Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Fri 12.21.2007
Gold futures rise, boosted by dollar weakness Gold futures rallied more than 1% on Friday, as declines in the U.S. dollar supported investment demand. "Gold prices are higher on the back of speculation that the US dollar may weaken into 2008, which boosts the appeal of gold as a hedge against inflation and makes it cheaper for foreign investors," said analysts at Action Economics. The dollar index, which tracks the performance of the greenback against a basket of other major currencies, dropped 0.3% at 77.585. Gold, as a dollar-denominated commodity, benefits from dollar weakness.
Only Gold Can Beat the Credit Crunch Of course - to any Wall Street power broker, economist, or US policy maker, this headline means the equivalent of "Only Space Aliens Can Halt Teenage Pregnancies". In other words, it’s a total non-sequitur to them. So what? Who cares about Wall Street, economists, or politicians? Individual investors, business owners, workers, fathers, mothers, and college students, they are the ones who must survive if the United States is to survive the mounting credit collapse more or less intact. Why worry about those who caused the mess? The point is that Wall Street or US politicians cannot and will not save investors. They are not concerned with investors, only with themselves. Investors must save their own little selves - and the only way to do that is by jettisoning the world of contracts, paper, and electronic currency blips.
Merrill Lynch may get $5 billion Temasek injection Merrill Lynch & Co is in advanced talks to receive a $5 billion cash infusion from Singapore's state investment company Temasek Holdings Ltd., becoming the latest among a number of blue chip Wall Street and European financial institutions to receive funding from Asian or Middle Eastern government funds in the wake of the ongoing turmoil in structured credit markets, according to a media report Friday. Talks between the organizations are at an advanced stage, The Wall Street Journal reported in its online edition, citing a person with knowledge of the matter. Talks between Temasek and Merrill are ongoing at a time analysts speculate the New York investment bank may book mortgage-related write downs of up to $8 billion in the fourth quarter, the Journal reported.
Bonuses on Wall Street surge 14 percent This might have been one of Wall Street's most dismal years in a decade, but that hasn't stopped bonus checks from rising an average of 14 percent. Four of the biggest U.S. investment banks — Goldman Sachs Group Inc., Morgan Stanley, Lehman Brothers Holdings Inc. and Bear Stearns Cos. — will pay out about $49.6 billion in compensation this year. Of that, bonuses are traditionally estimated to represent 60 percent, or almost $30 billion. But that might not sit well with investors who held on to investment bank stocks this year — and watched them plunge by up to 45 percent. Investment houses have been slammed by the credit crisis, and top executives this past week said they've yet to see a bottom.
US$ & Monoline Bond Insurers The hidden bond insurers used by Wall Street firms are in the news, especially ACA Capital and MBIA. Implications are huge, with monumental ripple effects. Financial press reporting of the bond insurers is woefully inadequate. Moodys and Fitch are giving analysis review to nine 'AAA' rated bond insurers to see if they have sufficient capital to conduct their insurance operations. The list includes ACA Capital, MBIA, Ambac Financial, and Financial Guaranty Insurance. ACA Capital has only $1.1 billion in cash for payout of bond failure claims, but has lost $1 billion in the most recent quarter. More losses are assured. This insurer is very important, since it is widely abused by Wall Street banks to hide cratered bond derivative losses. If ACA insures a bond, then Goldman Sachs or Merrill Lynch for instance can take the under-water bond off the balance sheet.
Years of mortgage foreboding followed by years of pain After years of foreboding - sadly much of it outside the real estate industry - the US housing bubble finally burst in 2007.Amid a spike in late payments and defaults on subprime mortgages made to borrowers with patchy credit histories, the liquidity that helped fuel the US housing boom drained rapidly away, leaving behind a global financial markets crisis that looks set to linger into 2008.Jack Malvey, chief global fixed income strategist at Lehman Brothers, said: "In the end, the story of 2008, 2009 and possibly 2010 will be about the extent and consequences of what promises to be the worst US housing correction since the Great Depression in the 1930s."
Stock market 'winter' is moving in Where in the world can you safely put your money? Not in equities, two top investors warn. They're not perpetual bears -- just investment analysts with enviable records. Growing numbers of market veterans in recent weeks have stuck out their necks and declared the 2002-07 bull market over, done and dead. At considerable risk to their reputations, considering the market is down a mere 8% from its high, they're asserting that a one-two-three punch of earnings recession, credit constriction and inflation have created bear-market conditions that could push the average stock down at least 20% over the next year.Although the news media and amateur analysts sometimes throw the term "bear market" around carelessly, like a schoolyard curse, it is not a concept that institutional analysts and fund managers take lightly.
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