Platinum Trades Above $2,000 for 2nd Day in London; Gold Gains Platinum rose to a record in London, trading above $2,000 an ounce for a second day, as power cuts in South Africa, the biggest producer of the metal, curbed output. Gold also advanced. Impala Platinum Holdings Ltd., the world's second-biggest platinum producer, today forecast output will drop because of power shortages. The Johannesburg-based company said it may lose 40,000 ounces of production, equal to more than two days of global supply. ``How high can platinum go?'' James Moore, an analyst at London-based TheBullionDesk.com, said by telephone today. ``It will depend on how quickly South Africa can improve its power supply.''
S.Africa power restriction lasting until 2012 South Africa's state-owned power utility will not be able to supply mines and other industrial customers with more than 90 percent of their electricity needs until 2012, Bloomberg reported on Wednesday.Eskom, which supplies most of the nation's power, said last month it could not guarantee electricity to industry, prompting many large mines to shut for five days. The utility has since agreed to provide 90 percent supply to industrial customers.In an interview with Bloomberg on Tuesday, Eskom Finance Director Bongani Nqwababa said the restrictions were unlikely to be lifted until the first new coal-fired power plants start up in 2012.Eskom officials were not immediately available for comment.
UBS sees tough `08, confirms $13.7 bln write-down Swiss banking giant UBS on Thursday said it still has significant exposure to the troubled U.S. mortgage market, raising fears of further write-downs, as it confirmed a $13.7 billion charge had sent its bottom line plunging into the red. Breaking down the charges, UBS said $10.8 billion was linked to subprime mortgages, $2 billion was from its exposure to Alt-A mortgages, and $871 million related to credit protection it had bought from bond insurers. Even after these charges, however, the bank said it still has significant exposure to U.S. mortgage assets. UBS said its net subprime exposure fell to $27.6 billion from $38.8 billion in September. But it also revealed several other positions that could lead to further write-downs, including around $26.6 billion of exposure to Alt-A mortgages -- which are riskier than prime mortgages but not as risky as subprime -- and around $3.6 billion of exposure to bond insurers.
Solvency Worries Stalk Credit-Derivatives Market Suppose you lent money to Morgan Stanley back in the mists of 2004, paying a bit more than 99 percent of face value for a chunk of the bank's $4 billion of 4.75 percent bonds repayable in April 2014. According to Feb. 12 prices on the Trace reporting system, the bonds are now worth about 97 percent of face. According to your gut instincts, there may be worse to come. Rather than sell at a loss, you decide to buy insurance in the derivatives market. You call your friendly credit-default swap broker, who happens to work for Merrill Lynch & Co. He quotes a price of 160 basis points, which means an annual cost of $160,000 to insure $10 million of debt for five years. If Morgan Stanley's creditworthiness slumps, the value of that swap will rise, delivering a profit to offset further losses on your bonds.
Totally spent We're sliding into recession, or worse, and Washington is turning to the normal remedies for economic downturns. But the normal remedies are not likely to work this time, because this isn't a normal downturn.The problem lies deeper. It is the culmination of three decades during which American consumers have spent beyond their means. That era is now coming to an end. Consumers have run out of ways to keep the spending binge going. The only lasting remedy, other than for Americans to accept a lower standard of living and for businesses to adjust to a smaller economy, is to give middle- and lower-income Americans more buying power. And not just temporarily.
Bye bye American Pie: students become the next victims of the credit crunch American students borrowing money to go to college could be the next victims of the global credit crunch as investors back away from traditionally low-risk securities backed by student loans. A state lending agency has suspended loans under a programme serving students at some 100 colleges and universities. Experts fear that others could follow. The Michigan higher education student loans authority cited "current and unprecedented capital markets disruption" for its decision to axe its alternative loans programme. Student loans are typically packaged into securities that have a floating interest rate determined through regular auctions - called the auction-rate securities market, worth an estimated $360bn (£183bn). In recent weeks, many of these bonds have been left unsold.
Wait till 2009 The housing market will not stabilize until late in 2008 at best, with sales, starts and prices continuing their slide through most of the year, economists attending the International Builders Show here said Wednesday. Housing starts, which fell 30% in 2007, could drop nearly that much again in 2008, said David Seiders, chief economist for the National Association of Home Builders. His forecast calls for new-home sales to fall to a 25-year low of 632,000 units in 2008, down more than 20%. Existing-home sales will drop as well, to a 20-year low, of 4.33 million units. And while home-price trends will vary across the country, the national median price is projected to drop again in 2008.
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