…one way or another, the current energy, emerging country and hedge fund/investment banking losses will end up with the global banking community. The market believes Citigroup (shares down one third in three months), Bank of America (31 per cent) and Deutsche (down more than 50 per cent in six months) will be among the hardest hit. And in the case of Deutsche, the global community believes there are deep old problems involving the European debt mess. Goldman Sachs shares had held up better than its peers but last night were down around 6 per cent to make their fall over three months 22 per cent, so the market fears they too will be hit.
…Here in Australia, what has so far somewhat insulated us is the incredible flow of Chinese money into apartment development and other areas. It shows no signs of abating and indeed the Chinese — who face their own debt crisis and a massive anti- corruption purge — see Australian apartments as something akin to US 10-year bonds.
But they are not US bonds and that will become apparent over time. Our rescuer is also our biggest risk.
The flow of funds is under pressure already but let’s not get bogged down in detail. At least Gotti has woken up. He’s the first in MSM to get a clue.