Poor Little Swiss
The Swiss Insider 10.05.2020 #insidersdoitsmarter
Dear Insider,
Being poor is never fun…
And in as much as being poor is tied to not having a job, the current situation in the world economy and in Switzerland is about as dire as it comes.
Over 14% unemployment in the US, 1000 new job seekers per day (see below) in Switzerland - the prospects for a quick return to happy life don’t look so very….happy.
One might be forgiven for scoffing at worries of destitude among the population of Switzerland, a country long known for having some of the highest salaries in the world. But to those who find themselves on out of a job, or banished to “kurzarbeit” (according to statistics, a full 30% of the working population) it is no laughing matter.
What makes the situation even worrisome is, of course, the delicate balance that Switzerland must maintain, between in-house demand (and high price tolerance) and a sustained export market also willing to accept relatively high prices based on an assessment of superior quality.
While the US and other Western countries relied heavily on domestic consumption to jumpstart growth after 2008, this crisis may be different, especially if wages remain elusive for furloughed workers.
How does the vicious cycle end?
The answer is still open…
Many residents of Switzerland are notorious savers - with stockpiles of cash (and gold…see below) stashed away. With negative interest rates, there may be an added (though unwelcome) incentive for people to start spending their cash reserves - they have to.
The end result will be a lower net wealth - but who said that being poor(er) was a crime? No one likes it, of course, but when reality sets in, human ingenuity takes over.
Few of the truly industrious have remained poor for long.
Another side effect of poorer firms will be a turning to even cheaper labor - some would say that is no problem given the difference in work ethic between Swiss and foreign labor.
But as well all know, a rise in immigration coupled with a rise in unemployment is not generally a recipe for peace and social harmony.
Such are the problems that now begin to rear their ugly heads.
Pity the council of seven that must now really and truly put their own heads together to find a solution.
Poor them…
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🔍 The Scoop
Inside takes that don’t necessarily make the front pages of daily news…
📉 Down by the Numbrs
Swiss fintech startup Numbrs is cutting approximately 60 staff after facing difficulties resulting from the coronavirus situation. Despite plans to launch in the UK this year, the company has been forced to cut itself down to size with a failed capital raise. With 11 billion euro in client assets and an erst-while valuation of over 1 billion euro, the company had seemed to be a hot pick in the fintech world.
🤑 Golden mattresses
It’s no secret that the Swiss are conservative when it comes to finance. Now with the latest crisis, the “safe haven” assets like gold are seeing their popularity run through the roof. It’s estimated that 1 in 5 Swiss residents hold gold. A whopping 71% of Swiss with a monthly salary of at least 10 000 CHF are estimated to hold the precious metal. In all, that makes 920 tons of the yellow stuff being held by investors in Switzerland. All that glitters….
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The Numbers Game
All the numbers that matter in these troubled times…
3,9%
With markets on the move, investment worries know no borders. But some are, perhaps, more anxious than others. Retirement funds, which are notoriously conservative in Switzerland have seen a drop in value of 3,9% since the beginning of the year. Not a good sign for those in the coronavirus risk groups…
130
It doesn’t seem like such a large number, but the amount of Migros stores which have implemented an automatic counting system to limit the number of customers in the storre at one time is significant. Such set-ups help keep overcrowding to a minimum and it’s not just Migros which has gotten on the bandwagon. Over 140 branches of Lidle are also equipped…
1000
Unemployment is no joking matter. While the USA this week reported its highest level of unemployment since World War II, Switzerland is also being hit hard. Recent estimates put new benefit claims at 1000 per day. An ignomious number…
300 billion CHF
The first of several installments of SWISS’s 300 billion rescue package is set to appear on the company’s accounts very soon - as early at the beginning of June, to be exact. Meanwhile, CEO Thomas Klühr expects prices to increase significantly in the medium- to long-term.
30 305
Yes - that is the number of laboratory-confirmed cases of Covid-19 in Switzerland, an increase of only 54 cases in the last days. As the curve begins to flatten, the question remains if this….is it?