Dan Gheorghiu's Weblog

Bursa de la Bucuresti a inregistrat ieri a treia zi de scaderi
consecutive, accentuarea turbulentelor de pe piata financiara determinand unele
dintre fondurile care activeaza pe piata noastra sa-si lichideze portofoliile,
sunt de parere brokerii.

Din cauza lichiditatii foarte reduse si a lipsei de cumparatori locali
de calibru care sa absoarba pachetele puse la vanzare de acestia, cotatiile
celor mai mari companii listate au inregistrat si ieri pierderi
importante.

Actiunile BRD au afisat pe parcursul zilei de ieri o
scadere de peste 8%, insa si-au mai revenit pe final si au inchis pe minus cu
3,8%, ducand pierderile din aceasta saptamana la 20%. SIF-urile, ale caror
portofolii sunt constituite in principal din actiuni bancare, au coborat si ieri
in medie cu 3,3%, pierderile din ultimele trei zile ale acestora depasind
16%.

Situatia este mult mai grava in Rusia, unde au fost oprite tranzactiile
pe bursa moscovita pentru a doua zi consecutiv, pentru a stopa cea mai mare
criza financiara interna din ultimul deceniu. Indicele rus Micex a pierdut 10%
in sedinta de tranzactionare de ieri, ducand declinul inregistrat in ultimele
trei zile la 25%. Mai mult, autoritatile ruse au decis sa efectueze un influx de
lichiditate de 44 mld. dolari pe piata bancara.

Our country's ability to buy goods and services from abroad is
diminishing and Santa is not coming this Christmas (just look around
and you'll see Christmas decorations already in some stores – how
desperate is that?) Foreign manufacturers are going to be scratching
their heads over the holidays wondering where the dollars that used to
come from America suddenly went.

The financial markets are going
to slowly realise that the only reason foreign central banks bought
Treasuries is because the US bought their goods first! China, as one
example, realises our money is not that good and will take an interest
in holding dollars only because we are buying goods and services from
them. Foreign countries have no reason to buy massive amounts of
Treasury debt unless we buy something from them first.

the Treasury debt still can't be sold to American savers because
America doesn't have savers; and, we are no longer buying enough goods
from foreigners and sending them our dollars to finance the Treasury
deficit.

However, squeezing a trillion dollars out of the money markets of the
world is clearly impossible and the only remaining option to fund the
US Treasury's insatiable appetite is through 'monetisation'.
Monetization means that the Federal Reserve would step in and print up
new money out of thin air and buy the Treasury debt. If that occurs,
monetary growth rates would soar and, in turn, create very high
inflation as too many dollars start chasing too few goods. Rising
inflation forces interest rates up, and rising interest rates always
have devastating consequences for the prices of financial assets such
as stocks and bonds.

So, how will we all be affected? First, start reading about what life
has been like in the Banana Republic and in countries like Argentina,
where the inflation rate in 2002 rose to 20% following the devaluation
of the country's currency, the peso. Brace yourself for several years
of rising inflation and interest rates and, by all means, protect your
portfolio. Remember, cash is king again.

First, I want to buy gold and silver in physical form whenever I can.
In the world of inflation, while cash is king, gold is the emperor!
Second, I look to accumulate real assets if they are quality assets and
the prices have crashed down. So, I do believe that in a few years even
real estate will again be a great inflation hedge!

Cristopher Dodd, presedintele Comitetului Bancar din Senat: “in forma curenta planul nu va functiona”; “acest plan este uimitor in ceea ce priveste lipsa detaliilor”;