We’ve been warning you since the start that the subprime crisis would have some real staying power.Indeed, every time optimistic prognosticators have predicted an end to this global financial debacle, we’ve had the same response: Don’t you believe it.
In the currency market, the dollar was slightly higher against the euro. Late Thursday, the euro was trading at $1.5729 vs. $1.5741 on Wednesday. The buck gave back much of its gain from early in the day, as equities sagged off of their highs.
Unlike Dorothy in “The Wizard of Oz,” the brutalized U.S. banking system will never again return to that comfortable, cozy, and cushy capital place it once happily referred to as “home.” But its “Wicked Witch” was its own greed. The curtain has finally been pulled back on the machinery, and the hot air used to pump up the U.S. banking system’s version of the Emerald City in the Land of Oz.
Ed Steer says: “Both silver and gold were quiet in the Far East yesterday, but there was a small sell-off in both metals starting with the London open. That only lasted for about three hours before the prices bottomed and then slowly ground higher almost into the close of after hours trading on the Globex in New York…finishing virtually on their highs of the day.”
Editor’s Note: Money Morning’s William Patalon III says crude oil prices above $142 a barrel and the 20% slump in the Dow Jones Industrial Average (DJI) since October are the chief concerns for investors.
British consumers are running out of credit. Stock markets took a serious hammering yesterday. The FTSE 100 lost nearly 150 points to close at 5,518. Over in the US, the Dow Jones dived by more than 350 points, to close at 11,453. This morning, the Asian markets followed suit, with the Nikkei 225 sliding nearly 300 points to 13,544 points.
The Fed’s policy meeting looms large today. And it looks likely that, with the inflation cat out of the bag, that the feds will hold off on more rate cuts.
In fact, every one of the 101 economists surveyed by Bloomberg said that they thought the Fed would leave rates unchanged.
Money Morning’s Jennifer Yousfi examines why the likelihood of further rate cuts has fallen in recent days…
Editor’s Note: Sky-high crude oil prices and gas prices are becoming something of a national obsession.
They’ve also becoming the mother of all political punchbags. Washington’s finest are scrambling over each other to be seen as championing ‘ordinary Americans’ over the big, bad oil companies and, even worse, the oil speculators.
Volatile oil prices… Bush blames Democrats for fuel crisis… More gloom on Wall Street… Stocks take a beating…
Crude futures encountered a volatile week last week as traders analyzed the contrasting news from aboard. On one hand, the news that Saudi Arabia may be increasing oil production and that China is hiking gasoline and diesel fuel prices should dampen demand and move prices lower. On the other hand, Israel threatened Iran’s nuclear facilities and rebels reportedly attacked a Chevron Corp. (CVX) plant in Nigeria late last week (both should contribute to higher oil prices). For now, crude stands around the $135 per barrel level.
The financial world has been in trouble since the Bear Stearns (BSC) hedge funds blew up in August 2007. Bear Stearns itself imploded and had to be rescued by a US government sponsored bail out. The world has been on a shaky wicket for the past 10 months. Oil has risen to record highs.
