I missed a very interesting article came across the Bloomberg recently, my head down and proverbial up as earnings season gets into full swing, but I caught it on the rebound on my lunch break when our friends at interest.co.nz posted their Top 10 at 10 (NZ time!) – one of my few must reads of the day (Macro Morning being the numero uno).
It comes in at No.9, but I reckon following the unfolding subprime dilemma it deserves to be placed at the top of the pile. Read on:
Yet our central bank is relaxed about price inflation running at nearly 6% nationally and between 15-25% in parts of Auckland…
Here’s what the radical central bankers in Switzerland are thinking of doing.
Thomas Jordan’s fight to protect the Swiss economy is set to widen beyond currency markets and too- big-to fail risks as the central bank chairman considers how to curb the biggest real-estate boom in two decades.
The Swiss National Bank may act to stem what it called risks from “excessive credit growth,” economists from Bank Sarasin to UniCredit Group said. An option available to the central bank would be to force lenders to hold additional capital of as much as 2.5 percent of their domestic risk- weighted assets to help buffer against losses.
4% a year! Hold the phone Heinrich! Here’s some more info from the original article (emphasis added):
Surging Prices
The cost of owner-occupied apartments with as many as five rooms has risen the most over the past 10 years, with prices jumping 40 percent, SNB data shows. Prices of rental apartments have increased 29 percent.
UBS and Credit Suisse had combined outstanding mortgages of 240.6 billion francs at the end of 2011, up 2.8 percent from the previous year. Cantonal banks, which are largely owned by the regions, had a 6 percent increase, while the cooperative-based Raiffeisen banks saw mortgages surge 7.4 percent.
Its not true that the Swiss try to take all the fun out of life – although they defintiely know how to make the trains run on time – but this is a fascinating development that needs to be put into perspective. Why?
Isn’t it just amazing how the SNB is ready to intervene in the FX markets to keep the Franc (CHF) low and is considering prudent capital constraint measures for its banks, whilst the RBNZ and RBA sit on the sidelines and let “the market” do its thing.
Its enough to make you head for the hills and start yodelling.
Chris Becker is an investment strategist at Macro Investor, Australia’s leading independent investment newsletter covering stocks, trades, property and fixed interest. Each week Macro Investor publishes tables on the top ten most undervalued and overvalued stocks on the ASX. A free 21-day trial is available at the site.
