Copenhagen August 3, 2007 (LPAC)--Amidst its coverage of the crises in the international debt markets the Danish paper Berlingske Tidende has an Op-ed by stock market analyst Lau Svenssen from the company Aktieinfo.net who also writes for the financial magazine Finans-info.dk. Headlined Are We Playing Pass the Buck or Dominoes? the Op-ed states, that with the crises in the US housing market and the stagnation in the US economy, what has until now been a risk for the creditors that have lent money is threatening to become a bigger problem. The total losses are far bigger than those officially acknowledged, because seemingly nobody wants to know the true state of affairs because it could turn the present game of passing the buck into a game of dominoes where all the chips fall over. The authorities that responsible for oversight are holding back information. The conclusion is, that we are in the lucky situation that somebody from outer space is taking the losses. Officially everything is O.K!
Svenssen writes that risk premium is rising, money is fleeing and the carrying power of the system is threatened. Takeover deals are falling apart and Kreditanstalt fuer Wiederaufbau had to intervene to save the German IKB bank. Again we are not told the numbers of the losses because the job is to make sure people keep their faith. And if banks go down they expect the government to step in and save them.
Svensson ends by stating that financing of the real estate market, corporate takeovers and pure speculation today are the biggest elements in the credit market. Clearly there are growing problems for the real estate market in many countries including Denmark but the players are keeping their professional optimism. A new word has to be invented for it: fin-spin financial spin doctoring. For instance clever heads argue that inflation is under control as long as you take away key components from the calculations. Well you can get an inflation to be zero if you just take away all the components! So down with the interest rate, be cheerful and let the foreign planets carry all the losses while we flee out the back door.
