It's Not Just 'Retail': Head Of European FX Sales Out After Citi Admits Massive Loss

All morning, mainstream media has been down-playing the insolvency of various retail-focused FX brokers using words like "contained" and even suggesting retail "moms-and-pops" should not be allowed to trade FX. Now, we get more news from a non-retail institution:

So should Citi be banned from FX trading too? It appears so. Citi's head of European FX sales is "said to leave" the company.

The Swiss just stuck a big fork into the fantasy economics that has been keeping the world economy afloat for the last 6 years.

A LOT of banks gambling with free money from the US taxpayer got caught. BILLIONS of dollars just went "POOF!".

They couldn't imagine that anyone would dare to do what the Swiss did yesterday. It would be harmful to the Good-ole-boy Network, especially in the week before Davos.

More bankster bailouts coming in 3, 2, 1...????

They couldn't imagine that anyone would dare to do what the Swiss did yesterday. It would be harmful to the Good-ole-boy Network, especially in the week before Davos.

You will know things are bad if the banksters buy Wagyu hamburgers rather than Wagyu steaks.

I would also be interested in knowing whether they was any funny trading right before the Swiss action. You could see who was considered a friend to the Swiss and who was just a billionaire chump to them.

The Swiss pegged their currency for the last several years to the Euro, at a set exchange rate.

To maintain that peg, they have had to buy euros, to keep the value of the franc from rising. With the EU about to announce a MASSIVE QE, it will devalue the Euro even more.

The Swiss decided to no longer play the game, because they would be forced to buy tons of Euros (by printing tons of francs) to maintain the Franc’s value.

A better explanation than mine:

a) SNB had to buy Euros by the billions every day, and the balance sheet was exploding. FX holdings, at almost 500bn at the end of 2014 might have reached 600bn or more (almost 100% of GDP). SNB is a listed bank with minority shareholders (like the German Theo Siegert, who holds 5.5%). So may be Swiss regulator was getting uneasy with leverage?

b) Foreign FX is not held at the SNB, but rather at an account at a foreign bank in name of the SNB. May be at the ECB itself. So the ECB probably knew exactly what was going on, and how many Euros the SNB was piling up. If the number was getting out of hand, ECB could have threatened to leak some info, inviting speculators to mount an attack on the SNB.

c) SNB had to hold the fort until after the gold referendum, since such a disaster would have undermined trust in the SNB and possibly have tilted a few towards voting “yes”.

d) After the opinion of the ECJ on bond buying it has become pretty clear the ECB will go all-in at its next meeting and begin buying Euro-zone bonds in earnest. The SNB was running already into difficulties finding AAA Euro-zone bonds to buy with a positive yield (to “recycle” all the Euros bought). The SNB was forced further and further out on the maturity ladder, increasing DV01 (the risk should interest rates start rising).

e) ECB made an offer to the SNB to take those Euro-zone bonds off the SNB’s balance sheet. In exchange, the SNB had to promise to stop buying Euros, effectively ending the peg. The ECB was never very fond of the SNB’s interventions, since the large buying of Euros probably left the Euro stronger than it otherwise could have been, thereby working against the ECB’s intentions. Letting the SNB know what is about to happen next week (and that the SNB would have been overwhelmed by Euro printing) left little choice. For the ECB killed two birds with one stone: it removed a large buyer of Euros, and it would give the ECB a large chunk of bonds they otherwise would have had to buy via the market.

f) The ECB told the SNB it couldn’t care less about a “Grexit” (exit of Greece from the Euro-zone). The SNB would have to expect massive further inflows into the CHF in such a case.

Kinks - Low Budget

Cheap is small and not too steep
But best of all cheap is cheap
Circumstance has forced my hand
To be a cut price person in a low budget land

Times are hard but we’ll all survive
I just got to learn to economize

I’m on a low budget
I’m on a low budget

I’m not cheap you understand
I’m just a cut price person in a low budget land
Excuse my shoes they don’t quite fit
They’re a special offer and they hurt me a bit
Even my trousers are giving me pain
They were reduced in a sale so I shouldn’t complain

They squeeze me so tight so I can’t take no more
They’re size 28 but I take 34

I’m on a low budget, what did you say?
Yeah, I’m on a low budget, I thought you said that
I’m on a low budget, I’m a cut price person in a low budget land

I’m shopping at Woolworth and low discount stores
I’m dropping my standards so that I can buy more
Low budget sure keeps me on my toes
I count every penny and I watch where it goes

We’re all on our uppers, we’re all going skint
I used to suck cigars but now I suck polo mints

I’m on a low budget, what did you say?
Yeah, I’m on a low budget, I thought you said that
I’m on a low budget, I’m a cut price person in a low budget land
I’m on a low budget, low budget, low budget

Art takes time, time is money
Money’s scarce and that ain’t funny
Millionaires are things of the past
We’re in a low budget ville where nothing can last

Money’s rare there’s none to be found
So don’t think that I’m tight if I don’t buy a round

I’m on a low budget, what did you say?
Yes, I’m on a low budget, I thought you said that
I’m on a low budget, I’m a cut price person in a low budget land
I’m on a low budget, say it again, low budget, one more time, low budget

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