You are here
Ted Butler tells silver investors to learn from the copper manipulation blowup
ECB Sees Risk of Disruptive Unwinding
of Imbalances, Severe Pressure on Dollar
By Steve Whitehouse
AFX News
Tuesday, May 31, 2005
http://www.forbes.com/markets/feeds/afx/2005/05/31/afx2066670.html
FRANKFURT -- Global current account imbalances pose a threat to
financial market stability, the European Central Bank said.
"Large and growing financial imbalances continue to pose medium-term
risks for the stability of foreign exchange and other financial
markets," the ECB said in its latest Financial Stability Review.
It said a disorderly correction of the large US current account
deficit and surpluses in Asia remains possible, particularly as the
imbalances could increase further.
"The risk of a disruptive unwinding of global imbalances remains,
especially because these imbalances could widen further," it said.
It said the US' propensity to import out of income and expectations
that US economic growth will exceed that of the rest of the world in
the coming year both point to a further widening of global
imbalances.
Asian central banks have so far been willing to continue financing
the US deficit, but if they lose their appetite for US assets, this
could trigger a disorderly correction, it said.
"Such concerns could increase the likelihood of a disorderly
rebalancing, involving a capital account adjustment and/or the
possibility of severe downward pressure on the US dollar, coupled
with significant upward pressure on long-term interest rates," it
said.
The ECB reiterated that global imbalances, high and volatile oil
prices, and weak private consumption also represent a risk to the
euro zone growth outlook.
It also said that an underestimation of risk has pushed the prices of
bonds and some other assets "beyond their intrinsic value."
This perception that financial market risks are low has increased
investors' willingness to hold risky assets and led to a "hunt for
yield" over the past two years, it said.
This has recently spread from bonds to other asset markets, including
small and mid-cap stock markets, and fuelled the growth of hedge
funds, it said.
But a correction of these price rises is possible in the period
ahead, the ECB said.
"A reappraisal of risk -- involving adverse market dynamics in the
euro area as well -- cannot be excluded in the coming period," it
said.
It said the banking sector is particularly vulnerable to a rise in
bond yields.
"Some euro-area financial institutions, including banks, would likely
endure losses -- at least in the short term -- from any upturn in
long-term interest rates," it said.
Banks would be vulnerable to such disturbances because provisioning
levels have declined, it said.
And while banking profitability has improved overall, there may still
be pockets of fragility in the euro zone banking sector, it said.
Anemic domestic demand may have left small and medium-sized firms
vulnerable to adverse disturbances, it said.
In particular, the surge in oil prices seen over the past six months
could test the robustness of smaller companies' finances, if it
lasts, the ECB said.
Household financing problems could also be a risk in those countries
where real estate prices have risen beyond their intrinsic value,
where debt is high and where mortgages are primarily at floating
rates, it said.
But, overall, reasonable interest rate swings would be unlikely to
hit household finances so hard as to significantly increase credit
risks, not least because many mortgages are set at fixed rates, it
said.
----------------------------------------------------
To subscribe to GATA's dispatches, send an e-mail to:
gata-subscribe@yahoogroups.com
To unsubscribe, send an e-mail to:
gata-unsubscribe@yahoogroups.com
----------------------------------------------------
RECOMMENDED INTERNET SITES
FOR DAILY MONITORING OF GOLD
AND PRECIOUS METALS
NEWS AND ANALYSIS
Free sites:
http://www.cbs.marketwatch.com
http://www.usagold.com/amk/usagoldmarketupdate.html
http://www.capitalupdates.com/
http://www.silver-investor.com
http://www.thebulliondesk.com/
http://www.goldismoney.info/index.html
http://www.minersmanual.com/minernews.html
http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html
http://www.investmentrarities.com
http://www.kereport.com
(Korelin Business Report -- audio)
http://www.plata.com.mx/plata/home.htm
(In Spanish)
http://www.plata.com.mx/plata/plata/english.htm
(In English)
http://www.resourceinvestor.com
Subscription sites:
http://www.lemetropolecafe.com/
http://www.interventionalanalysis.com
http://www.investmentindicators.com/
Eagle Ranch discussion site:
http://os2eagle.net/checksum.htm
Ted Butler silver commentary archive:
http://www.investmentrarities.com/
----------------------------------------------------
COIN AND PRECIOUS METALS DEALERS
WHO HAVE SUPPORTED GATA
AND BEEN RECOMMENDED
BY OUR MEMBERS
Blanchard & Co. Inc.
909 Poydras St., Suite 1900
New Orleans, Louisiana 70112
888-413-4653
http://www.blanchardonline.com
Centennial Precious Metals
3033 East First Ave., Suite 807
Denver, Colorado 80206
1-800-869-5115
http://www.USAGOLD.com
Michael Kosares, Proprietor
cpm@usagold.com
Colorado Gold
222 South 5th St.
Montrose, Colorado 81401
http://www.ColoradoGold.com
Don Stott, Proprietor
1-888-786-8822
Gold@gwe.net
El Dorado Discount Gold
Box 11296
Glendale, Arizona 85316
http://www.eldoradogold.net
Harvey Gordin, President
Office: 623-434-3322
Mobile: 602-228-8203
harvey@eldoradogold.net
Gold & Silver Investments Ltd.
Mespil House
37 Adelaide Rd
Dublin 2
Ireland
+353 1 2315260/6
Fax: +353 1 2315202
http://www.goldinvestments.org
info@gold.ie
Investment Rarities Inc.
7850 Metro Parkway
Minneapolis, Minnesota 55425
http://www.gloomdoom.com
Greg Westgaard, Sales Manager
1-800-328-1860, Ext. 8889
gwestgaard@investmentrarities.com
Kitco
178 West Service Road
Champlain, N.Y. 12919
Toll Free:1-877-775-4826
Fax: 518-298-3457
and
620 Cathcart, Suite 900
Montreal, Quebec H3B 1M1
Canada
Toll-free:1-800-363-7053
Fax: 514-875-6484
http://www.kitco.com
Lee Certified Coins
P.O. Box 1045
454 Daniel Webster Highway
Merrimack, New Hampshire 03054
http://www.certifiedcoins.com
Ed Lee, Proprietor
1-800-835-6000
leecoins@aol.com
Lone Star Silver Exchange
1702 S. Highway 121
Suite 607-111
Lewisville, Texas 75067
214-632-8869
http://www.discountsilverclub.com
Miles Franklin Ltd.
3015 Ottawa Ave. South
St. Louis Park, Minn. 55416
1-800-822-8080 / 952-929-1129
fax: 952-925-0143
http://www.milesfranklin.com
Contacts: David Schectman,
Andy Schectman, and Bob Sichel
Missouri Coin Co.
11742 Manchester Road
St. Louis, MO 63131-4614
info@mocoin.com
314-965-9797
1-800-280-9797
http://www.mocoin.com
Resource Consultants Inc.
6139 South Rural Road
Suite 103
Tempe, Arizona 85283-2929
Pat Gorman, Proprietor
1-800-494-4149, 480-820-5877
Metalguys@aol.com
Swiss America Trading Corp.
15018 North Tatum Blvd.
Phoenix, Arizona 85032
http://www.swissamerica.com
Dr. Fred I. Goldstein, Senior Broker
1-800-BUY-COIN
FiGoldstein@swissamerica.com
The Moneychanger
Box 178
Westpoint, Tennessee 38486
http://www.the-moneychanger.com
Franklin Sanders
1-888-218-9226, 931-766-6066
----------------------------------------------------
HOW TO HELP GATA
If you benefit from GATA's dispatches, please
consider making a financial contribution to
GATA. We welcome contributions as follows.
By check:
Gold Anti-Trust Action Committee Inc.
c/o Chris Powell, Secretary/Treasurer
7 Villa Louisa Road
Manchester, CT 06043-7541
USA
By credit card (MasterCard, Visa, and
Discover) over the Internet:
http://www.gata.org/creditcard.html
By GoldMoney:
http://www.GoldMoney.com
Gold Anti-Trust Action Committee Inc.
Holding number 50-08-58-L
Donors of $1,000 or more will, upon request,
be sent a print of Alain Despert's colorful
painting symbolizing our cause, titled GATA.
Donors of $200 or more will receive copies
of "The ABCs of Gold Investing" by Michael
Kosares, proprietor of Centennial Precious
Metals in Denver, Colorado, and "The Coming
Collapse of the Dollar" by James Turk and
John Rubino.
GATA is a civil rights and educational
organization under the U.S. Internal Revenue
Code and contributions to it are tax-deductible
in the United States.
