A reason for metals getting hit??? More defaults...Submitted by IamVoting4RonPaul on Thu, 05/29/2008 - 21:37
From a member of LeMetropoleCafe.com:
"Maybe this is one reason why Central Banks are aggressively attempting to smash gold and silver:
It is estimated that the size of the Alt-A market is $950 billion vs. $650 billion for subprime:
Recent data is indicating that the default rate on Alt-A paper is beginning to catch up to the default rate on subprime mortgages. So if the credit meltdown we experienced in the fall of '07 was primarily related to subprime paper, imagine what is coming at us as Alt-A paper collapses.
These downgrades also mean that, not only will pension funds and other big funds restricted to holding only AAA-rated paper be required to liquidate, but there will a massive trigger of credit-default derivatives that kick in to high gear, requiring the sellers of this ratings downgrade insurance to pony up cash to make up for the monetary losses connected with price declines this formerly AAA-rated paper.
The credit market/derivatives tsunami headed for our shores is going to make last fall look like short sprinkle in springtime."