But first, two observations: 1) Obama supporters must be completely horrified by the number of blatant lies that spewed forth from Obama’s lips as he read his teleprompter to us. It was better than the usual bedtime fairytales we get from him….2) I am dead-right about the housing market: LINK. Of course, Zerohedge is finally catching up to me on high-end housing. But I’ve said all along that the collapse of the housing bubble encore would start at the high end…
From the moment I saw the news about the Swiss cutting its currency loose from its tie to the euro, I was interested in the fact that the SNB apparently acted without telling other Central Banks or the usual cast of Too Big To Fail “insider” banks. If they had, we likely would not have seen a 30% move, as the information would have found some leaks and the swissy would have partially priced in the event by moving somewhat higher ahead of the fact.
I thus had suspected a motive that would later become apparent. A lot of analysts opined that the move was made ahead of a large QE announcement from the ECB. While that aspect was no doubt a component of the decision, this news hit the tape this morning:
China, Switzerland to announce offshore yuan trading center in Zurich –
As China takes it currency global, Zurich is set to become a center for yuan trading in Europe with Chinese and Swiss officials poised to sign a financial deal on Wednesday.
“A memorandum of understanding will be signed between the central banks of the two countries during Chinese Premier Li Keqiang’s visit to Switzerland. It is an important step in the internationalization of the RMB, especially in Europe,” a government official was quoted by Chinese news agency Xinhua.
Switzerland is basing its push for the offshore yuan business on the country’s close ties with China, one of the nation’s biggest trading partner. Switzerland is the first country among the world’s top 20 to have a free trade agreement with China…LINK
It’s not just a mere coincidence that the SNB de-pegs the swissy last Thursday and this yuan currency trading deal is announced 6 days later. The timing is not an accident.
I believe China agreed to set up a European yuan trading center in Zurich on the condition that the SNB sever the swissy’s connection to the euro. I also think it’s another way for China to indirectly lob a bomb at the U.S. dollar in the ongoing currency war.