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UBS capital issues, interbank blame games and legality, risk aversion will be in full force

Posted by Adrian on March 31, 2008

As mentioned in ‘commodity markets and slight correction March 2008 (prior to easter 2008)’ , the big Swiss bank (UBS) is undoubtedly in trouble with capital problems due to the massive write-downs in the last quarters and panic withdrawal from local depositors. There is talk of investigations, new regulations, transparency on accounts from investment banks to retails banks; which has caused a blame game to occur (not to mention the rumours going back and forth), so responsibility for the schmozzle of the financial markets is being handed around. Hedge funds are being attacked as the stock markets are being shorted (short sold). Suing is also the rage, from the Bear Stearns mess to Lehman suing a brokerage firm in Japan. Possible legal issues with Australian broker Opes Prime going bankrupt. Also, the Hedge Funds are getting blamed for Iceland economic woes. The market is in panic mode and so it should be, risk aversion will hit like a vengeance. I suspect we will see the USD rise from this (on a temporary basis), the high yield currencies may lose somewhat, and the short selling to continue on stocks. Then there is global inflation.

It pretty much leaves the commodity markets as havens


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