In China and India, consumers unfazed by high gold prices Sky-high gold prices did little to curb demand for jewelry in India, China and some other Asia countries in 2007, suggesting that buyers recovered from initial shocks sparked by persistent rallies in bullion.Gold surged more than 30 percent last year, peaking at a 28-year high of about $845 an ounce in November. The rally continued into 2008 to touch historic highs of $936 in early this month."There seems to be renewed demand for gold among the jewelers and consumers over the last 15 to 20 days," said Ajay Mitra, managing director of the World Gold Council in India."They have to some extent consented to the fact that gold in the short term is not going to be falling below $900," he told Reuters by telephone from Mumbai.
Top steelmakers agree 65% iron ore price rise while platinum hits record level Commodity prices were on another high last night after a 65% increase in iron ore costs was agreed by top steel makers. The ground-breaking iron ore contract was won by Vale of Brazil after tough negotiations with Japanese and Korean steel companies including Nippon, Sumitomo and Posco. The new prices will be introduced from April 1 and is likely to lead to higher car, ship and building costs. "The magnitude of the price increase for 2008 reflects the continuity of very tight conditions still prevailing in the global iron ore market," explained Vale, whose shares rose more than 5% on the Sao Paulo exchange. Iron ore values are being driven by huge demand in China, where the economy grew by over 11% last year - its highest rate in 13 years - and the rest of Asia.
US banks borrow $50bn via new Fed facility US banks have been quietly borrowing massive amounts of money from the Federal Reserve in recent weeks by using a new measure the Fed introduced two months ago to help ease the credit crunch. The use of the Fed’s Term Auction Facility, which allows banks to borrow at relatively attractive rates against a wider range of their assets than previously permitted, saw borrowing of nearly $50bn of one-month funds from the Fed by mid-February. US officials say the trend shows that financial authorities have become far more adept at channelling liquidity into the banking system to alleviate financial stress, after failing to calm money markets last year However, the move has sparked unease among some analysts about the stress developing in opaque corners of the US banking system and the banks’ growing reliance on indirect forms of government support.
Wall St. Banks Confront a String of Write-Downs Wall Street banks are bracing for another wave of multibillion-dollar losses as the crisis that began with subprime mortgages spreads through the credit markets.In recent weeks one part of the debt market after another has buckled. High-risk loans used to finance corporate buyouts have plummeted in value. Securities backed by commercial real estate mortgages and student loans have fallen sharply. Even auction-rate securities, arcane investments usually considered as safe as cash, have stumbled. The breadth and scale of the declines mean more pain for major banks, which have already written off more than $120 billion of losses stemming from bad mortgage-related investments.
US Credit Markets Are Collapsing! - Last Chance to Defend Your Portfolio! Martin Weiss writes: The U.S. credit markets, the giant growth engine that powers the American economy, are collapsing ... with few credit sectors spared from damage, few investors escaping losses, and little hope of federal action that's quick or strong enough to make a major difference. Here's what's happening ... First and Foremost, the Fall of The Nation's Three Largest Bond Insurers Is Accelerating This is the " Great Ratings Debacle " I highlighted last year. And now, the critical watershed event that I said would trigger the next phase — the collapse of the bond insurers' triple-A ratings — is here in aces and spades. Without the triple-A rating, their whole reason to exist falls by the wayside: They cannot enhance the credit of bond issuers. They cannot do more business. They may as well close their doors and go home.
Bond Insurer Split Threatens $580 Billion of Notes Credit ratings on more than $580 billion of asset-backed securities may be cut, sparking writedowns by banks, under New York regulator Eric Dinallo's plan to break up bond insurers. New York Insurance Department superintendent Dinallo proposed splitting the companies' municipal insurance units from their unprofitable businesses of guaranteeing debt linked to subprime mortgages. A separation may preserve AAA rankings for securities sold by local governments and agencies, while allowing asset-backed securities to slide. ``This is one of the worst possible outcomes for the market,'' Gregory Peters, head of credit strategy at Morgan Stanley in New York, said in a telephone interview. Lower ratings would force banks that own the mortgage-backed debt to write down the value of the securities by as much as $35 billion, he estimated.
Signs Point To Banking Crisis Getting Much Worse The evidence comes in in pieces. One bit of bad news here and one there. Today, the FT reported that US banks had tapped the Fed’s Term Auction Facility for over $50 billion in the last few weeks. As one analyst pointed out "The TAF ... allows the banks to borrow money against all sort of dodgy collateral," says Christopher Wood, analyst at CLSA. "The banks are increasingly giving the Fed the garbage collateral nobody else wants to take ... [this] suggests a perilous condition for America’s banking system." The news that Credit Suisse had "found" $2.85 billion in write-downs for asset-backed paper was not terribly encouraging. It is certainly an indication that banks are still having substantial problems valuing assets which are based on a weakening housing market and do not trade because of a locked-up credit markets. The banks can guess at the value of what they hold, but have no way to know for certain.
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