It’s amazing how this market keeps celebrating while the Titanic is sinking. Strike up the band, everything will be just fine. Right?

Feb.21, 2008 in Market Outlook

The Financial Crisis Continues
On Monday a Wall Street Journal headline stated: “Markets at Risk for Additional Shocks.” It seems that “the world’s top banking authorities” are warning that financial markets “may suffer a relapse.” The front page of that same Wall Street Journal wrestled with another set of negatives: “New Hitches in Markets May Widen Credit Woes.” According to authors Liz Rappaport, Carrick Mollenkamp and Karen Richardson, “A widening array of financial-market problems threatens to trigger a new phase in the global credit crunch” Ambrose Evans-Pritchard, the international business editor of the Telegraph (UK), affirmed that the credit crisis is escalating. “Defaults in the US housing market are spreading from sub-prime to top-grade housing debt, threatening to set off a wave of even bigger losses for banks and investment funds.”

Here’s a prediction to ponder: by Nyquist
Coinciding with the retreat of the dollar, the retreat of U.S. military power signals a new era in which traditional U.S. allies are compelled to make concessions to Beijing and Moscow. When the power-shift begins, Saudi Arabia’s special relationship with the United States will succumb to a new “realism.” NATO will fall apart, with key nations running to Moscow ahead of others. Taiwan, Japan and South Korea will feel the heat. Old allies will detach themselves. Old dependencies and clients will seek protection elsewhere. A policy shift lies ahead for the United States. The Americans are destined to withdrawal from the Middle East. Internal tensions, within the United States, will radicalize the home front.

“German State-Owned Banks on Verge of Collapse”
http://www.spiegel.de/international/business/0,1518,536635,00.html

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