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overtheedge
Member since May 2012
680 commentaries - 6 followers

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has posted a comment on the article :

Swiss Peg Removal: Did Anyone Win? - Mish - Global Economic Analysis

Wow!
I would tender the argument that it is far too early to think about winners.
Admittedly I have avoided the FX market, but I do have questions that will be answered in the fullness of time.
However I don't wanna wait, so here goes.

As many folks have found out, not all debts are settled just because the item was repossessed or the keys returned to the bank.
There is an ugly little clause in many contracts that allows for deficiency judgements by the courts.
Effectively the holder of the paper comes back with a monetary claim against the debtor for the amount of money value that is the difference between owed and realized.
My question is, "In the FX market, do the contracts allow for deficiency judgements against the gamblers who lost?"
Even if the brokerage goes bankrupt, the trustees usually are tasked with asset recovery.

I understand the concepts of collateral damage and counter-party risk.
Consider the carnage if deficiency judgements are pursued against those foolish enough to leverage their gambling habits.
You don't own it until the last payment is made.

I contend we haven't seen anything yet over the Swiss decision to un-peg.
Believe as you no doubt will.

Commented 3385 days ago

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Beginning of the headline :Swiss Economy Winners and Losers In reference to Rabbit Hole Intervention Fails: Wild Moves in Swiss Franc as Switzerland Abandons Euro Peg; Morals of the Story, reader "Grandaddy" a Swiss citizen living in the US, asks "How will removal of the peg affect the Swiss economy/outlook in the long run?" Intuitively Obvious It's an interesting question because what seems intuitively obvious at first glance is not necessarily correct over the long haul or even the short haul. For example, conventio... Read More

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