Subprime meltdown much more serious and widespread than previously thought before – rise of gold price and a financial meltdown
Paula Ranske
Jul. 21, 2007

The stock market got a wake up call. The rally that just got underway is ending with reversal from technical upswing – the most bearish signal to a technician.

When fundamentals drag a bull wave down, the resulting bear market is deep, widespread, and very long term – its is called burst of euphoria or bubble.

The subprime mortgage problem is much more widespread and deep, and is well stretched across Atlantic and Pacific. The meltdown has started and the effects are all over the financial world.

The long term banking cycle topped last year and the banking as well as the financial services industry now is poised for sharp erosion in profit, bankruptcy and failures.

Federal Reserve Bank of St. Louis President William Poole said investors who lost money buying subprime mortgage-linked securities got what they deserved.

Fed will be shocked when they understand what they have done in the last six years. They indirectly encouraged this to happen. The investors will soon blame Federal Reserve for it and ask for a Federal bail out. That will increase budget deficit and that is the reason why Gold is rising so fast.

Poole criticized the underwriting standards and interest- rate assessments of Wall Street and endorsed the Fed's steps to strengthen consumer safeguards. His remarks come after Chairman Ben S. Bernanke committed to tougher rules to protect consumers during his semiannual monetary policy testimony this week.

Unfortunately it is too late.

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