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1. In one way, I'm sympathetic to the institutional reluctance to
face the music. I'd give a lot to mark my weight to 'model' rather than to
'market.' - Warren Buffett, Fortune, 8/16/07 (On the financial institution
practice of valuing subprime assets on the basis of a computer model rather
than the free market price.)
2. The Federal Reserve was not founded to bail out Bear Stearns or
a few hedge funds. It was founded to keep a stable currency and maintain its
value. - Jim Rogers, Rogers Commodity Fund
3. For the second time in seven years, the bursting of a
major-asset bubble has inflicted great damage on world financial markets. In
both cases--the equity bubble in 2000 and the credit bubble in 2007--central
banks were asleep at the switch. The lack of monetary discipline has become a
hallmark of unfettered globalization. Central banks have failed to provide a
stable underpinning to world financial markets and to an increasingly
asset-dependent global economy. - Stephen Roach, Morgan Stanley
4. There is a lot of pain still to be had in the equity markets,
particularly aimed at the risky end of the spectrum. We think the fair value on
the market is about a third lower in the U.S. . . - Jeremy Grantham, Grantham,
Mayo and Van Otterloo
5. Suddenly, the world is realizing that gold is still a safe haven
asset. We've seen pretty substantial losses in equity markets. I think this is
genuine safe-haven buying. - James Moore, theBullionDesk
6. I think Greenspan would have cut rates already. So I do think
things are beginning to look different at the Fed. - Paul Kasriel, Northern
Trust
7. At this juncture, the impact on the broader economy and
financial markets of the problems in the subprime market seems likely to be
contained. - Fed chairman, Ben Bernanke, Congressional testimony, March,
2007
8. "If prices go down, we will have problems -- problems in
the sense of spillover to other areas," Greenspan said. While he hasn't
seen such spreading yet, "I expect to." - Former Fed chairman,
Alan Greenspan, speech, March, 2007 as reported by Bloomberg.com
9. This is not a rescue. - Goldman Sachs Chief Financial Officer
David Viniar after Goldman poured $3 billion into one of its hedge funds
10. This is a sort of preemptive rescue. - Eric Kuby, chief
investment officer for the Goldman fund mentioned
11. When you're in a pit, the first thing to do is to stop digging.
- James Ellman, Seacliffe Capital
12. The US financial system is teetering. Its USDollar currency is
losing global support, with some outright revolts in crucial territories. The
chief private sector export from the US financial sector has been fraud-ridden
asset-backed bonds and their toxic credit derivatives. What should anyone
expect? For years an institutional dishonesty within all things financial in
the United States has been engrained, spreading, and become integrated with
high levels of the USGovt. The Wall Street hucksters exported fraud. The
backlash might be more severe than the soft soap gurus anticipate. Look for an international
boycott. The shock waves in the US financial markets are preliminary symptoms
of bigger events soon to come. Stability identified is nothing but quiet
between tremors. - Jim Willie, Hat Trick Letter
13. The German banks' situation is not uncritical. - Alexander
Stuhlmann, Germany's Landesbank
14. After all, in a credit crunch, cash is deemed to be king. In
which case, gold owned outright has just been crowned emperor. - Adrian Ash,
BullionVault
15. [C]apitalism without financial failure is not capitalism at all,
but a kind of socialism for the rich. - James Grant, Grant's Interest Rate
Observer
16. US sub-prime is just the leading edge of a financial hurricane.
- Bernard Connolly, AIG
17. When the music stops in terms of liquidity, things will get
complicated. But as long as the music is playing, you've got to get up and
dance. We're still dancing. - Chuck Prince, Citigroup
18. Why is it possible to rescue S&L buccaneers in the early
'90s and provide guidance to levered Wall Street investment bankers during the
1998 long-term capital management crisis, yet throw 2 million homeowners to the
wolves in 2007? - Bill Gross, Pimco
19. So perhaps the most worrying single remark made by a responsible
banking official during the current crisis came from Jochen Sanio, the head of
Germany's banking regulator BaFin. He warned on Aug. 1 that his country could
be facing the worst banking crisis since 1931 -- a reference to the collapse of
Austria's Kredit Anstalt, which provoked a wave of bank failures across Europe.
- Martin Walker, United Press International
20. Angelo Mozilo, chief executive of Countrywide Financial Corp,
which is one of the chief victims of the sub-prime home loan debacle, said the
housing crisis was the result of "one of the greatest panics I have ever
seen". When asked if housing would lead the US into a recession, he said:
"I can't believe ... that this doesn't have a material effect ... on the
psyches of the American people and eventually on their wallet." - Phillip
Inman, The Guardian
21. As calamitous as the sub-prime blowup seems, it is only the
beginning. The credit bubble spawned abuses throughout the system. Sub-prime
lending just happened to be the most egregious of the lot, and thus the first
to have the cockroaches scurrying out in plain view. The housing market will
collapse. New-home construction will collapse. Consumer pocketbooks will be
pinched. The consumer spending binge will be over. The U.S. economy will enter
a recession." - Eric Sprott, Sprott Asset Management
22. The U.S. economy, once the envy of the world, is now viewed
across the globe with suspicion. America has become shackled by an immovable
mountain of debt that endangers its prosperity and threatens to bring the rest
of the world economy crashing down with it. The ongoing sub-prime mortgage
crisis, a result of irresponsible lending policies designed to generate
commissions for unscrupulous brokers, presages far deeper problems in a U.S.
economy that is beginning to resemble a giant smoke-and-mirrors Ponzi scheme.
And this has not been lost on the rest of the world. - Hamid Varzi,
International Tribune
23. It's a crisis if everybody calls it a crisis. - Morgan
Downey, Lasalle Global
24. It's inappropriate [for money market funds to invest in credit
derivatives]. It doesn't have a place in money market funds. When I created the
first money market fund, I said you have to have immediate liquidity, safety
and a reasonable rate of return. You also have to have a situation where you're
not giving people headline risk. - David Evans
25. The crisis in the US sub-prime mortgage market could bolster the
gold price not only because gold provides a safe investment haven. The crisis
is expected to slow GDP growth, spurring lower real interest rates and a weaker
US dollar that will boost gold investment demand. Gold's traditional role as a
safe haven asset in times of financial turbulence and instability is enforced
in the current market as the metal recouped the majority of losses which
occurred in a flight to cash in the beginning of August. Supporting this view
is the fact that gold recovered despite a rise in the US dollar caused by a
European Central bank intervention that boosted liquidity in Europe. - Dr.
Peter Richardson, Craton Capital
http://www.usagold.com/amk/usagoldmarketupdate082707.html
face the music. I'd give a lot to mark my weight to 'model' rather than to
'market.' - Warren Buffett, Fortune, 8/16/07 (On the financial institution
practice of valuing subprime assets on the basis of a computer model rather
than the free market price.)
2. The Federal Reserve was not founded to bail out Bear Stearns or
a few hedge funds. It was founded to keep a stable currency and maintain its
value. - Jim Rogers, Rogers Commodity Fund
3. For the second time in seven years, the bursting of a
major-asset bubble has inflicted great damage on world financial markets. In
both cases--the equity bubble in 2000 and the credit bubble in 2007--central
banks were asleep at the switch. The lack of monetary discipline has become a
hallmark of unfettered globalization. Central banks have failed to provide a
stable underpinning to world financial markets and to an increasingly
asset-dependent global economy. - Stephen Roach, Morgan Stanley
4. There is a lot of pain still to be had in the equity markets,
particularly aimed at the risky end of the spectrum. We think the fair value on
the market is about a third lower in the U.S. . . - Jeremy Grantham, Grantham,
Mayo and Van Otterloo
5. Suddenly, the world is realizing that gold is still a safe haven
asset. We've seen pretty substantial losses in equity markets. I think this is
genuine safe-haven buying. - James Moore, theBullionDesk
6. I think Greenspan would have cut rates already. So I do think
things are beginning to look different at the Fed. - Paul Kasriel, Northern
Trust
7. At this juncture, the impact on the broader economy and
financial markets of the problems in the subprime market seems likely to be
contained. - Fed chairman, Ben Bernanke, Congressional testimony, March,
2007
8. "If prices go down, we will have problems -- problems in
the sense of spillover to other areas," Greenspan said. While he hasn't
seen such spreading yet, "I expect to." - Former Fed chairman,
Alan Greenspan, speech, March, 2007 as reported by Bloomberg.com
9. This is not a rescue. - Goldman Sachs Chief Financial Officer
David Viniar after Goldman poured $3 billion into one of its hedge funds
10. This is a sort of preemptive rescue. - Eric Kuby, chief
investment officer for the Goldman fund mentioned
11. When you're in a pit, the first thing to do is to stop digging.
- James Ellman, Seacliffe Capital
12. The US financial system is teetering. Its USDollar currency is
losing global support, with some outright revolts in crucial territories. The
chief private sector export from the US financial sector has been fraud-ridden
asset-backed bonds and their toxic credit derivatives. What should anyone
expect? For years an institutional dishonesty within all things financial in
the United States has been engrained, spreading, and become integrated with
high levels of the USGovt. The Wall Street hucksters exported fraud. The
backlash might be more severe than the soft soap gurus anticipate. Look for an international
boycott. The shock waves in the US financial markets are preliminary symptoms
of bigger events soon to come. Stability identified is nothing but quiet
between tremors. - Jim Willie, Hat Trick Letter
13. The German banks' situation is not uncritical. - Alexander
Stuhlmann, Germany's Landesbank
14. After all, in a credit crunch, cash is deemed to be king. In
which case, gold owned outright has just been crowned emperor. - Adrian Ash,
BullionVault
15. [C]apitalism without financial failure is not capitalism at all,
but a kind of socialism for the rich. - James Grant, Grant's Interest Rate
Observer
16. US sub-prime is just the leading edge of a financial hurricane.
- Bernard Connolly, AIG
17. When the music stops in terms of liquidity, things will get
complicated. But as long as the music is playing, you've got to get up and
dance. We're still dancing. - Chuck Prince, Citigroup
18. Why is it possible to rescue S&L buccaneers in the early
'90s and provide guidance to levered Wall Street investment bankers during the
1998 long-term capital management crisis, yet throw 2 million homeowners to the
wolves in 2007? - Bill Gross, Pimco
19. So perhaps the most worrying single remark made by a responsible
banking official during the current crisis came from Jochen Sanio, the head of
Germany's banking regulator BaFin. He warned on Aug. 1 that his country could
be facing the worst banking crisis since 1931 -- a reference to the collapse of
Austria's Kredit Anstalt, which provoked a wave of bank failures across Europe.
- Martin Walker, United Press International
20. Angelo Mozilo, chief executive of Countrywide Financial Corp,
which is one of the chief victims of the sub-prime home loan debacle, said the
housing crisis was the result of "one of the greatest panics I have ever
seen". When asked if housing would lead the US into a recession, he said:
"I can't believe ... that this doesn't have a material effect ... on the
psyches of the American people and eventually on their wallet." - Phillip
Inman, The Guardian
21. As calamitous as the sub-prime blowup seems, it is only the
beginning. The credit bubble spawned abuses throughout the system. Sub-prime
lending just happened to be the most egregious of the lot, and thus the first
to have the cockroaches scurrying out in plain view. The housing market will
collapse. New-home construction will collapse. Consumer pocketbooks will be
pinched. The consumer spending binge will be over. The U.S. economy will enter
a recession." - Eric Sprott, Sprott Asset Management
22. The U.S. economy, once the envy of the world, is now viewed
across the globe with suspicion. America has become shackled by an immovable
mountain of debt that endangers its prosperity and threatens to bring the rest
of the world economy crashing down with it. The ongoing sub-prime mortgage
crisis, a result of irresponsible lending policies designed to generate
commissions for unscrupulous brokers, presages far deeper problems in a U.S.
economy that is beginning to resemble a giant smoke-and-mirrors Ponzi scheme.
And this has not been lost on the rest of the world. - Hamid Varzi,
International Tribune
23. It's a crisis if everybody calls it a crisis. - Morgan
Downey, Lasalle Global
24. It's inappropriate [for money market funds to invest in credit
derivatives]. It doesn't have a place in money market funds. When I created the
first money market fund, I said you have to have immediate liquidity, safety
and a reasonable rate of return. You also have to have a situation where you're
not giving people headline risk. - David Evans
25. The crisis in the US sub-prime mortgage market could bolster the
gold price not only because gold provides a safe investment haven. The crisis
is expected to slow GDP growth, spurring lower real interest rates and a weaker
US dollar that will boost gold investment demand. Gold's traditional role as a
safe haven asset in times of financial turbulence and instability is enforced
in the current market as the metal recouped the majority of losses which
occurred in a flight to cash in the beginning of August. Supporting this view
is the fact that gold recovered despite a rise in the US dollar caused by a
European Central bank intervention that boosted liquidity in Europe. - Dr.
Peter Richardson, Craton Capital
http://www.usagold.com/amk/usagoldmarketupdate082707.html
