New World Order University Forum

The Federal Reserve is currently requiring major banks to reassess their reserves in light of a worst-case scenario. This is being called a stress test. Research Reports offers a preliminary assessment of major banks’ capital needs. Bill Gross of Pimco notes that trillions of dollars of new capital will be required to shore up the big banks. More analysis on the major banks here.

Market Watch reports that U.S. exports are declining at a 49% annual rate, and U.S. imports are declining at a 30% annual rate. This means that the foreign countries that relied on the U.S. consumer for their economic growth must now scale back production. The lower U.S. demand means that many exporting nations are now facing higher unemployment, mass migrations out of cities to rural areas, and protectionist pressures to keep their remaining industrial companies from collapsing.

Britain’s debt is now larger than its GDP. Money Week predicts a further fall in British housing prices and wonders if Britain will go bankrupt. Of course, it’s not just Britain. Other countries are in the same pickle. Money Week notes that restricted consumption and restricted government spending could solve the crisis, but governments are pursuing the opposite policy. Money Week also notes that Japan is the major country closest to bankruptcy.

Option Armageddon offers charts showing the relationship between expanding debt and lower housing prices. The big question is, who is going to buy all the new government debt? And why should they buy it with interest rates artificially held close to zero?

Extrapolation of present trends indicates a possible bankruptcy of the Fed, severe dollar devaluation, or an astronomical price for gold. Christopher Laird explains why the Fed and the G20 nations cannot print enough money to cover the worldwide derivates debt overhang. The result of this analysis arrives at a hard choice, let the big banks fail or risk the failure of the Federal Reserve and the collapse of the dollar. Many voices are now calling for the former.

As more financial experts recognize that the world is facing a doomsday scenario, the search is on for a safe haven. Michael Pollaro explains why the Swiss franc is no longer a safe haven. The euro can’t be a safe haven, either, as long as the European central bankers and Gordon Brown call for more deficit spending (“stimulus”). Switzerland’s decline is linked to the fall of UBS. The Asia Sentinel reports on Singapore’s investment in UBS and the related decline of Singapore as a safe haven.

If you are thinking of buying gold mining shares, Richard Mills offers a warning. Marxist governments around the world are appropriating gold mines. Mills also reports on food riots in this article.

Doug Noland of The Prudent Bear argues that increased government spending is creating a Government Financial Bubble to replace the private credit bubble. The disconnect between private and government capital isn’t helping the economy. Noland believes the issuance of more government debt will not reflate asset prices. In other words, buying a house now is probably not a good idea as falling prices will put you under water. Increased government spending and debt issuance are putting the entire world financial system at risk.

Tags: Bill Gross, credit crisis, Federal Reserve, stress test

This entry was posted by Director on Monday, March 16th, 2009 at 2:37 pm and is filed under Global Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.