Tuesday, April 21, 2009

Just when you thought it was safe to go back in the water . . .

Meltdown losses of '$4 trillion'

The International Monetary Fund (IMF) has warned that potential losses from the credit crunch could reach $4 trillion (£2.75tn) and damage the financial system for years to come. It says that even if urgent action is taken to clean up the banking system, the process will be "slow and painful", delaying economic recovery. It says that banks may need $1.7 trillion in additional capital. But it warns that political support for further bank bail-outs is waning. One year ago, the IMF estimated that total losses from the credit crunch would be $1 trillion, which has been exceeded, showing how rapidly the financial meltdown has escalated.

Posted by charlie brooker @ 02:45 PM (693 views)
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3 thoughts on “Just when you thought it was safe to go back in the water . . .

  • general congreve says:

    The writing is on the wall for all to see. What to do?

    1. Leave your money in an insolvent bank, with your deposit backed by an insolvent governent?
    2. Buy bonds from bankrupt governments?
    3. Invest in the stockmarket, currently underpinned by nothing more than lagging bullish sentiment? I’m looking forward to the earning reports coming out soon, should expose some of those apocalyptic fundamentals that we all know are there.
    4. Invest in commodity fund/ETFs run by insolvent banks?
    5. Invest in physical gold and silver bullion?

    Whichever you think is safest, your call. Time is running out…

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  • I think gold has lost its shine. i’m happily trading it, but I don’t expect any magic from it. I think more practical hedges are wanted, eg China and copper, rather than gold just because it’s the traditional hedge. Also, what happens to gold price when gold is dumped to get funds…

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  • general congreve says:

    The reason I back gold is because while commodities like copper and oil might have major upside potential, the only way for the ordinary investor to invest in these things is through ETF’s or futures. These are all managed by the financial sector and your money will essentially be sitting in a bank somewhere, most likely an insolvent bank that risks going bust as this crisis unfolds to levels that even governments can’t stop.

    Likewise, Chinese shares, or any shares for that matter mean handing your money over to a company who then puts it in their bank, a bank that is most likely insolvent and can’t be relied upon to be here in the longer run.

    So, by all means speculate, but be aware of the risks and make sure you’ve got a reasonable amount of your capital secure and in your own hands in case the SHTF, gold or silver can do that for you.

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