A paradox, CHF

[Brian Ellis]

I don't intend making this a long rant, but the current "gold rush" to the Swiss Franc (CHF) as a refuge currency defies logic. Switzerland is a country with no natural resources but became highly industrialised before WW1, with a wide portfolio of products. Over the last 25 years or so, its traditional manufacturing industries (textiles, watches, pharma, food and soaps, machine tools, heavy electrical gear etc.) have either disappeared or have been largely farmed off to the Far East and elsewhere. Its major service industries (banking and insurance) have taken blow after blow over the past decade. Yet the CHF outshines every other currency in the world, despite predictions that the country may experience a deep recession within 6 months or so and despite the National Bank having sold off most of its gold reserves a few years ago.

Furthermore, the SMI share index is plummeting down to half its all-time high. The best Swiss blue chip share, UBS, is currently hovering around CHF 10 where it was over CHF 70 five years ago.

I'm not complaining, as my pension is in CHF and I'm now exchanging it into EUR at 30% up over what I did a couple of years ago.

[Dr Mordrid]

All the calculations now will go poof once the China banking and ghost city bubbles burst. Not that I think there's much of a future for the Euro once Germany hits the wall from bailing the rest of Europe out

[UtwigMU]

Swiss are still harder working and more fiscally disciplined than guys like us, Portugal, Spain, Greece, Italy.

Only Dutch, Germans, Austrians and Finns are probably on par or better than Switzerland in Eurozone.

Actually there is a problem here and even bigger problem in Croatia because people took mortgages in Swiss Francs. Since the interest was lower it looked attractive at first but now that Franc has grown, some people are now paying 1200 Euros instead of 800 Euros a month and are crying for the government to bail them out. Croatian government struck a fixed rate for mortgages in Francs deal with their banks, threatening with new banking taxes.

[cjolley]

...in Croatia because people took mortgages in Swiss Francs...

Wow.
Though, I suppose that's no worse than taking an adjustable rate mortgage for a lower interest rate. (which I would never do myself btw)
But still, wow.

[Umfriend]

Yeah, that is definately bad practice and it is worse than taking an adjustable rate mortgage as the volatility in monthly expenditure on the mortgage with exchange rates is far far higher then due to changes in interest rates. Moreover, if your domestic interest rates are going up then chances are you are doing well (although I would never advise an individual to take those odds).