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U.S. May Be on Brink of Financial Crisis
 | By Patrick Heller, Market Update
June 10, 2008 |
Last week brought terrible financial news. Several major stock brokerages (Merrill Lynch, Goldman Sachs, Lehman Brothers) and insurance companies (Ambac and MBIA) saw their credit ratings drop. Two of the nation's largest banks, Bank of America and J.P. Morgan Chase, had negative connotations added to their credit rating.
Then there were the employment figures. On Thursday, it was reported that initial unemployment benefit applications in the previous week had dropped slightly from the week before. Well, of course, they were, since unemployment offices were closed on Memorial Day! To a whole lot less fanfare, it was also reported that the number of people receiving unemployment benefits was at a multi-year high. On Thursday, the general prediction for Friday's monthly unemployment figure was a rise from 5 percent to 5.1 percent It came in at a disastrous 5.5 percent.
Virtually ignored by the American media was the statement by the Israeli Transportation Minister late last week that Israel would not sit idly much longer if Iran did not abandon its efforts to develop nuclear weapons. The statement was the closest yet of the possible beginning of a war with Iran that would inevitably include the United States. Gold prices soared Friday on this news, yet the American public is largely uninformed about this.
On June 9, Lehman Brothers announced that it was seeking a capital infusion of $6 billion not long after the company portrayed itself as financially solid. In March, just two days before the company was sold for $2 (later $10) per share, the CEO of Bear Stearns also said that his company was financially sound, when the stock was trading for $66 per share.
There is a very real chance of a major financial crisis in the United States in the next two months. As bad as the financial news has been since last August, it looks to me like the worst is yet to come and relatively soon. If you don't own any yet, look to buy some physical gold and take possession of it. The sooner the better.
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