How is Switzerland handling the credit crunch?

I guess most of the Swiss banks were hurt by the new rules regarding US residents. Nevertheless investors from all over the world are [broken link removed] to keep their money stable and protected especially in these times where the economic crisis is on the run...
 
Purple said:
No, the country is morally repulsive.
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Just out of interest, is that because of their behaviour in WW2 (hidden accounts etc) or are there other reasons as well? I have a good friend here with a PhD in Law and her job at a major swiss bank is to try and work out what assets really belonged to Jewish families lost during the war....a very interesting job....though she does have a bit of a "Id have to kill you if I told you" attitude about it when you ask her for details.

From the perspective of someone living here, paying taxes here, Switzerland is definitely effected - it is after all a global economic crisis and they are not that protected. Banking is a very important lucrative industry here - so banking being hit does hurt. A couple of observations from my side:

* The banks have stopped hiring contractors and there have been large cutbacks in some departments worldwide in CS and UBS, especially the latter.
* As a result of the latter the taxes in the next village from us (opfikon) have gone up.
* There are still fulltime hire positions available though certainly in the IT and finance sectors of banking.
* Aside from banking small industries and private businesses are very big here. By that I mean we dont really have chains like boots and specsavers at home nor do we have shopping centres. Individual family businesses like the corner shops of old at home are big. A lot of these seem to be handed down generation to generation in families, are dependent on local communities to survive and seem to be fairly secure and independent of the banks - ie some what safe from a global crisis.
* Farmers are very protected here, they are highly subsidized by the swiss government and a leg of lamb for 6 people here costs about 100chf (65 euro!) eventhough it was farmed and killed locally. I think the farmers will be fine ;o)
* Indirect Taxes are high here but the swiss do seem to invest heavily into their infrastructure you can see where the money is going so to speak.
* About 30% (or maybe even less) own their own homes here. Its not the done thing really. Many people on excellent salaries dont invest in homes but rather in cars/boats (not secure assets as such- just making hte point that owning a home here is not hte be all and end all).
* 20% is the required deposit for home - unless you work for a bank when you may get a mortgage with a deposit in the the region of 15%. People couldnt believe it here when I spoke of 100% mortgages at home - they thought I was making it up.
* Once a bank agrees to give you a mortgage (say 80%) it will only give you 80% of what the bank perceives the value of the house to be. Not 80% of the purchase price. They establish the value of the house using some complicated algorithm (sq mtr of the property x cubic volume of hte property x age x state of restoration x community value x no. of dogs in the area). So you may have offered to buy a house at 120k but the bank feels its only worth 100k, the bank gives you a mortgage for 80k. This stops prices being driven wildly up like we saw at home during the celtic tiger years.
* You remortgage approximately every 5 years. So in 5 years time the bank is not obliged to reissue a mortgage if they feel you dont earn enough/cant pay back etc.
* There are very few mortgage packages here, tracker mortgages dont seem to exist. Nor does the mortgage where the balance of your account counts against the principal (I have forgotten the name of that one). The mortgages here are endownment in style and you are encouraged to pay off a lump sum everytime you remortgage. The banks are v protected.
* I was told by swiss peers that swiss banks were told by the swiss government about 10 years ago to reexamine all mortgages given and reevaluate them - and retract where necessary - in preparation for a crisis. UBS hadnt completed this. I never read anything about this, I was only told it - so Im not sure how factual that is.
* Certain people cant buy in certain areas - they have the idea of keeping towns for the peole that grew up in the them - so I cant buy in the appensel for example.
* Citizenship is not distributed easily. While its easy to work here for a few years its not easy to become swiss - Im married to one, my daughter is one, but itll be another 5 years before I can even apply to be one (and then that is dependent on me passing a german exam).
* One of the biggest differences to Ireland and the UK is that eventhough the crisis is here its not prevalent in our news and media. The fact that it seems bears (the furry kind not the stock market kind) might be making their way back into CH via the alps from Italy is getting as much coverage as the world economic crisis.

Just observations from irish expat - Im no financial guru!
 
Purple said:
No, the country is morally repulsive.
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That is a very serious charge. What particular act or acts do you feel justifies such a harsh appraisal?

If it's something to do with WW2 how would you compare the actions of the Swiss with that of, for example, the Germans and Austrians (not only starting the whole thing but also responsible for the holocaust), the Swedes for allowing the German war machine through their country to invade Norway, the Italians and Spanish who embraced fascism and supported the Nazis militarily, the French (including Vichi France) who rounded up Jews for extermination, many eastern European countries (Poland) who helped in large numbers in localised murder sprees against Jews, the Russians with their systematic rape and murder of civilians? In terms of morality, I find it hard to see how you've defined a line which the Swiss have crossed but the Germans, French, Japanese, etc. have not.

Other than that, perhaps you view Swiss pragmatic liberalism as being immoral? E.g. the fact that prostitution is legal, heroin is administered to junkies by doctors and they have a generally relaxed attitude to other drugs, wealth and income are very lightly taxed, little/no censorship, the admiration for individual self-sufficiency and autonomy, widespread gun ownership, etc.?

To add to casiopea's post, I would add that Switzerland is one of the most federal countries in the world. The vast majority of income tax, for example, is a local cantonal tax. Each canton has it's own laws and executive and view themselves as quite independent and self-sufficient. The divergence and degree of autonomy is very significant - for example one canton resisted female suffrage until 1990. As a result, it is difficult to generalise about the politics of the country. As an example of how weak the federal government is, bringing in a "national" smoking ban has proven to be almost impossible. So it would be nice if you qualified your statement: are you referring to actions of the federal Swiss government or that of specific cantons (which hold most of the power)?
 
Very interesting post, casiopea. Switzerland is one of the European countries I haven't been in, but I have always had an interest in the way they run their society over there.
 
From casiopea, it appears that it is policy in Switzerland to keep people in their place - discouraging home ownership, perpetuating a landlord class, not allowing people to live in certain places, not allowing businesses to expand into chains etc. Sounds very repressive. It appears that if you are born in Switzerland, your life is mapped out for you. Not sure I'd like that.

I've been to Switzerland a couple of times - Geneva and Zurich. I've always got the sense that there is something almost feudal about the set-up of the place. Certainly, there is a very noticeable underclass of immigrants.
 

Ah lads, that wasnt the impression I meant to give at all. Or at the very least its not the impression I have. For the record prior to living in Switzerland I lived in Italy (for 5 years), Sweden (2 years), the UK (1 year) and the states (2 years on and off). Indeed Zurich was my last stop and was meant to be for one year before I was going to hang up my travelling shoes and head home to Ireland (where Ive always loved returning to and owned my house) for good. Im not listing that as some sort of travelling CV but rather to highlight that its well within my remit to up and leave if I dont take to a place. Quite simply I fell in love with Switzerland very very quickly. Its beautiful, there is so much to do, the weather is spectacular, the work life balance is excellent (I have never worked more "normal" hours than here), the health care is phenomal, its clean and safe (and I know that is boring to some but I love the fact that I dont lock my bike outside my house), taxes are lower than Ireland, the salary to cost of living ratio is excellent, if I lose my job the state pays me 80% while I look for a new one (for up to 2 years) and the people, if you take the time to get to know them, are truily lovely. The alps, the lakes, the forests. There arent words to describe them so I wont try but did you know that only one third of CH is habitable and the rest covered by alps/forests/lakes - the country is a haven for hikers, skiers and other outdoor sports. Its without doubt my second home and that is not an accolade Id distribute lightly. There are many many expats here like me that came for a year and never left. By the way I didnt stay because I met someone - it was more the other way around - I decided to stay first.

What mightnt be clear from my post above is that only 30% own houses here mainly because many/most people here have no interest in "owning" their property. Its culturally not done. The generation before this one even less people owned their properties. When I try to explain to people here that most people in Ireland "own" their family home they cant believe it. One swiss person said to me - but why do you want to pay rent to a bank for the rest of your life. Rental properties are very protected over here. Its too long to go into but its very safe for a family to rent in an area and send their children to schools in the area without the risk of eviction. People dont buy not because the banks wont let them but rather because they rather spend their disposable income on other things (family, holidays, car etc). A sales guy I work with drives a porshe but rents his home - there are so many like that here - they simply like spending their money on other things. Other countries Ive lived (namely Italy and Sweden) in have been the same. This need to own our home is a very Irish/English thing - we arent wrong - they arent wrong - its as simple as cultural differences.

Remember my post above is in the context of the credit crunch (the thread topic) and the banks - you shouldnt use it to make a full impression of Switzerland. If I were to write a post about Ireland and the global economic crisis for a swiss person they would come away with a very negative view - right now theyd probably consider it a third world country and would want to know why anyone would want to live there. We know that isnt true.

Im off now to to work for the Swiss Tourism board - clearly my skills are wasted in IT
 
Thanks casiopea! Your posts are informative, thoughtprovoking and enjoyable!

I wonder is it insecurity that drives our cultural preference for home ownership?
 
My comment was based on how the Swiss banking system is so willing to finance murder and genocide all over the world while taking on deposit the stolen billions from murdering dictators. This has been the case for generations and is a corner stone of the Swiss economy.
Casiopea, the only reason your friend has such a job is because of massive sustained pressure over years from the United States of America to force Switzerland to do the right thing. The Swiss banking sector and the Swiss people, through their government, resisted that pressure with a stubborn immorality of the most astounding kind.

Switzerland is like the great houses in England’s Home Counties that existed in idyllic frivolity on income drawn from the sweat of slaves labouring in chains in sugar and tobacco plantations an ocean and a world away.
I am not saying that all (or even many) Swiss people are active participants in these matters but the very things that you describe so well which attract you to Switzerland are, in part, built on the blood of others. And how does Switzerland contribute to solving the world’s ills? Well it has one of the biggest armies in Europe but it doesn’t send its troops on peace keeping missions, no, it just makes hundreds of millions every year feeding off the slops from the UN gravy train as it pulls into UN Central in Geneva.
 
Purple said:
I am not saying that all (or even many) Swiss people are active participants in these matters but the very things that you describe so well which attract you to Switzerland are, in part, built on the blood of others.
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So where stands UK,USA,France,Germany,Spain,etc. The List is endless and can be argued about the majority of countries in the western world
 
path said:
So where stands UK,USA,France,Germany,Spain,etc. The List is endless and can be argued about the majority of countries in the western world
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An excellent point!
A little story, just to emphasize the point.....I remember being in Hyde Park, Speaker's Corner and an African man, proclaiming, i'll go back to Africa when I can take the entire contents of the British museum with me, back to Africa because there's f** all British in there. A very valid point.
 
Sorry, that's both hysterical and highly inaccurate and has more basis in cliched pulp-thriller plot lines than in reality. The wikipedia article gives an account of the reality of Swiss banking.

Neither is your criticism of the Swiss levels of military participation in UN missions reasonable grounds for labeling an entire country as "morally repulsive"; the Swiss have only been members of the UN for a bit over 5 years.

That's hardly evidence I'd say on which to justify singling the Swiss out as being morally repulsive which is a serious charge to level at an entire country of nearly 8 million people, 1.7 million of whom are foreign born.
 
Those countries engage on the world stage and use their resources to help others. As darag pointed out, Switzerland only joined the UN 5 years ago, despite making hundreds of millions, if not billions, of euro from it over the last 50 years.
They have resisted, and continue to resist, all attempts to stop the flow of blood money through their banks and only aided the post 9/11 anti-terror drive by the US after massive pressure and open threats.

They have the resources and the ability to be a force for good in the world but choose not to because they can stay rich that way. The way in which they treat their “guest” workers and their general emigration laws also show an innate selfishness and lack of empathy for their fellow man.

As to how Switzerland is dealing with the recession; the fact that unemployment hits unskilled workers hardest and that historically many of these “guest” workers have inadequate unemployment insurance has meant that Switzerland has effectively exported its unemployment problem. While treatment of “guest” workers and their rights to residency have improved greatly in most Cantons in recent years the fact remains that those at the bottom of the social scale ca still, to a great extent, be cut loose by mainstream (affluent) Swiss society when the need arises. The fact that emigration policy is still driven from Canton level, the rejection of three federal referendum proposing improvements in naturalisation for second and third generation “guest” workers since the 70’s and the emergence of the (Nationalist) Swiss Peoples Party all reinforce the status quo.
 
I'm really finding it difficult to argue with you on this one Purple. Your dislike seems completely irrational. You've made some very wild accusations but when challenged on them, you just sidestep the challenges and throw out a further bunch of wild accusations. To be honest I'm struggling to stay civil; accusing an entire country of 8 million people of being morally repugnant is as offensive (if not based on well-accepted fact) as laying similar charge or a charge of stupidity against a particular race or ethnic group.

I mean are you actually standing by your claim that "the Swiss banking system is so willing to finance murder and genocide all over the world while taking on deposit the stolen billions from murdering dictators" or have you quietly dropped it? Because it's absolute rubbish. Did you read the wikipedia article I pointed out? Even among the biggest detractors of Swiss banking law (the Germans, French and US) nobody has ever accused them of financing genocide. You've been watching too many spy and action movies; the big issue for the French, Germans and Americans is that the Swiss interpretation on what constitutes merely tax evasion and what is tax fraud; only in the latter case will they hand over details. Absolutely nothing to do with dictators, financing genocide or any thing even close. You're simply so far off base here that it's hard to even bother with the rest of your points.

I mean, you really are stretching it when the main plank of the other support for your "moral repulsive" accusation is that they allowed the UN to have offices there (like thousands of other international organisations who pick Switzerland because it's a stable, democratic, non-aligned and neutral country) without joining themselves?

And there is no discrimination against people working in Switzerland when it comes to welfare entitlements assuming you've paid your social insurance contributions - like many other places, for example, Ireland in fact. Like much else in your rant, you're mixing up a whole much of separate issues; citizenship and welfare entitlements which are different issues as in every other western country. Over 20% of the Swiss population is not born there. It is the original "melting pot" - accepting of immigrants, a strong work ethic, socially liberal, tolerant and pragmatic. It has one of the highest numbers of asylum seekers per head in the world and accepts immigrants of every sort from manual workers (earning at least twice the Irish minimum wage) to billionaires and everything in between.

And if the existence of a tiny nationalist party is enough for you to designate an entire country as being morally repulsive, what does that say about countries like France and Austria with much bigger nationalist right wing parties? Or how would you feel it fair to accuse the whole of Ireland of being morally repulsive because of the support nationalist Sinn Fein receives (about the same level as the nationalist SVP in Switzerland)?
 
Sorry I forgot to challenge the claim that "Those countries engage on the world stage and use their resources to help others". Do you mean countries like United States, Russia, France, Germany, Netherlands, Italy, United Kingdom, Sweden and Canada? By the way, these are the biggest arms exporters in the world. In fact without them, given that they sell more than 95% of all the arms there would be no international arms market at all.
 

From here; "The countries of Europe are significant arms exporters. Armies fight with European weapons in arenas of war all over the world. The bestsellers include: British fighter jets, Dutch military electronics, German submarines, French missiles, Czech tanks, Spanish munitions. Those are just a few examples.
Other countries with less significant arms production still have a share in the weapons trade however: Denmark and Portugal ship European weapons everywhere in the world, the Swiss banks finance huge arms deals."
Swiss banks have also been called on to stop financing companies operating in Darfur.
Everyone from Moboto in Zaire (I'm sure you are aware of the case going through the courts in Switzerland at the moment to see who gets the loot) to Abacha in Nigeria deposited hundreds of millions (and in some cases billions) in Swiss banks. Much of that money stayed in Switzerland after their overthrow and/or death. In the case of Abacha that ran to billions. Taking the blood money from dictators who rape some of the poorest nations on this earth and keeping it after their death is, in my opinion, morally repugnant. Consistently resisting attempts to change this practice shows that they are generally accepted by a sizable portion of the Swiss people.
 
Hi Purple,

Purple said:
Casiopea, the only reason your friend has such a job is because of massive sustained pressure over years from the United States of America to force Switzerland to do the right thing.
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Ive totally lost you here....what friend....?

A lot of your points I disagree with, they seem a bit outlandish to be honest and Ive never heard them from anyone/anywhere else. Ill try and address them fairly especially this one (in effort to keep the thread on topic) -



Unemployment hits unskilled workers the hardest everywhere in the world not just Switzerland. Im not certain what you mean by "guest" worker. Do you mean someone legally residing (perhaps many generations of family) and working here but not a national - I think that is what you mean given that you are talking about "rights to residency" etc. but if Im making an incorrect assumption please correct me.

"Guest" workers as you call them have pretty much same rights in the circumstances of unemployment as nationals here. When you lose your Job as a tax paying citizen you are entitled to Rav support. Depending on how you lost your job (did you resign, were you made redundant, were you fired etc) you are entitled to different levels of support but it doesnt differ if you are a B-visa holder, C-visa holder (a lot of these are 2nd or 3rd generation non-resident "swiss" which I think is the group you are refering to), or a resident. During this time - the Rav send you on courses to help you find a job (often for the first 2 groups its german courses) and during this time 80% of your salary is paid in the case of redundancy. The Rav supervises who and where you are interviewing and you are only obliged to accept a job that is to the same level and salary as before. Should you turn down jobs as you are having far too good a time living off the state then your support greatly reduces (30% or something of your salary is paid). Only people working here less than 1 working fiscal year are not elligible for this support. If you are living here illegally and not paying tax then of course you are not elligible for this - nothing unusual about that.

It is true that many generations of families live in Switzerland without ever becoming, what is called here, "paper-Swiss", ie they live on continous c-visas and never become truily resident. This is often due to a lack of interest as opposed to not being allowed to - in their current visa state they have all the support and entitlements (schooling, health care, RAV etc) as a resident hence no particular rush to change it. Often times (especially for the italians) its a lack of willingness to relinquish their own culture (though you are allowed hold 2 passports here) rather than not being able to become paper-Swiss. For an EU citizen its only a matter of time (and a german exam) to becoming a resident, its harder for non-EUs but it is possible.

You refer to emmigration policy being driven at canton level, most swiss government is driven at cantonal level not just emmigration policy. Indeed policy is actually driven/enfourced at Gemeinde (community) level, then cantonal then Country. As an expat its different - and yes it has its downsides (but who^s Government does not have downsides?). For example that is why the smoking ban for example is taking forever to come in here - its coming in Gemeinde by Gemeinde and Kanton by Kanton not country wide. Another very interesting example is that women werent given a vote at the same time through the country. Indeed in the alpensell - women didnt get a vote till 1972(!) This was due to the fact that voting took place at Gemeinde level and the men of that one village (gemeinde) used to gather in the square and raise their hands to vote yes for something. If they gave women the vote there wouldnt be enough room in the square! They were dragged kicking and screaming into the 20th Century and eventually had to give up their much loved tradition of gathering in the square to vote for things. So yes its frustrating, annoying, quaint and antiquated at times. The SVP (the swiss nationalist party you refer to above) is notoriously conversative and very few ex-pats like them - they do have very strong opinions on extraditing what they perceive as "foreign" criminals and their families which did cause big uproar here in Switzerland last year. Interestingly after succeeding in the elections their "leader" (Blocher) was usurped and SVP themselves put forward another, much more liberal, candidate for the "presidency". That is a facit of swiss politics I do enjoy - they have no one leader of the country even when a party wins the election - there are 7 presidents/members (made up of all the parties) and one member is elected every year as a figure head - so you may have a conservative party but liberal leader or vice versa.

Another interesting point to note on the lack of interest Switzerland has in joining EU and had in joining the UN etc. Switzerland is made up of 4 nationalities - Romansk, German, Italian and French. Within Switzerland itself there is a lot of "competition" between the groups - however each group for the most part sees themself as first and foremost Swiss. One (irrational) fear the Swiss have is of "bleeding" or blending into their neighbouring country and losing their Swissness - the swiss germans to Germany the swiss French to France the Swiss Italians (and Romansk) to Italy. So while the Swiss French consider themselves so much better than the swiss Germans - they also dont want be "French", same for the swiss Germans and Italians. The fear is if they were to join the EU - say - they are then only one step or referendum behind actually losing their border and swissness to the corresponding neighbouring country and becoming German/French/Italian. To that end, whenever a european driven issue is to be voted on - the swiss invariably become more swiss than German/French/Italian and vote no. One of the major reasons why they were many many generations behind joining the UN.



The former part of your statement I (and Im sure everyone) agree with - the latter is a massive accusation without from what I can see basis. However I do not know enough to comment. Ill look into it further (at the weekend hopefully) and come back and comment.

The Swiss (and their government) are conservative there is no doubt about that and they are extremely protective of their identity - is that a bad thing - I personally think not and I certainly dont see them as morally repulsive or that this generation or the previous one are guilty of crimes that you seem to be directing at them.
 
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Bronte said:
That's so breathtaking, imagine being a woman there. What a mindset.
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It was 1971- in the canton of Alpensell. The (stupid) reason Ive explained in my above post. I should also add that most of Switzerland regard the Alpensell as behind the times. It wasnt something they were proud of.
 
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