Bracing for a Euro Crash and Creating A Housing Bubble: The Swiss Caught in a Vice
As developments in the Eurozone veered from bad to awful, with Greece on the brink and Spain getting closer, Switzerland, a speck of land with 7.9 million people surrounded by Eurozone turmoil, has been bracing itself, according to the President of the Swiss National Bank and long-time euro-skeptic Thomas Jordan, for the collapse of the euro.
“We start with the thought that Greece will not exit the Eurozone,” he said in an interview in the Sonntagszeitung, and then came the but—actually a whole slew of them.
“Our baseline scenario anticipates a protracted period of great difficulties,” he said. “The situation will only calm down when budget cutting and reform efforts start working in the Eurozone, which could be a long time. We’re preparing for very turbulent times.” And Greece’s exit, he said, “can’t be excluded”—thus following in the footsteps of Jens Weidmann, President of the German Bundesbank, who’d ventured into a veritable lion’s den with a pungent interview in Le Monde. Read…. The President of the Bundesbank Lashes Out.
And even if Greece remained in the Eurozone, “contagion could spread to other countries and escalate the debt crisis.” Less worried about trade and banking relationships with Greece, he saw the greatest dangers in the indirect consequences: “It’s conceivable that the entire European banking system gets into trouble. It would pull down the economy of Europe. Other highly indebted countries could get in trouble as well. That would pose high risks for us.”