Why gold could hit $1,100 an ounce this year Every year the LBMA – The London Bullion Market Association – holds a gold forecast competition. And there is one outstanding forecaster. He won in 2002, was second in 2003 and 2005. He won in 2006 and is about to win for 2007. The competition works like this: you give your high for the year, your low for the year and your average price for the year. There are about 25-30 participants, from such esteemed institutions as UBS, HSBC, JP Morgan, Standard Bank, Bear Stearns, Standard Bank, Goldman Sachs, Macquarie, Deutsche Bank, Barclays – it reads like a who's who of subprime CDO-exposed banks.
Steep Write-Down for Morgan Stanley Morgan Stanley, the No. 2 U.S. investment bank, on Wednesday reported a larger-than-expected fiscal fourth-quarter loss due to a $9.4 billion write-down from its exposure to subprime and other mortgage-related investments. The company also said China's government-controlled investment vehicle, China Investment Corp., has invested $5 billion to help replenish its capital. And Chairman and Chief Executive John Mack said because of the poor performance, he would not take a bonus this year. "The write-down Morgan Stanley took this quarter is deeply disappointing -- to me, to our colleagues, to our board and to our shareholders," he said. "Ultimately, accountability for our results rests with me, and I believe in pay for performance, so I've told our compensation committee that I will not accept a bonus for 2007."
Morgan Stanley Getting $5B Investment From China Investment bank Morgan Stanley said Wednesday it sold a portion of itself to China Investment Corp., an investment arm of the Chinese government, for $5 billion to raise capital after taking $9.4 billion in writedowns on mortgage-related investments. Morgan Stanley said the investment will help bolster its capital position and allow it to continue growing its Chinese operations. China Investment will receive equity units that convert into as much as 9.9 percent of Morgan Stanley common stock. The equity units carry a fixed annual payment of 9 percent before converting to shares of common stock Aug. 17, 2010. The Chinese bank will have no special rights of ownership or any role in management of Morgan Stanley.
US Foreclosure Filings Up 68 Pct in Nov. U.S. homeowners increasingly failed to keep up with their home loan payments in November, as the number of foreclosure filings surged 68 percent nationwide compared with the same month a year ago, according to a mortgage research company. In all, 201,950 foreclosure filings were reported last month, compared with 120,334 in November 2006, Irvine-based RealtyTrac Inc. said Wednesday. Last month's filings fell 10 percent from October's 224,451. The last time there was a sequential drop in foreclosure filings was between August and September, when they fell 8 percent. "It's a little bit of good news in the otherwise murky real estate market right now," said Rick Sharga, RealtyTrac's vice president of marketing. "The fact that we're seeing a 10 percent decrease is significant. It's a good thing."
Bear Stearns Hedge Fund Manager Departs Amid Probes Ralph Cioffi, the manager of Bear Stearns Cos. hedge funds that invested in subprime mortgages, left the firm as U.S. prosecutors investigate whether he withdrew money from two funds before they collapsed in July. The U.S. Attorney in Brooklyn and the Securities and Exchange Commission are investigating Cioffi's withdrawal of money from the funds, three people with knowledge of the matter said. The probe is part of a broader regulatory review, according to the people, who declined to be identified because the examination isn't public. Investors in the two funds, which filed for bankruptcy in July, lost $1.6 billion. ``This hits three hot buttons for the government right now: insider trading, hedge funds and subprime,''
Former Fed chief blamed for stoking US sub-prime loans crisis Alan Greenspan, the former Chairman of the US Federal Reserve, has come under the most sustained attack to date for his role in America's mortgage meltdown. When he stepped down from the Fed in February last year after 18 years as Chairman, Mr Greenspan was hailed as one of the best central bankers, who presided over one of the biggest economic booms in history. But an increasing number of critics are now questioning Mr Greenspan's achievements, arguing that he fuelled the housing bubble by reducing the US interest rate from 3.5 per cent to 1percent in the aftermath of the September 11 terrorist attacks in 2001. He is criticised for not clamping down on high-risk "sub-prime" mortgage lending, despite warnings that loans were made on terms which borrowers could not afford once the initial "teaser" rate had expired.
The World's Largest Banks Are Now Trapped The subprime mortgage crisis constitutes the worst banking error in my lifetime. Nothing else comes close. It has visibly begun to unravel. The European Central Bank on Tuesday, December 18, opened a line of credit of $500 billion to commercial banks. The Federal Reserve System under Greenspan was the prime instigator. It forced down short-term interest rates by supplying the overnight bank-to-bank loan market with sufficient liquidity to drop the rate to 1%. This encouraged banks to make loans at low rates. These loans were short-term loans. The borrowers then went out and bought long-term assets: bonds and mortgages. This is known as the carry trade. The pioneering central bank in the carry trade was the Bank of Japan. It lowered short-term rates from about 7% in 1990 to just above zero in 1999, where it stayed until mid-2006. But the yen is not the world's reserve currency. The U.S. dollar is.
- - - - - - - - - - - - - - - - Archived Page Link
- - - - - - - - - - - - - - - -
RSS
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/images/quotes_7a.gif)