Gold Fever Boils Over and the Master Forecasters of 2009
Stock-Markets / Financial Markets 2009 Dec 06, 2009 - 06:06 AMBy: Nadeem_Walayat
The big news story of the week was the improving Jobs picture in the U.S. which saw the unemployment rate dip back to 10% from 10.2%, triggering a surge in the stock indices early Friday. Last weeks news of Dubai World's debt default hit Emirate stock markets hard this week with the UAE's main exchange in Abu Dhabi down more than 20%.
In Britain RBS Bank announced that it would award £1.5 billion of bonuses on the basis of £6 billion of profits, whilst conveniently ignoring the fact that these profits are wholly as a consequence of unprecedented bank bailouts and easy money terms engineered for the purpose of the bankrupt bailed out banks to rebuild their balance sheets, instead of which those in charge of RBS threatened to resign if the bonuses were not paid out. If the Labour government has any credibility left it should call the bankster's bluff, as I suspect the RBS board would not honour the threat as there exists a wide gap between the word honour and banking these days. With the pre-budget report due on Wednesday, this may be an opportunity for the Government to introduce a Bankster's Bonus Tax and win votes in the run up to the general election.
I also hear that Goldman Sachs executive officers in New York are arming themselves on fears of a potential popular uprising against bankster bonuses.
In my opinion bonuses paid out by bailed out banks is tantamount to legalised theft from the tax payers who are destined to foot the bill in terms of much higher taxes to come after the next election as this Labour Government looks set to repeat the same outcome of all past Labour governments i.e. to leave a virtually bankrupt economy behind.
Additionally the National Audit Office revealed what we already know that the bank bailouts have saddled tax payers with liabilities of more than £850 billion, or more than 100% of National debt. Whilst a truly shocking admission, it is however pretty much inline of where we should be by now from my projection of 12 months ago with more bank bad debt losses to come. The Labour government estimates the ultimate losses of between £20 to £50 billion, which is a ridiculous figure as the Government has already lost an estimated £15 billion on Northern Rock Bank alone, I estimate the actual real losses to run as high as £500 billion.
Financial Markets Quick Update
Stock market - Stocks reversed the Unemployment report bounce by closing at Dow 10,388. As mentioned in Thursdays quick analysis, the stock market appears to be resolving towards an expanding triangle which is bearish for stocks, the measuring move for which confirms the normal correction objective of several weeks ago i.e. Dow 9950 to 9900.
U.S. Dollar - The Dollar surged higher Friday to 76, though it remains in the weak overall downtrend with the initial buy trigger remaining at 77.00
Gold - Corrected sharply from an extremely overbought state to $1160, and should continue to target a move to below $1,100 though short-term volatility remains high.
The Market Oracle Master Forecaster Awards of 2009
The Market Oracle has for another year endeavoured to provide our readership with the highest quality of analysis. Now our readers have the opportunity to help us award authors who's market and economic judgment calls for 2009 hit the nail on the head. Our aim is to present Master Forecaster Awards to the Top 20 authors voted as the most accurate forecasters of 2009. Voting remains open until the end of of December.
How to Vote
The process of voting is to simply add ?vote2009 AFTER .html in your browser address bar and press enter which will record your vote for that article on our server. The aim is to vote on articles published between late 2008 and early 2009 thus enabling outcomes to be compared against forecasts.
Example Vote For Article9999.html
Click Here for the Voting Guide and for popular and quarterly lists of articles from late 2008 in to mid 2009.
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Source: http://www.marketoracle.co.uk/Article15596.html
Your analyst.
By Nadeem Walayat
http://www.marketoracle.co.uk
Copyright © 2005-09 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.
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