South Africa turns off power to miners South Africa's leading miners halted operations on Friday, sending gold futures into uncharted territory, after the companies agreed to curtail use of electricity as the state-run utility struggles to generate enough power to meet the country's growing needs. Eskom -- whose trouble keeping electricity running left tourists stuck on a cable car by famed Table Mountain earlier this week -- said late Thursday that the generation and distribution problems may last for two to four weeks. "Power is the life blood of these underground operations and is essential for both hoisting men and ores as well as providing adequate cooling at these extreme depths," said Ross Norman, managing director at Fast Markets in London.
3rd Phase of Gold Bull Market With the financial system crisis looming around the world, the gold bull market is starting to enter into its third phase. On the chart below, we have broken down the gold bull market into three phases. The first phase began in 2001 and continued for 54 months with gold gaining 100% (avg. 1.85% per month). The second phase began in 2005, lasted for 24 months with gold gaining 60% (avg. 2.5% per month). The third phase is the most impressive yet. Its start coincided with the widespread recognition of a crisis in the western financial system, further exacerbated by the slowdown in the economy. It is difficult to predict the slope of the third phase, but the first few months have been promising.
Gold & Math on a Napkin Bankers, Wall Street hucksters, financial network commentators, and floating analysts seem to have flunked basic arithmetic in grand fashion. Maybe they only expose the next link in a long chain of deception, their apparent expertise. One hears estimates of $200 billion on total mortgage bond losses from the Secy of Inflation Ben Bernanke. One witnesses the series of bond writedowns by Wall Street banks. One can read of Wall Street economists like Jan Hatzius of Goldman Sachs, who cites $400 billion in potential bond losses, a favorite figure cited by other bankers. One is subjected to press anchors and their simplistic echoes of bond losses. One is endlessly lectured by highbrow analysts of the extent of bond damage. The trouble is, they all cannot do simple arithmetic and observe the billboards on mortgage bond indexes, fully available.
The Large US Companies That May Disappear In 2008 Firestone. American Motors. Texaco. Pan Am. Worldcom. At one point or another these large American companies were at the top of their industries. Pan Am was the leading global airline for decades. All are gone. Some were sold off. Others went bankrupt. Who could have predicted it? There are several iconic US companies that may well not exist at the end of 2008. Some may not even make it halfway through the year. Not all will go out of business. Some may simply be auctioned off in pieces. Others may be bought. These companies will not exist in their current forms as they are known to their shareholders and consumers now. When a company ceases to exist as an independent entity, it is not necessarily bad for shareholders. Some may be worth more in parts. Often a bust-up or merger is what brings owners the most money.
Buddy, could you spare us $15 billion? THIS has been a crisis of risk in unexpected places. Think of collateralised-debt obligations (CDOs), structured investment vehicles (SIVs), and now a £4.9 billion ($7.1 billion) loss due to fraud at Société Générale. One particular nastiness has been festering in an obscure industry which, until recently, enjoyed pristine credit ratings: the "monoline" bond insurers. Their plummeting fortunes (see chart) helped to spark the stockmarket sell-off that prompted the Federal Reserve to act this week ahead of its scheduled meeting. So perturbing was their plight that the prospect of a rescue caused a far bigger stockmarket rally than the Fed's biggest rate cut in a quarter of a century the day before.
Mortgage bond insurers 'need $200bn boost' America's biggest mortgage bond insurers collectively need a $200 billion (£101 billion) capital injection if they are to maintain their key AAA credit ratings, a figure that dwarfs a plan by New York regulators to put together a capital infusion of up to $15 billion, a leading ratings expert said yesterday. The failure to maintain their AAA ratings will lead to a further round of multibillion-dollar writedowns among the Wall Street banks and other large owners of the bonds, Sean Egan, of Egan Jones Ratings Company, said. It would also push some of them into receivership, Mr Egan added. Egan Jones makes its money by selling its research to money managers, rather than through fees from the companies it rates.
Fed helpless in its own crisis After months of denial to soothe a nervous market, the Federal Reserve, the US central bank, finally started to take increasingly desperate steps to try to inject more liquidity into distressed financial institutions to revive and stabilize credit markets that have been roiled by turmoil since August 2007 and to prevent the home mortgage credit crisis from infesting the whole economy. Yet more liquidity appears to be a counterproductive response to a credit crisis that has been caused by years of excess liquidity. A liquidity crisis is merely a symptom of the current financial malaise. The real disease is mounting insolvency resulting from excessive debt for which adding liquidity can only postpone the day of reckoning towards a bigger problem but cannot cure.
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