European Bank Run Watch: Swiss Edition

European Bank Run Watch: Swiss Edition


Analyst Reggie Middleton, who has accurately predicted collapse after collapse, outlines the case for why the European bank runs will soon spread to the Swiss banks.

On July 23, 2011 I penned The Anatomy Of A European Bank Run: Look At The Banking Situation BEFORE The Run Occurs! which detailed for my readers and subscribers the mechanics of the modern day bank run, particular as I see (saw) it occurring in Europe.


A reader has convinced me to consult with him on a specific situation, regarding overseas monies and the (lack of) safety of those funds, which prompted me to dig up the Sovereign Contagion Model that we developed n 2010. In a nutshell, the Swiss banking industry was built upon impenetrable bank privacy for high net worth clients. Once the US decided it needed to boost its tax revenues during hard times, it literally collapse the Swiss hegemony in secret banking and left that banking industry to compete in actual banking versus asset concealment. This left Swiss banks naked, for they don’t appear to me to truly be able to compete aggressively and successfully in other areas.

Add to this mix potential contagion issues for the Swiss banking industry due to the fact that Switzerland has a veritable cornucopia of exposure all over the soon (if not already) serial recession ridden world, and well…

The first chart is raw contagion exposure as a % of GDP. The 2nd chart is the same exposure ran through our “reality” model. Food for thought.

The BoomBustBlog Sovereign Contagion Model

Nearly every MSM analysts roundup attempts to speculate on who may be next in the contagion. We believe we can provide the road map, and to date we have been quite accurate. Most analysis looks at gross claims between countries, which of course can be very illuminating, but also tends to leave out many salient points and important risks/exposures.

I. Summary of the methodology

We have followed a bottom-up approach wherein we have first identified the countries/regions with high financial risk either owing to rising sovereign risk (ballooning government debt and fiscal deficit) or structural issues including remnants from the asset bubble collapse, declining GDP, rising unemployment, current account deficits, etc. For the purpose of our analysis, we have selected PIIGS, CEE, Middle East (UAE and Kuwait), China and closely related countries (Korea and Malaysia), the US and UK as the trigger points of the financial risk dissemination across the analyzed developed countries.
In order to quantify the financial risk emanating in the selected regions (trigger points), we looked into the probability of the risk event happening due to three factors – a) government default b) private sector default c) social unrest. The probabilities for each factor were arrived on the basis of a number of variables determining the relative weakness of the country. The aggregate risk event probability for each country (trigger point) is the average of the risk event probability due to the three factors.
Foreign claims of the developed countries against the trigger point countries were taken as the relevant exposure. The exposures of each developed country were expressed as % of its respective GDP in order to build a relative scale for inter-country comparison.
The risk event probability of the trigger point countries was multiplied by the respective exposure of the developed countries to arrive at the total risk weighted exposure of each developed country.
Sovereign Contagion Model – Retail – contains introduction, methodology summary, and findings
Sovereign Contagion Model – Pro & Institutional -contains all of the above as well as a very detailed methodology mapthat explains what went into the model across dozens of countries.

The bank run in other European nations:

A list of past analyses by Reggie predicting major market events that blindsided the global financial markets while being missed by entirely mainstream analysts

As Predicted Last Year, The French and the Greeks Are In A Race …Jun13, 2012 – On Saturday, 23 July 2011 I penned “The Anatomy Of AEuropean Bank Run: Look At The Banking Situation BEFORE The Run …
Most Headlines Now Show French Bank Run Has … Sep20, 2011 – Roughly two quarters ago, I warned subscribers that marketswere overlooking a distinct concentration of risk in France.Interestingly enough …
Watch The Pandemic Bank Flu Spread From Italy To France To …Nov18, 2011 – The central bank tightened rules last year to force lendersto aside more…. BoomBustBlog Susbscribers, if you’re paying attention, this was the one year … of a French bank run – with the largest ofthe French banks running the …
The French Government Creates A Bank Run … Aug11, 2011 – The professional level subscription document detailing thelikely causes of a run on our primary bank run candidate is nowavailable for …
Just As Predicted Over The Past Month, The French Bank Run …Aug10, 2011 – Attention subscribers! The French Bank run has BEGUN! Belowis grab of the CDS chart of just one our subject banks as run candidatefeatured …
Bank Run! Italiano Style? Jun11, 2012 – In March of 2010, or roughly 2 and quarter years ago, Iridiculed Italy’s public proclamations of austerity and fiscalresponsibility. I put out a rep…
No Capital Controls In The EMU? Liar Liar Pants …Jun25, 2012 – I have outlined the upcoming EU bank runs up to two years inadvance (see the many … Whenever one expects a bank run, the first things TP…
Yes, The BoomBustBlog Forecast Pan-European Bank Run Has …Dec1, 2011 – In the post “The Ironic, Prophetic Nature of the MF GlobalBankruptcy Filing and It’s Potential Ramifications” I identified the MFGlobal event as …
The Inevitability of Another Bank Crisis – BoomBustBlog
How To Prevent Bailouts, Bank Runs & Other Fun …Jan4, 2012 – bamboozled_copyThe setting of the infamous “Bamboozled”speech delivered by Malcom X on 125th Street in Harlem. Take careful note of the …

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