It's not often you get to compare Switzerland and the United States (fondue vs. Velveeta, knives vs. guns, efficient train service vs. Amtrak), but the latest controversy surrounding Swiss National Bank President Philipp Hildebrand affords us that rare opportunity.
Hildebrand is feeling the heat after it was revealed his wife used Swiss francs to buy $504,000 three weeks ahead of Switzerland capping the franc. That netted her a nice profit, which has since been given to charity.
My first instinct on just seeing the headlines was that this guy is toast. But I was clearly thinking from the American point of view. Ben Bernanke is called treasonous and warned to stay outta Texas for quantitative easing. If one of his family were found to be shorting the greenback he wouldn't have time for an emotional press conference. He may be on the first plane to Gitmo.
But the Swiss have a different idea about privacy and banking and Hildebrand managed to carry that spirit through an entire press conference (admittedly while sweating like Albert Brooks in "Broadcast News") where he said he wouldn't step down.
Hildebrand said he didn't know his wife had made the trade (a former finance professional, she said the dollar was too low to pass up buying) and that his privacy had been breached. He also said he didn't break any rules. Actually the SNB hadn't even released its rules until this story broke. The message from the central bank is that it's basically none of the country's business what the bankers do.
But here's where I see some similarity with the U.S. Both countries refuse to really come clean on their currency plans – just for different reasons. The Swiss cite privacy and the Americans just don't trust their citizens.
For a long time now (most prevalent under John Snow, who changed the definition of "strong" to "hard to counterfeit" in 2003) the Treasury Department has just repeated the phrase that a strong dollar is in the interests of the United States. Now any diversion from that meaningless statement would be a monumental policy shift. It's not even clear if the Treasury has a currency plan now or if it's all under the Fed. But it is clear that politicians don't trust voters to make an informed decision and that there would just be too much backlash if a Cabinet member said a weak dollar would be smart to, say, help exports.
Cue Super PAC ads galore accusing the administration of weakening America's money. And then the Bureau of Engraving printing a dollar that can't be torn in half.