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Gold reclaims its currency status as the global system unravels
Posted By admin On June 21, 2010 @ 8:52 am In Money Watch | Comments Disabled
London Telegraph 
June 21, 2010
We already know that the eurozone money markets seized up violently in early May as incipient bank runs spread from Greece to Portugal and Spain, threatening the first big sovereign default of our era.
Jean-ClaudeTrichet, the president of the European Central Bank (EC), talked days later of “the most difficult situation since the Second World War, and perhaps the First”.
The ECB’s latest monthly bulletin gives us some startling details. It reveals that the bank’s “systemic risk indicator” surged suddenly to an all-time high on May 7 as measured by EURIBOR derivatives and stress in the EONIA swaps market, exceeding the strains at the height of the Lehman Brothers crisis in September 2008. “The probability of a simultaneous default of two or more euro-area large and complex banking groups rose sharply,” it said.
This is a unsettling admission. Which two “large and complex banking groups” were on the brink of collapse? We may find out in late July when the stress test results are published, a move described by Deutsche Bank chief Josef Ackermann as “very, very dangerous”.
And are we any safer now that the EU has failed to restore full confidence with its €750bn (£505bn) “shock and awe” shield, that is to say after throwing everything it can credibly muster under the political constraints of monetary union? This is the deep angst that lies behind last week’s surge in gold to an all-time high of $1,258 an ounce.
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URLs in this post:
 London Telegraph: http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7841961/Gold-reclaims-its-currency-status-as-the-global-system-unravels.html
 Image: http://www.homegain.com/housead/homes_for_sale/index?entryid=11502
 Global Currency Wars Sees Swiss Franc Devalue 8.5% Against Gold In Week: http://www.prisonplanet.com/global-currency-wars-sees-swiss-franc-devalue-8-5-against-gold-in-week.html
 Citigroup says gold could rise above $2,000 next year as world unravels: http://www.prisonplanet.com/citigroup-says-gold-could-rise-above-2000-next-year-as-world-unravels.html
 Bundesbank Warns China’s Currency “On Its Way To Becoming Global Reserve Currency”: http://www.prisonplanet.com/bundesbank-warns-chinas-currency-on-its-way-to-becoming-global-reserve-currency.html
 Has the Dollar ALREADY Lost Its Status As World Reserve Currency?: http://www.prisonplanet.com/has-the-dollar-already-lost-its-status-as-world-reserve-currency.html
 UN Gold Hoax Muddies The Waters Of Real Move Towards Global Currency: http://www.prisonplanet.com/un-gold-hoax-muddies-the-waters-of-real-move-towards-global-currency.html
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