Financial Risk is Systemic - Global Crash 'not unlikely'

NVDL: Locally, Old Mutual has tanked and Investec got whopped. We have been speculating - excuse the pun -on a crash for some time. On a weekly basis Jim Kunstler has been predicting a financial shitstorm. It's a wonder the financial gadgetry and every other artifice and apparatus has held this delusional system together this long.

Right now the JSE is below 25 000 at 24 865 (down over 3% in morning trade). Everything else is sinking too.

Renée Bonorchis: “All the advantages of having foreign players in SA are now disadvantages. There has been a 180-degree turnaround.”

Dykes said local banks had been prudent and it was a “blessing” that they had not been able to play fully in international markets.

“There is immense uncertainty. Cash is pretty much king right now.” With all asset classes getting hammered and emerging markets being knocked about, there was little place for an investor to hide.

Dykes said such times presented opportunities. “It looks like we won’t be sucked into the same sort of forces governing other markets. Even in the 1930s, people made money picking the bottom of the market.”

clipped from www.businessday.co.za THE world teetered on the brink of a stock market crash yesterday as news of the collapse of Wall Street firms Lehman Brothers and Merrill Lynch filtered through, causing major losses at bourses around the world, including the JSE. This led to increased speculation about a global recession and systemic financial risk. It started with Lehman Brothers, which yesterday filed for bankruptcy with more than $613bn in debt. Then came Merrill Lynch, which was sold in something of a fire sale to Bank of America for $50bn. And then there was the news that American International Group (AIG), the largest US insurer by assets, needed a $40bn bale-out. Alan Greenspan, the former chairman of the US Federal Reserve, said it was the worst financial crisis in at least 50 years. “It’s a complete nightmare,” Dennis Dykes, chief economist at Nedbank, said.