Posted:Sun, 06 Jul 2008 17:01:01 GMT
Author:DPA
Geneva - The global financial crisis could lead to losses of 1,600 billion dollars for financial institutes, according a report in the Swiss Sunday newspaper Sonntags Zeitung. It quoted a confidential study by the hedge fund Bridgewater Associates as saying losses for banks holding risky assets could be four times greater than the 400 billion dollars previously estimated.
The hedge fund expressed doubts that the financial institutes would be able to drum up enough funds to cover the losses, something it said could exacerbate the crisis.
Bridgewater,one of the world's biggest hedge funds, based its calculations on the state of risky debt-based US assets, such as mortgages, credit and credit card demands.
The value of such risky assets is 26,600 billion dollars, according to the hedge fund. The losses would amount to 1,600 billion dollars if these assets were valued at market rates and not in the form of securitization, the newspaper said.
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The second is from another legend, Ted Forstmann, whom I met at his apartment many years ago when I lived in Manhattan. My sister dated a friend of his…
Theodore J. Forstmann
The Credit Crisis Is Going to Get Worse
By BRIAN M. CARNEY
July 5, 2008; Page A9
"You've got Paulson saying 'Oh, you see the good news is it's over.'" The problem, according to Mr. Forstmann, is that it's far from over. "I think we're in about the second inning of this." And of course, the credit crisis wasn't even supposed to last this long. "This all started in August [of 2007], and it was going to get cleared up by October. It hasn't gotten cleared up at all."..
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I have included the full article in the Appendix for your perusal.
What we are talking about here is a severe financial market crisis, like one we have not seen since the Great Depression. What many on Planet Wall Street seem to be missing is that it won’t come in the exact same format. Times are different … circumstances are different. What will be very similar will be the extent of lowering of the standard of living in America. It will shock most of Middle America … and those on the coasts too.
The Fed, and other central banks, in this scenario, will feel obliged to flood "the system" with money, even more than they are now, and this will lead more and more investors to flee into gold and silver for safe haven, inflation protection purposes.
*This is already occurring to some extent when it comes to demand for gold….
LONDON, July 7 (Reuters) - ETF Securities said on Monday the amount of bullion backing its Physical Gold exchange-traded fund PHAU.L rose 15 percent last week to a record 1.459 million ounces….
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We are only at the tip of the iceberg when it comes to NEW demand for physical gold and silver … meaning it will come from investors in the West who have shunned precious metals to-date.
*Each time the dollar is about to break down, some government official makes a comment about the dollar, which is followed by central bank intervention. The Planet Wall Street pundits and reporters then cite these comments as the reason for short term dollar strength. Course, when nothing changes fundamentally, and nothing has, the dollar begins to tank again.
Europe has a myriad of problems too. However, our structural financial market/economic problems are gargantuan in comparison, which is why the dollar ought to tank in the weeks and months ahead. This too will be gold/silver friendly.
*The odds of crude oil going higher from here are still favorable. Thus far crude oil corrections are classic bull market ones … steep and short. During the correction this morning, Brent crude oil was trading at a 70 cent premium to WTI. We shall see if this anecdotal tool works again, in that it suggests the general oil market remains in strong hands.
It won’t be long before we are going into the critical hurricane season in the US. Should any storm come close to threatening our refineries, crude oil will rise sharply in this environment of perilously tight supplies….
OPEC president warns no end to oil price rises
Jul 6 06:38 AM US/Eastern
OPEC president Chakib Khelil warned Sunday that oil prices will continue to rise because of the falling dollar, in an interview in the Algeria-News. "The price of oil will rise again in the coming weeks. We have to follow the evolution of the dollar, because a one percent fall in the dollar means four dollars more on the price ofoil," Khelil, who is Algeria's minister of energy and mines, told the independent daily.
"As producer countries we think that the current supply is sufficient, that this balance in supply is in everybody's interests and that it shouldn't be disturbed, because the current rise in oil prices is in nobody's interest," the head of the Organisation of Petroleum Exporting Countries stressed.
He also commented on the geopolitical effects on the price of oil, notably the crisis between Iran and the West over its nuclear programme and rejected the theory that oil cartel members were against boosting production to put a downward pressure on prices.
"I believe that 60 percent of the rise is due to the fall in the exchange rate of the dollar and to geopolitical problems, and 40 percent to the intrusion of bio ethanol on the market," he said.
"I can affirm that all the (OPEC) countries are in favour of new explorations (of oil reserves), but the fact is that the embargo imposed by Libya has prevented any increase of investment in that country, just as the current embargo on Iran is stopping anyone investing there," Khelil said.
"The United States is threatening severe economic sanctions against any group which dares invest in Iran. Similarly, the war in Iraq is why investment there is weak. No OPEC country can invest in embargoed countries."
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*There is still almost a ZERO understanding in the investment world that the prices of gold and silver have been ARTIFICIALLY suppressed by a Gold Cartel, consumed by their efforts to take away a true, widely followed barometer of US financial market health. No sense in me going through that entire drill again except to repeat this is the most important factor in the big picture for the future price of gold and almost no one out there gets it. That’s like sailing on the high seas without a compass.
There is a significant amount of talk out there on Planet Wall Street about a commodity bubble bursting. Gold and silver are thrown in with oil, corn, soybeans, copper, etc. How bizarre that these supposedly sophisticated people don’t have any clue that the exact OPPOSITE is true for gold and silver. For them to lump both gold and silver into the commodities group in general is an example of just how much disinformation is emanating from Planet Wall Street. This lack of basic knowledge will accrue to us immensely down the road. These ignorants are likely to wake up when gold goes $1200 bid.
Well, the above was written soon after the Comex open. As most financial markets began turning dramatically late morning, I have stopped doing any more writing to at least wait for the Comex close.
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Despite the fact that the euro went from down .90 to up .48 when gold closed, and the yield on the 10 yr T note fell sharply to 3.88% due to safe haven concerns, gold and silver never even came close to taking out unchanged. This is just what The Gold Cartel had in mind over the past two trading sessions … take both off the investment radar screen as go to vehicles in times of crisis.
This is getting to be very tiresome. The good news is that these no good bums are going to get their butts handed to them in the weeks and months to come. |
