Major Market Mover: Banks Queuing Up

One after the other, banks can no longer bear the increasing pressures from falling housing prices, the turn fell yesterday on the GSE Columbian Bank and Trust Co. Topeka, Kansas; with fears increasing that more banks and insurer will face turn downs if they do not raise the adequate capital just to make cover the write down that took place.

The Credit Squeeze and the tightened commercial credit will remain to weigh upon the US economy; no tranquility will be seen till markets get to the bottom of those entire write downs from the endless foreclosures. But when this will end here the question, the States did not get enough of those issues but now the contagion diffused to the other major economies such Unite Kingdom and Germany that released for the first time the purchase of a bank that was about to fall due to it's connection to the US sub-prime mortgages.

Stocks slashed yesterday, after the Columbian Bank announced their malfunction from the sub-prime issue, as now it's the perfect time for rumors to spread and its effects come vital, the speculators believe AIG Inc will follow other banks in reporting more losses, along with expectations the insurers will face inescapable penalties from their connection to the write downs, what to DO???

We recently saw how Mr. Paulson decided to help the two of the biggest mortgage companies in the States just to salvage the financial sector from sever crashes that would lead to its doom, but can he intervene to help all falling banks; I don't think getting the green light to help those two companies and risking the credibility of uncontrolled financial markets in addition to the treasury credit rating will be the best solution, and if he really going to do why don't he help other bank on the edge of officially announcing their failure.

The outlook remain to be unclear, and I repeat again the trust in the US economy came just after markets saw the European Economies facing the start of a weakening growth believing at the time the states is the safest, but trust me dear reader now major economies in the whole world are in threat due to the linkage between them, however the emerging countries will have the chance in proving that they can catch up the gap between them and the well developed and established ones.

Light was stolen from the continuity of the Housing data plus the FOMC Minutes that are to be released later today. Markets expects to see more fall down in the New Home Sales that are about to be released later today, July sales plunged to 525 thousand from the previous 530 thousand; the monthly sales fell 0.9% in July from the previous fall 0.6%.

But analysts' expectation varies, the optimistic ones believe that sales will rise to 570 thousand from the previous 530 thousand, though the balance pan weighs more on the chance that sales would be dropping, with a worst expectations falling to 493 thousand fueled up by the aggravate tightened condition that remain to stop citizens from borrowing money just to equip their purchase of new homes.

The lower sales of New Homes will continue in curbing the employment levels, the lower the demand the less workers are needed to build those new homes, increasing expenses on the construction companies will help to more layoffs, so till now the employment sector won't be observing any improvement, because workers are fired and the now the falling banks are going to led to sever job cut downs just trying to salvage the bit remaining in the left out ashes.

Not just the tightened credit condition; Confidence, consumers are still hesitant in investing their left over money in the housing markets that till now and after a whole year did not reach a bottom. But according to the spreading expectations markets believe that confidence levels would have been improving in August especially after the dragging pressures from surging gasoline and oil prices eased, as we all witnessed that prices eased since the end of July extended it this current month.

Okay prices are going to ease and inflation will too, taking some of the pressures from the feds as they won't be considering a rate hike just to mitigate inflation, as it's mitigating itself alone. But the queued up banks on the verge of falling and the increased workers layoffs from various sectors in the economies will eat away all this confidence.

Moreover, our calendar contains the FOMC Minutes; a hawkish statement will be released and just as we can remember in the last meeting expectations of a dissent between members could occurred, so parts of today released statement will be just to gratify the outraging members.

But my dear reader we have to keep in mind that variables changed since the last meeting, rising commodity prices that was an issue at that time is now not, so from each meeting to the other a lot of changes takes place due to the high volatility taking place in markets, so expectations that the minutes will be discarded tonight.

Crown Forex

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