The Flight To Commodities

Fear and panic are sweeping the world's financial markets as the effects of the ongoing credit crunch, self inflicted by the greed and stupidity of the banks, claimed another high profile victim.

Carlyle Capital Corporation (CCC), a $21BN mortgage fund, collapsed. This fund, although it invested in "high quality" mortgages, had leveraged itself to hilt. Thus proving the old adage, don't invest with money that you can't afford to lose.

The City is bracing itself for a string of similar fund collapses.

The result of this carnage is that there is a flight away from financial products to commodities. Gold is leading the way, breaking through the $1000 an ounce barrier.

This should come as "heartening" news to Gordon Brown who, when he was chancellor, sold much of Britain's gold reserves off for less than a third of that amount.

Could someone please ask him why he did that?

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Darling's Ostrich Budget

Yesterday's budget, presented by Alistair Darling, aside from being tedious and predictable betrayed the fact that Darling and the government are burying their heads in the sand over the meltdown in the world's financial markets.

Stock markets across Europe and Asia are falling this morning as the dollar slumped to new lows, and fears grow that the US Federal Reserve's $280BN liquidity bailout will fail to stop a market meltdown and a US recession.

The Carlyle Capital Corporation (CCC) admitted today that it is likely to be liquidated, after failing to reach an agreement with its lenders. The company defaulted on $16BN of debt, and bankers are seizing its assets.

Several hedge funds with assets of more than $4BN are on the brink of collapse, or had halted withdrawals.

Meanwhile Darling tinkers with the tax on booze and fags, and worries about plastic bags.

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