The U.S. financial position is precarious. One third of syndicated bank loans are reported to be junk quality. The recent Xerox example could be just a sample of the riskiness of this exposure in a prolonged recession. Central banks are still lenders of last resort. This may give comfort to borrowers, but perhaps not to holders of central bank-issued notes.
Confidence often dies hard.
In the spring of 1930, Walter Chrysler predicted that 1930 would be a record year for car sales. The gold market may soon take heart from recent statements from those in the know. As a prelude to aggressive monetary expansion Japan s Finance Minister warned that government finances were on the verge of collapse. The torrent carries with it most remnants of certainty and euphoria that built up in earlier periods.