Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Wed 03.12.2008
A Golden Future For Silver One of the most important aspects of investing is that it is genuinely hard work. There are no shortcuts. Taking it easy for a while simply isn’t an option if you strive to make a decent return every year. One has to stay focused, in order that they will be able to anticipate and then take advantage of great opportunities, things which are rare. And yet, we are now being handed a great opportunity on a silver platter. This is an opportunity that could be life changing for many. I know that I have said it before, and that to some of you may think I sound like a broken record, but it is crucial for investors to act quickly in order that they might profit from this chance of a lifetime.
Is the dollar's decline about to accelerate? Remember the boy who cried wolf -- and one day the wolf ate him? How about crying "foreign debt"? We first asked this question nearly four years ago. We pointed out that critics used to claim the Reagan-era boom in the early 1980s was just due to borrowings from foreigners. It sounded plausible. But it just wasn't true. Foreign holdings of federal debt were low in the early 1980s, and falling. They bottomed at 13.4% at the end of the fiscal year in October 1984. But when we last looked, the wolf was at the door. Foreign holdings of federal debt had reached 37.3% at the end of fiscal 2003. Now the wolf is in the door. Foreign holdings of federal debt in 2007 reached a record: 45%.
Dollar Falls to Record Low on Concern Fed Package Won't Succeed The dollar fell to a record below $1.55 per euro on concern that the Federal Reserve's plan to provide funds to banks won't be enough to break the gridlock in money-market lending and stem credit losses. The U.S. currency erased more than half of yesterday's 1.6 percent rally versus the yen, the biggest in six months, which came after the Fed said it would extend $200 billion of credit to financial institutions to spur lending. Traders bet the Fed will cut rates by as much as three quarters of a percentage point next week to avert a recession, while the European Central Bank keeps borrowing costs unchanged. ``It's difficult for the dollar to gain traction,'' said Paresh Upadhyaya, who helps manage $50 billion in currency assets at Putnam Investments in Boston. ``The Fed is probably running out of options; the market is fixated on interest-rate differentials, which are clearly negative for the dollar.''
Fed takes boldest action since the Depression to rescue US mortgage industry The US Federal Reserve has taken the boldest action since the 1930s, accepting $200bn of housing debt as collateral to prevent an implosion of the mortgage finance industry and head off a full-blown economic crisis. The Bank of England, the key European central banks, and the Bank of Canada all joined in a co-ordinated move with a mix of policies to halt the dowward spiral in the credit markets, expanding on the "shock and awe" tactics used late last year. The Fed's dramatic step came after an emergency conference call by governors on Monday night. It followed the melt-down of the US chartered agencies -- Fannie Mae, Freddie Mac, and other lenders -- which together guarantee 60pc of the entire US home loan market.
China's oil reserve build-up adds to global demand China's plans to build its strategic petroleum reserves to at least 100 million barrels by 2010 could add more pressure to crude prices which have already been at record highs. The world's second-largest oil consumer already has built two underground storage reserves in east China and will put into use two more storage bases soon, a senior Chinese official said over the weekend, according to China's official Xinhua news agency. "Although China is not the only source of rising oil prices, it has consumed the largest share of the global increase in oil demand in the last seven years," said Donald Straszheim, chairman of Straszheim Global Advisors and an expert on Asian economies. "Building reserves will of course add more pressure on global oil prices."
Freddie Mac sees home prices falling further U.S. home prices have much further to fall, the chief executive of major mortgage-buyer Freddie Mac said Wednesday. Speaking to analysts on a conference call, CEO Richard Syron estimated that housing prices, from peak to trough, have dropped only a third as far as he thinks they're going to. The McLean, Va.-based company's expecting a peak-to-trough decline of 15% in all. On Feb. 28, Freddie Mac reported a fourth-quarter loss of $2.5 billion, blaming the weakened U.S. housing market and credit-related expenses.
Citi commits $1 bln to prop up two muni bond funds Citigroup Inc. is injecting $1 billion into two internal municipal bond hedge funds that were hit hard by recent disruptions in fixed-income markets, a spokesman for the giant bank said on Wednesday. Citigroup launched ASTA Finance, LLC and MAT Finance, LLC in 2002 to trade muni bonds. ASTA made leveraged investments in fixed-rate munis and tried to hedge the interest-rate risk of those positions. MAT focused on arbitrage, sniffing out anomalies between tax-free munis and similar taxable bonds. The two funds had roughly $2 billion in capital and through leverage, or borrowed money, had about $15 billion in assets. The normally placid muni bond market has been thrown into turmoil in recent weeks as the mortgage crisis has spread into a full blown credit crunch.
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