Gold has never been this valuable before. Over $1000? Wow ! One might want to understand the 'drastic' statement these commodity prices actually make. In other words, 'Like the Bush/Cheney Iraq War - There is no end in sight !' Everyone take cover.
Ask yourself this. How much 'sovereign wealth' does the USA actually have and how much debt is it currently carrying and how much is the USA economy actually growing?
Gold, oil hit records as crisis spreads (click here)
Spot gold tops US$1,000/oz
Gold and oil soared to record highs on Monday as a tumbling dollar and the escalating financial crisis prompted investors to abandon equities and head for cover in commodity markets.
Industrial metals prices slipped as traders priced in weaker global economic growth, wheat gained ground on bullish fundamentals and cocoa prices held firm.
Spot gold hit an all-time peak of US$1,030.80/oz and was up at US$1,022.95/1,023.65/oz at 1201 GMT from US$996.90/997.70 late on Friday.
The precious metal is up by more than 50% since last August when credit markets imploded as problems in the US subprime mortgage market hit confidence.
Crude oil rose to a record near US$112 a barrel as the dollar fell after the US Federal Reserve surprised markets by cutting the discount rate - the rate it charges on direct loans to banks - by 25 basis points to 3.25%. ...
Why is it that Greenspan's explanation of this mess makes far, far more sense than any of the rhetoric stated elsewhere?
In other words, 'the players' to the Bush/Cheney 'exploitation economy' turned loose a Pandor's Box of 'variables' that were not even part of the financial picture to what was once a 'prudent investor CLIMATE' in the USA, extending globally.
What would anyone expect from defunct CEO's of failed and bankrupt companies? For God Sake, Dick Cheney had to become Vice President, start a war and provide No Bid Contracts to Halliburton to save the company and his own 'ASSets.'
Who do you think is in the White House, Rhodes Scholars ?
The TRUTH is, they didn't know what they were doing and now they still don't, because, they haven't even IDENTIFIED the 'elements' of the equation that caused it all, nor are they interested. It's far easier to 'hand Hank Paulson' insider information and have Goldman Sachs profit from everyone else's losses; for as long as it can.
By the way, it's completely obvious today that when Paulson took the seat as Secretary to the US Treasury it wasn't to benefit the country, but, to 'bail out' his own company!! Still yet another loser at the top of the USA government in a chain of losers !!
Greenspan sees many casualties from crisis: report
2008-03-18 09:01:09.0
Greenspan sees many casualties from crisis: report (click at title to entry)
(Agencies)Updated: 2008-03-18 09:01
LONDON -- There will be many casualties from the unfolding financial market crisis, which will lead to a large-scale overhaul of international banking regulations, codes and risk management, former Federal Reserve Chairman Alan Greenspan said.
Writing in the Financial Times, the former Fed chief said much of the financial system's risk-valuation models failed, not because they were too complex but because they were "too simple to capture the full array of variables governing that drive global economic reality."
"The crisis will leave many casualties. Particularly hard hit will be much of today's financial risk-valuation system," he wrote....
Oh where, Oh where can the truth be found? Oh where, Oh where can it be?
Economist: US subprime crisis to linger for a long time (click here)
2008-03-18
16:04:28.0
Economist: US subprime crisis to linger for a long time
(chinadaily.com.cn)
Updated: 2008-03-18 16:04
The US subprime credit crunch that is plaguing the US financial market and economy is far from over, and its global aftermath is expected to linger for quite a long time, predicts Andy Xie, a well-known economist.
Xie made the forecast after US-based JP Morgan Chase said Sunday it would acquire rival Bear Stearns in a deal valued at US$236.2 million - or $2 a share - a stunning collapse for one of the world's largest and most venerable investment banks.
Commenting on the recent Standard & Poor report that said the subprime crisis may bottom out at the end of this June, the independent economist based in Shanghai and Hong Kong said he believes the end of the subprime woes are still not in sight, the 21st Century Business Herald reported.
Xie, a former Morgan Stanley chief economist in Asia, said JP Morgan's bailout means Bear Stearns, one of the five major US investment banks, has actually gone bankrupt. Risky bets on securities tied to subprime mortgages - loans given to customers with poor credit history - crippled Bear Stearns.
He expects more large financial institutions may face the same fate as Bear Stearns in the future as a result of the current subprime debacle, which many economists consider the biggest crisis in the US financial market since World War II.
Other analysts also said the bid to rescue Bear Stearns was more than just saving one of the world's largest investments banks - it is propping up the US economy and the global financial system. An outright collapse could cause huge losses for banks, hedge funds and other investors connected to Bear Stearns.
Xie noted that after an initial estimation, the losses in the financial market resulting from the subprime crisis stand at $160 billion. He added the subprime woes have gone beyond subprime loans to involve many other areas such as leverage financing, construction and credit card loans.
The economist pointed out that many financial institutions are already embroiled in bad debt crises that have yet to be exposed.
He said chances are slim for the world to recover from the impact of the US housing woe and subprime crunch in the near term, adding that recovery is near impossible until the US housing market climbs out the steep hole.
A large number of houses are still in stocks in the US and if they enter the market, house prices would drastically drop further, Xie said.
Japan's Economy Facing Turmoil
The current governor's term runs out Wednesday at a time of turmoil on global markets due to fears over the US economy (click here)
..."However, the real problem is whether we should take the risk of not benefitting the Japanese people by accepting a bad nomination."...
In reality, isn't the USA economy when measured against its sky-rocketing debt, truly irretrievable? I mean when has insoluble debt ever lead to a booming economy. The Bush/Bernanke/Paulson 'bail out' is simply putting more debt into the USA balance sheet that spells more disaster. The USA tax base needs to be expanding under a thriving economy before it can even begin to pay the bills. The Bush/Cheney War Economy is like an endless pit, it just keeps falling into deeper and deeper turbulence.
March 17, 2008, 8:52 am
Lehman’s Turn (click here)
BROKERS TUMBLE PRE-MARKETThere’s a euphamism that Norman Mailer employed in ”The Naked and The Dead” that we’ll - acting charitably - decline to specify here that could quite well apply to the other brokerage firms Monday. (Go to the bookshelf. You’ll find it pretty quickly.) Lehman Brothers (LEH), otherwise known as the next logical suspect, has surrendered about a quarter of its value in Monday’s pre-market trading, after having given up 15% on Friday. Moody’s is reviewing its outlook on the company’s credit. The ratings agency cut its take on the firm’s credit to ‘’stable” versus its prior ”positive,” saying that Lehman has ”navigated quite well to date,” but that, under the current conditions, a positive outlook is no longer warranted. At the end of the fourth quarter, Lehman had $34 billion in cash available, and another $63 billion in unencumbered assets (those are the best kind) available to its unregulated entitites. Moody’s touted Lehman’s liquidity management. Merrill Lynch (MER) has fallen 13% in premarket action, while Goldman Sachs (GS), which - if you like to listen to rumors - is about to unspool some $3 billion in write-downs when it reports results Tuesday, has declined 10% Monday.
Hello, America? An economy 'designed' by Bush and Paulson to deliver the goods to ONE investment firm left standing after this disaster's dust settles. Seems a little odd, doesn't it? Could it be corruption? Ah. Yeah. Same 'ole, Same 'ole Republican corruption, no different than Halliburton, to serve the cronies that will sustain the 'power brokers' in DC. All the Neocons need is 'enough' wealth' to keep the party alive, it doesn't need the country to do well.
The USA Housing Market Crisis - Also Known as "It's anyone's guess !"
First the nation has to get the Bush administration to ADMIT there is a recession, before we can point to the fact, Republican Fiscal Policy JUST DOESN'T WORK !!!!
US Economic collapse just doesn't make for strong allies !
US admits economy is in downturn
The US Treasury Secretary sees tough times ahead
US Treasury Secretary Hank Paulson has admitted that the US economy is facing a "sharp decline" at the moment but hoped for a recovery later in the year.
The news comes after the US central bank, the Federal Reserve intervened to rescue troubled bank Bear Stearns, providing $30bn in emergency support.
Mr Paulson said that he did not believe investors saw the move as a bail-out.
The Fed is expected to slash interest rates later on Tuesday to help boost confidence in financial markets.
Meanwhile, two other leading Wall Street banks reported sharply reduced profits for the first three months of the year.
Goldman Sachs posted earnings of $1.5bn, while Lehman Brothers, whose shares had fallen sharply on Monday, earned $489m, or 60% less than in the same period last year.
http://news.bbc.co.uk/2/hi/business/7302068.stm
Wolseley misses targets as US housing bites
Catherine Boyle
Wolseley, the building materials group, added to the gloom surrounding the US housing market this morning as it reported a 23 per cent drop in trading profit and warned that business in the US would become more challenging.
The company reported first-half trading profits of £300 million, which failed to meet analysts’ expectations, as its US building materials operation, Stock, swung to a loss of £44 million, hit by the collapsing housing market.
Wolseley management said in a statement: “The board expects business conditions in a number of the group’s markets to become more challenging. In the US, the housing market is likely to deteriorate further and put additional pressure on the RMI (repair, maintenance and improvement) market.”
Wolseley, which slashed 6,000 jobs in its last financial year and recently cut a further 3,000 to combat a tough US housing market, said its focus will remain on further cost reductions and maximising cashflow.
http://business.timesonline.co.uk/tol/business/industry_sectors/construction_and_property/article3566280.ece
Housing Market Tracker - State, City & Town Budgets Falter
Quote of the Day
"No one is debating the fact that this economy has slowed way down. We feel it, we know it, the American people know it." – Treasury Secretary Henry Paulson. (Mathaba.net, Mar. 17th)
Macro Impact, And Will The Housing Slump Cause A Recession?
Sovereign Wealth Funds Shying Away From Wall Street. "One group conspicuously absent from a last minute deal to scoop up Bear Stearns on the cheap were the sovereign wealth funds that have spent billions of dollars on Wall Street lately... Widespread layoffs across Wall Street have been largely averted so far, as capital injections took the form of minor stakes from foreign fund investors... But if stricken financial institutions are forced to turn to fellow industry players for a bailout, job overlap is inevitable. As it stands, JPMorgan has a large and successful investment banking franchise, leaving in doubt the future of Bear Stearns's own unit." (Int'l Herald Tribune, Mar. 17th)
http://seekingalpha.com/article/69069-housing-market-tracker-state-city-town-budgets-falter
12:30 18/03/2008
Fresh concerns about the global financial system. Video
U.S. stocks fell early Monday but losses were nowhere as steep as those seen in Europe and Asia. (118 sec./4.28Mb, shows: 22)
http://en.rian.ru/video/20080318/101580875.html
US crisis puts pressure on UK banks
Mar 18 2008 by Our Correspondent, Western Mail
THE crisis at US investment bank Bear Stearns will add to the funding pressure on UK banks and a squeeze on borrowers despite falling interest rates, experts warned last night.
The rescue and cut-price sale of the 85-year-old Wall Street firm to rival JP Morgan Chase will make banks even more fearful of lending to each other in the credit crunch, said stockbroker Panmure Gordon.
Analyst Sandy Chen is also expecting a raft of further losses among the UK’s major banks on the mortgage-backed investments hit by the crunch, which have plummeted in value.
He said, “Banks themselves must be tightening their credit and risk models even further, leading to even greater pressure despite any further rate cuts.”
“Recent events lead us to expect higher impairment charges, lower margins and concerns about capital cushions.”
This could lead to even more expensive mortgages for hard-pressed homeowners as banks look to rebuild their balance sheets – despite two rate cuts in December and February from the Bank of England and more expected later this year.
http://icwales.icnetwork.co.uk/business-in-wales/business-news/2008/03/18/us-crisis-puts-pressure-on-uk-banks-91466-20637411/
Ahead of the Bell: Housing Starts
WASHINGTON
A government report on new-home construction and building permit applications for February is forecast to show further declines.
The Commerce Department report, due Tuesday at 8:30 a.m. EDT, is expected to show construction of new homes and apartments fell to an annual rate of 990,000 units in February. That would mean a 2.2 percent drop from a rate of 1.01 million units a month earlier, according to the consensus estimate of Wall Street economists surveyed by Thomson/IFR.
Applications for building permits, considered a reliable sign of future activity, are projected to fall to an annual rate of 1.03 million units in February, down 1.9 percent from a rate of 1.05 million units in January, according to Thomson/IFR.
Good news in the housing sector remains scarce. The National Association of Home Builders said Monday its housing market index for March was the third lowest reading on record.
The index, which gauges builders' perceptions of current conditions, interest from potential buyers and expectations for home sales over the next six months, came in at 20 in March for the second-consecutive month.
The index has been at 20 or below since September, a sign of persistent pessimism from builders. The report is derived from a survey of about 400 residential developers nationwide.
Tighter lending standards, rising defaults and fear about the housing market's future have sidelined buyers, an absence felt acutely by homebuilders such as D.R. Horton Inc., Pulte Homes Inc. and Centex Corp.
http://www.businessweek.com/ap/financialnews/D8VFPJV81.htm
Bad housing market breeds bad landlords
By Anne Trubek
March 18, 2008
SHAKER HEIGHTS, Ohio - The housing slump is cranking out unfit landlords. Take me, for example.
The other day I found myself shooing curb pickers away. My previous tenants were supposed to have cleared out the day before. The new tenants were already busy moving in their stuff. My house now held one 8-month-old, two parents, three grandparents, two cleaners, two movers and one locksmith. And me, taking someone else's personal items to the curb.
People were starting to slow down on my rural state road. Some parked, picked up albums, inspected the couch and tested the sturdiness of the table. They were generally polite and asked if it was for the taking. I was unsure how I was supposed to respond. With no room left on the porch and eight voice-mail messages waiting for the previous tenants, all I could do was keep taking what remained inside straight to the curb.
http://www.baltimoresun.com/news/opinion/oped/bal-op.landlord18mar18,0,46306.story
A credit downturn hits home in region
Bear Stearns: another piece of a housing market puzzle
By Michael Pollick
The downfall of Bear Stearns may seem like a distant muffled moan, part of a continuous whine about the gyrating stock market and sagging housing front.
WHAT'S THE FED DOING ABOUT IT?
In financial moves some experts said are reminis-
cent of those of the Great Depression, the Federal Reserve has engineered the sale of the ailing investment firm Bear Stearns to JPMorgan Chase & Co. for nearly $270 million. The Fed's moves include:
Extending a
$30 billion federally guaranteed line of credit to JPMorgan.
Opening its "discount window" for direct loans from major investment houses, making more money available to banks and brokerage firms, or making them more liquid.
The Fed's moves could continue today with another large interest rate cut.
But it is actually a part of a drawn-out credit implosion that continues to affect the value and marketability of average people's homes as well as their retirement savings.
"Bear Stearns was a huge buyer of the Option ARM subprime loans, and it has gotten them into trouble," said Mike Koebel, a senior mortgage executive at CNL Bank, referring to adjustable-rate mortgages.
http://www.heraldtribune.com/article/20080318/BUSINESS/803180501/-1/newssitemal
Fed Rate Cuts Are Helping Economy, Not Credit Crisis
It’s not the economy, stupid.
It’s the credit crunch.
The size of the Federal Reserve’s expected interest rate cut this afternoon may help stimulate a sluggish economy. But like the several cuts before, it is unlikely to unfreeze the credit markets, especially the mortgage one.
And as the Fed continues to use its conventional fire-fighting equipment,there’s a growing sense that extraordinary--and somewhat controversial--measures may be needed.
“The Fed by itself will not get us out of it," says John Irons, research director at the Economic Policy Institute. “We need to combine fiscal stimulus with monetary stimulus.”
Among the ideas now emerging are a new fiscal stimulus measures, specifically targeting the mortgage market, and the possibility that a bailout of both business and consumers may be inevitable.
“The bulls eye of this crisis is the mortgage market,” Sen. Charles Schumer, chairman of the Economic Policy Subcommittee, told CNBC Tuesday. “Everyone knows we need to do more to stabilize housing.”
http://www.cnbc.com/id/23689759
Wen: China worried about US financial woes
(chinadaily.com.cn)
Updated: 2008-03-18 16:14
Beijing is very much worried about the potential global economic fallout from the US subprime crisis and expanding financial woes, which could make China's job of balancing growth and fighting inflation more difficult, Premier Wen Jiabao said on Tuesday in Beijing.
"We need to blaze a trail in between (curbing inflation and nurturing economic growth)," Wen said after the conclusion of the first session of the 11th National People's Congress, the parliament. Wen was reappointed China's primer minister on Sunday, after his administration attained an eye-catching annual double-digit GDP growth for China in his first term.
However, the Chinese premier admitted that it would be challenging to control inflation this year to within the projected 4.8 percent target. China's inflation ran as high as 8.7 per cent in February, partially because the severe snow storms seen in five decades battered south China and handicapped food supplies.
Wen's administration has set "two prevents" when mapping out this year's economic policies: to prevent the fast-growing economy from being overheated, and keep structural price rises from turning into significant inflation.
http://www.chinadaily.com.cn/china/2008npc/2008-03/18/content_6546596.htm
China raises deposit reserve requirements by 0.5%
(Xinhua)
Updated: 2008-03-18 19:41
BEIJING -- China's central bank decided on Tuesday to raise the deposit reserve requirement ratio of commercial banks to a record high of 15.5 percent, the second such move this year.
The move was to further strengthen regulation of liquidity in the banking system and lead bank loans to increase in a reasonable way, said a statement on the website of the People's Bank of China (PBOC).
It echoed Premier Wen Jiabao's talks at a press conference Tuesday that the government would tackle soaring prices and mounting inflationary pressure.
In his government work report to the National People's Congress, Wen said the task of holding down inflation was "difficult".
"The current price hikes and increasing inflationary pressures are the biggest concern of the people," he said.
In its bid to contain rising inflation, the central bank has raised the reserve requirements 12 times and the interest rates six times since last year.
http://www.chinadaily.com.cn/china/2008-03/18/content_6546940.htm
The Barron's 400SM index, calculated by Dow Jones Indexes, measures the performance of a diversified group of U.S. companies selected in part based on fundamentals-related rules-based criteria. The index includes companies that have scored highest according to fundamentals-related rankings calculated by MarketGrader.com. Additional rules-based screening provides for sector and market cap diversification. The index is licensed by Dow Jones Indexes.
http://www.marketgrader.com/MG.Services/Barrons400/landingpage.jsp?env=idev
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