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From the end of July 2007 till now, the Dow has dropped 13 percent, the euro has gained 14 percent versus the dollar and oil has jumped 60 percent. Financial stocks are treading historic lows, whereas the oil sector is treading historic highs (CNBC)
Investment banks, asset managers and insurers in Europe and the US have in total lost $2.7 trillion in value from the beginning of 2007 to July of 2008. (FinancialNews)
The past year has seen the biggest volatility in stock prices ever, as well as the biggest write downs by banks, currently standing at $500 billion with no apparent end in sight (Telegraph)
The credit crisis arguably commenced with the following statement from BNP Paribas: "The complete evaporation of liquidity in certain market segments of the U.S. securitization market has made it impossible to value certain assets fairly regardless of their quality or credit rating," (August 2007)
A year into the crisis, what is more important to investors is not the current profits/losses of corporations, but the future exposures that they will have from the assets currently on their books, be they ARSs or CDOs
Investors and corporations are concerned about the future price of commodities, and oil in particular. Last year, at this time, oil was at $70 a barrel. Its doubling has impacted corporate profits, slowed overall economic growth around the world and impacted stock valuations.
One year since, the SEC, ECB, BOE, the Federal Reserve and the U.S. Treasury have strongly intervened in the financial system. Those regulators, who initially doubted the extent of the credit turmoil have learned otherwise. "Troubles in the subprime sector seem unlikely to seriously spill over to the broader economy or the financial system," Ben Bernanke June 5, 2007.
"We don’t know if the stock market correction is finished or if there is another serious decline ahead. We don’t know if the Treasury bond market faces a sustained upward movement in yields or will rally to lower yields. We don’t know if we are going to see the deflationary forces of falling housing, collapsing autos, and distressed consumers prevail over the inflationary forces of commodities and a weaker currency." ( July 29, 2008 David R. Kotok of Cumberland Advisors)
Originally posted by leo123
I don't rule out a full blown depression - world wide.
our governments tend to create war to solve this.