Saturday, June 19, 2010

World Financial Report, June 18, 2010

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The Economist - 19 June 2010

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Commercial Real Estate Delinquencies

The rate of commercial mortgage delinquencies ballooned more than 25% in the first quarter of 2010.

New numbers from the Mortgage Bankers Association reveal the commercial real estate problem has not gone away… it’s just being swept under the rug. Still, this is hard to ignore: 5.7% of loans contained in commercial mortgage-backed securities were at least 30 days in arrears during Q4 2009. And the number exploded to over 7.2% in Q1 2010. That’s the blue line in this chart…

Yes, a year earlier, the figure was still under 2%. And that red line? Those are loans more than 90 days overdue that sit in the portfolios of banks and thrifts. After 90 days, you might as well consider it defaulted. And that rate has doubled in the space of a year.

"Economic growth, specifically in areas of jobs and consumer spending, will be key to stabilizing the commercial property and mortgage markets going forward,” reads a statement from the Mortgage Bankers Association that accompanied this data.

Time to Focus on Silver

It is not exactly groundbreaking analysis to say that whats good for Gold is generally good for Silver. As observers of the precious metals know, Silver tends to lag Gold but eventually catch up quickly. In the long-term sense, Silver is still a year or two behind Gold as Gold has broken above all resistance levels. Technically speaking, we do favor Gold over the next few months, but ultimately, Silver is poised to catch up with vengeance.

Here is a great 40-year Silver chart from Nick Laird at, with my annotations. (more)

Gerald Celente: The Entire System is Collapsing

Greenspan Says U.S. May Soon Reach Borrowing Limit

Former Federal Reserve Chairman Alan Greenspan said the U.S. may soon face higher borrowing costs on its swelling debt and called for a “tectonic shift” in fiscal policy to contain borrowing.

“Perceptions of a large U.S. borrowing capacity are misleading,” and current long-term bond yields are masking America’s debt challenge, Greenspan wrote in an opinion piece posted on the Wall Street Journal’s website. “Long-term rate increases can emerge with unexpected suddenness,” such as the 4 percentage point surge over four months in 1979-80, he said. (more)

Why Many Respected Analysts See Gold Going Up to $10,000

Arnold Bock recently wrote an article on this site suggesting that gold would go to $10,000 by 2012 giving a host of sound reasons why that would be the case. It took the internet by storm with extremely high readership. My first reaction was "Who in their right mind would even suggest that gold will eventually reach $2,500, let alone $5,000 or even $10,000?" Well, believe it or not, Bock is not the first respected mind to come to the same conclusion. Actually, the list is rather long so in this article I will relate the reasons why just 10 such analysts hold these views.

  1. Peter Schiff:

As President & Chief Global Strategist of Euro Pacific Capital, Schiff correctly called the current bear market before it began. As a result of his accurate forecasts on the U.S. stock market, economy, real estate, the mortgage meltdown, credit crunch, subprime debacle, commodities, gold and the dollar, he is becoming increasingly more renowned.

He recently was reported in Business Week as saying that "People are afraid of the debasement of all the currencies. What's surprising is that gold is still as low as it is ... Gold could reach $5,000 to $10,000 per ounce in the next 5 to 10 years.” (more)

Salbuchi - 2010 Forecast - Status Report at 15 June 2010

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Bloomberg Businessweek - June 21-27 2010

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Chart of the Day