My first thought was "The Mouse That Roared," an equally legendary movie starring Peter Sellars back in the 1960's. But, really, the problem is far more serious than that. We will not really go to war with Switzerland, but we must resolve this conflict. The banks in the U.S. have long since understood that movements of large amounts of money are frequently related to crimes and, therefore, they have a civic obligation to provide information about large deposit transactions. The Swiss do not see it that way at all, and hold that privacy is not concealment for nefarious purposes, but instead a "right" ... something that Swiss law holds for money, but not its citizens.
Obviously, the Swiss with a substantial part of their economy based in "privacy-enhanced" banking have serious worries about this confrontation. But, the Post article does not explain the deep background of this at all. The real problem is leverage, that is, the amount of debt that banks like UBC have incurred and their position now that the world-wide financial crisis has rocked their foundations.
A well-known financial advisor reports to his clients that the next crisis will be the inability of European countries to support their domestic banks to the tune of, say, five trillion dollars in evaporated assets. Everyone, here and in Europe, is playing this game as close to the vest as possible, but in the case of the Swiss, the issue is amplified by the banking secrecy laws they hold so dear. The Swiss government does not know the extent of the Swiss banking problem, but for sure wants to know before the rest of the world. This may be an illusion on their part.
In the U.S. the banks have a central bank upon which to draw in times of emergency. Not all European countries have such systems. Italy does not, and Italy is in deep trouble. Spain has a housing bubble perhaps twice as bad as the one in the U.S. The UK banks are teetering while the Labour government is losing traction. In other words, sometime soon (before the end of 2009) one of these places is going to melt down. Europe has to protect itself against that likelihood, and ... the U.S. must protect itself against Europe ... while, nevertheless, seeming not to be especially aggressive as a competitor or as a potential source of international security. This is the reason Obama and Geithner and Summers are playing the financial game the way they are. The U.S. banking system, as horrid (greedy, arrogant, and under-regulated) as it is, is the bedrock of world finance, and has to be brought back on line before the rest of the world can even contemplate fixing their own. The international stakes where the controls are the least effective or completely non-existent are huge and the politics of it all extremely sensitive to a variety of miscues, not the least of which is belligerence about Swiss secrecy.
Hang on, folks! This financial crisis has a long way to go. The quirky possibility that the U.S. will experience an "up" quarter this year is just par for the course. This happens in virtually all slumps and is almost meaningless.
JB
