The Worst is NOT Over

Wall ST fell by 5.69% overnight. And the reason?


Do we actually need any reason in the current nervous climate?

Just a sudden change of Sentiment could push down the Wall St by another 5%, 6% or even 10%.


Alright, this time they said it is the concerns over Corporate Profitability.

Is this News?

Almost a year ago, all these big firms (the big banks in particular) started writing off Historical level of Bad Debts, inviting Sovereign Funds, Foreign Investors etc. to pull in more Capitals.

And yet, quarter after quarter, there are still massive write off - contrary to the CEOs' claim of "The Worst is Over!"

E.g. Citi Group has a straight 4 Quarter Results in Red!


Not so long ago, RBS was fighting with Barclay's for the control of the Netherland Bank, ABN AMRO. And then they both started to fight for their own survival. Barclay's had to call in overseas investors to stay afloat and RBS?

The British Government has to rush in and take control!


And then the Netherland Giant, ING.

It bought the collapsed Baring's in Britain back in mid 90's and until about a month ago, was a potential candidate to bail out the falling Fortis. And now?

It has just been bailed out by the Netherland Government!


And the Once Reputable Red Chip (i.e. a Blue Chip with Strong Chinese Government Connection) in HK has just reported a Massive Loss on One Item alone - Hedging on A$, resulting in Giantic Loss of HK$15 Billion (i.e. about A$3 Billion) and, that is, 50% of the Firm's Market Value. Its share dropped by 55% in one day and about 80% in two days!


So far, vast majority of "Mum & Dad" Investors are drowned in this "Financial Tsunami". Some Institutional Investors still holding on to some shares, hoping that the Worst is over and firms soon start to be making profits and paying good dividends again. Now, they realise this Hope remains a Hope only and will not come True in the near future and are increasingly under pressure to cash in their holdings.

The effects of this "Financial Tsunami" are gradually reflecting in the broader economy (e.g. Higher Unemployment), though as the Financial Secretary in HK recently stated in the public,

"We have NOT seen the Worst yet."

And the CEO of the HSBC has also claimed after laying off thousands of jobs within HSBC,
"I could not promise there will not be any more job cuts."

And the Governor for the Bank of England just stated,
"Britain is in Recession."

And the already confirmed in Recession NZ, just cut its official rate by 1% to 6.5% this morning.

Australia?

Well, we are of course better placed than US. Our official rate is at 6% and theirs at 1.5%

If we are to continue cutting rate by 1% at a time, we still have 6 times to go before reaching 0.
And US has only 1 1/2 time - NO more silver bullets?
There are some Economists already worrying US is to have a Prolong Recession like the Japan in the 90s.

And now Iceland is down, Pakistan in also in the line to seek IMF's help, South Korea is defending its currency and Hungary has put up its interest rate by 3% to also defend its currency, fencing off the Hungary Speculators!

And More and More Hedge Funds are collapsing in everywhere.

Not to mention the full extent of Damage caused by the collapsed Lehmans has yet to be fully comprehended. (The US 64 Trillion CDS market)

The Worst is NOT over - you'll be if you still have NOT changed your Mentality and Strategy!

Fate
Be Prepared for the Unexpected