Alpine Meadows

What comes to mind when you think of the Alps?

Photo: Kevin Connors. Source: Morguefile

Maybe it’s clear mountain lakes and crystal blue skies. Maybe it’s sun and snow and skiing. Or maybe it’s money?

A map of Europe scaled by per-capita GDP reveals an interesting tendency: the areas with the most mountainous topography tend to have higher incomes. Northern Italy, western Austria, southern Germany, and Switzerland are all significantly richer than other regions. This holds true despite differences in taxation, culture, transport, and trade policies. Why might this be?

Source: Eurostat

Many explanations have been offered—the tendency for mountainous areas to be left alone; the impact of global tourism; even the legacy of the Hapsburg Empire, remote though that may be. (Without Wiki I can’t recall the name of single Hapsburg leader.)

What jumps to mind when I see this map is the connection with Switzerland. What’s distinctive about the Swiss? Switzerland has fiercely guarded its independence and neutrality. It was never a great manufacturing center, but over the centuries their safe-haven status has helped them amass a large base of capital. That money had to be employed productively. So the regions that had the greatest contact with Swiss bankers and banking institutions have had more access to ready sources of capital and finance. It also didn’t hurt that Switzerland has been a self-governing coalition of small states from the time of William Tell.

Statue of William Tell in Altdorf. Source: Wikipedia

As our bureaucrats and politicians try to sort out too-big-to-fail banks and banking regulations, it’s worth asking what’s made Switzerland so stable for several centuries. Finance is real. It’s a mistake to treat it as something extraneous to the economy.

Douglas R. Tengdin, CFA

Chief Investment Officer

By | 2017-07-17T12:21:57+00:00 May 23rd, 2016|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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