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The global credit crisis has hit Asia with a vengeance ..., triggering a massive flight to safety as investors across the region pull out of risky assets.
Yields on three-month deposits in China and Korea have plummeted to near 1pc in a spectacular fall over recent days, caused by panic withdrawls from money market funds and credit derivatives. ...rumours abound that Asian banks have yet to own up to their share of the expected $400bn to $500bn losses from the US mortgage debacle.
"The whole financial market is in turmoil..."
Mr Redcker said the flight from risk has led to a sudden unwinding of the $1,200bn yen "carry trade" as hedge funds and Japanese investors close risky positions. The yen has snapped back violently from yen118 to yen108 against the dollar since early October, with similar moves against other Anglo-Saxon currencies.
"We're seeing a liquidation of the carry trade.
China has quietly ordered banks to freeze their lending through the end of the year, the Wall Street Journal reported on Monday, marking the latest in a series of measures to keep investment from running out of control.
Investors fear the financial system is moving into new credit turmoil, which could create further losses for financial institutions – and potentially hurt sentiment in the “real” economy.
Credit markets are trading at levels which imply that investors assume that the US is heading for a recession, bank analysts and economists have warned.
"They think that they can control it but eventually they can't, as powerful as they are eventually the markets are more powerful. The dollar can't be kept in check because eventually it will come unwound," Ron Paul said.
The Texas Congressman cited the repeal of the Insurrection Act as opening the door to a declaration of national emergency and martial law which could be instituted for any number of reasons, including civil disobedience in the event of an economic downturn and a run on the banks. "If in 6 months or a year there is total chaos who knows what they might try to do," said Paul.
LEAP/E2020 now estimates that at least one large US financial institution (bank, insurance, investment fund) will file for bankruptcy before February 2008, sparking off bankruptcies among a series of other financial institutions and banks in Europe (in the UK especially), in Asia and in various emerging countries.
The triggering factors for a major financial institution to go bankrupt are now so powerful and warning clues so numerous that, according to our researchers, the probability that it happens within three month now reaches 100%.