Swiss National Bank Vice-President Thomas Jordan said that pegging the currency to the Euro was a possibility. The Swiss franc weakened sharply versus both the Euro and the US. Let us get this straight.
Both the major currencies are representing dysfunctional economics and polity. Switzerland which investors consider a safe-haven (they run a fiscal and current account surplus) openly muses on pegging its currency to one of these two.
If that is not competitive debasement, I do not know what else is. Alan Beattie anticipates correctly here.
It is comical to read that the US stock market began the trading day on Thursday on a strong note because initial jobless claims dropped, ignoring the fact that the larger than expected trade deficit for June was going to give a second quarter GDP that is closer to 1% (annualized!) rather than 3% that was bandied about, not-so-long ago.
This blog has been arguing lately that China is part of the problem and not the solution in the current global context. This blog post in FT Alphaville reinforces that view rather strongly.
This post originally appeared at The Gold Standard and is reproduced with permission.