from The Wealth Watchman:
The “Body Count” is Piling Up
My friends, it hasn’t even been a week since the Swiss National Bank(SNB) dropped their monetary nuke on Europe, and already, we’ve seen multiple casualties across the board. Of course, the first ones we heard of, were the smallest and most obvious: the large banks and FX brokerages, who were almost all short the Swiss Franc.
A short list of just a few of those FX players(that we know of) are:
Interactive Brokers- Loss: $120 million
Alpari UK- Loss: $225 million
Barclays- Loss: “tens of millions” of dollars
Citigroup Inc.- Loss: $150 to 200 million
Deutsche Bank AG- Loss: $150 million
FXCM Inc.- Loss: (at least $300 million: the size of the bailout they received)
Comac Capital LLP- Loss:(unknown but severe)
Discover Capital Management LLC- Loss:(unknown but severe)
Credit Suisse Group AG- Loss:(unknown but severe)
Saxo Bank- Loss:(unknown but severe)
Everest Capital’s Global Fund- Loss: (“almost all” of its $830 million in assets)
That’s nearly a cool 2 billion buckaroos, just right there, from those who admit the extent of their losses! Rest assured, this isn’t an exhaustive or extensive list, either! This is just a short list of a few parties who lost, but you get the idea: from TBTF banks, to currency brokerages, to hedge funds…that red that you see flowing isn’t just from their balance sheets!
Big deal, Watchman! So some banks lost a couple billion dollars!! That’s peanuts! These kinds of losses have happened before, why should any of us be concerned about this?
Oh, my gloriously-obtuse friend, if you thought that somehow the losses from this secret, undisclosed move would be limited to just currency brokerages…you’ve got another thing coming.
Mortgage Dominos are Going Down
The housing markets in Europe(as here) already had more than its own share of problems, but once again, just when folks thought it was safe to come out and play in the real estate playground….
Wham!
Their portfolios took a sledge hammer to the kidney.
I expected this to affect mortgages, but I didn’t expect this next country’s market to be the very first one to cry “Uncle!”
For Poland, of all places, has been ravaged by this surprise currency revaluation! It turns out that forwell over half a million mortgage holders in Poland, this 20%+ surge in the Franc, has affected their mortgage payments since they were denominated in Swiss currency.
Imagine your own mortgage situation, for a moment. Times are pretty tight already, right? Think about how large of a drain on your paycheck and budget that monthly mortgage payment already is to you. Yet, thankfully, somehow you’ve managed to keep up with that payment, secure your living quarters, month to month, and still have enough to eat, and all your expenses taken care of. Sure life can be stressful, but you’ve been able to deal with it. After all:
You may not be getting rich….but you’re getting by.
Yet, now imagine, that you wake up, go down to your bank to pay off that mortgage, and the person behind the counter tells you, “I’m sorry, but this Zloty payment is not nearly enough. Currently, you now have to cough 20% more on this payment than you did last month!”
What would you do?! You’ve already budgeted everything, and there isn’t a single cent to spare! Where on earth are you going to get that extra cash? Do you do something drastic? Do you hold a garage sale for many items you never intended to part with? Ask a family member for a loan, or worse, go to a loan shark company for an advance on your next paycheck?
Do you give some blood plasma for cash? Do you cut off and sell your hair(if you’re a lady)?
Do you raid your Polish pension account? “No”, you think, “the government already took half my entire pension just a few years ago….I can’t afford to borrow from what’s left!”
You know, though, that whatever you do to get through the month, that you can’t probably repeat it next month. You’ll probably have to get a 2nd(or 3rd) job. Immediately.
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