Financial Loan and Mortgage Crisis Takes $167bln From Central Banks To Hold Off

Central Banks coughed up over $167 billion in an effort to prevent a financial crisis, in an emergency cash injection that was larger than that after 9/11.

The European Central Bank put $131 billion into the market after BNP Paribas, the second biggest French bank suspended their home loan and mortgage operations.

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Despite mortgage applications increasing 8.1% a week ago many people are still worried, especially if the Fed raises interest rates, and some politicians are calling for action as mortgage companies try to calm the fears in the mortgage market.

However market analyst Sam Kirtley of The Gold Prices Newsletter thinks that throwing money at the problem will not help, and may make the situations worse:

“This “cash injection” is really just the ECB printing loads of worthless fiat currency and throwing it at the problem, but this will not prevent the coming financial crisis that will hit the credit systems, including mortgages and home loans, particularly hard.”

“However, investors were looking for a safe heaven. Yesterday we watched the yields on 30-day commercial paper rise 5 basis points to 5.32 per cent, equalling its highest rate since 2001. The key point here is that the investors wanted a temporary safe heaven for their capital. They were not looking for a long term haven as the yield on the two-year treasury bonds fell 22 basis points to 4.44 per cent.”

“This is where gold and gold stocks come into the picture. We believe that gold and silver are going to be the first choice for investors looking for protection from the coming crash and also investors looking to profit from it. We see a major rally in gold and gold stocks beginning at the end of the summer.”

Brian Sack, senior economist at Macroeconomic Advisers, said: “What happened today raises more systemic risk issues. It had a feel of liquidity problems similar to some of the past episodes like 1998…I am not saying it is as intense as 1998, but it certainly looked like that.”

What do you think?

Are we going to have a financial crash?

Is the US real estate and housing market about to collapse?

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