.

CH

That's the symbol for the Swiss Franc.  That's all one saw today.  Out of the blue the central bank removed the peg set to the Euro which had bee set at !.20 to the Euro.  The latter traded down 33% in a moment.  Oddly I was up early and when I turned on the tube all I could think of was the day Nixon took us off the gold standard.  It was chaos then; I can't imagine what it was like this morning.  Usually the rumors start immediately as to up is on the wrong side of the trade (there will be a few) but today has been relatively silent which is good.

This action puts us into an entirely different world, adding currency markets (which are the largest by the by) to the list of great unknowns, catastrophes, and disasters facing the world today.  I caught one guy on the tube saying with a shocked expression; "The Swiss just acted in their own interest without a thought!"  Well, DUH!  What the hell do you expect them to do, keep buy junk as they had for 3 years? How much has that cost them?  The other thing is the Swiss don't really like anybody; oh, they will do business with whatever comes along but buddy, buddy like?  Nah.  The Russians are about the only ones who like the Swiss.  The Swiss treat them like crap, only slightly worse than anyone else, but waaaay better than anyone else treats them.  So they go there; great digs, wonderful food, beautiful scenery, gorgeous women from all over and not a word spoken as to where they got their money which of course is why they they keep it there.  And on a day like this when the Swiss do the Swiss thing their money, openly stolen and even more carefully hided grows like Topsy if their attitude was, "bugger the return I just want it safe and quiet."  And it was.  Happy New Year Oligarchs!  It was a great day.

Of course for the rest of us, especially the Euros, it wasn't so great.  The almost complete interpretation of the the future of the events of today is that this forces the hand of Mario Draghi and on January 22, "whatever it Takes" has to be put on the table and convincingly argued that it is enough.  It will not be of course as Quantative Easing in the fix in which Europe finds itself will not do a thing.  Didn't Over Here; didn't in Japan, didn't in the U.K.  Poor Mario is in such a box that he may actually run for the President of Italy now that Napolitano has quit...a job that was probably thought up on the second rung of hell some years back.  As for the Germans?  They always liked the Swiss.  A lot of them even claimed they were Swiss in '46, but of course that has passed.  They'll just keep exporting their little hearts out now with a way weaker currency...of course there are a lot few buyers out there, but they'll find a way.  Deutschland uber alles...and the allies just get madder and madder.

More tomorrow.