Back to August 2007….

On the Financial Post’s Wealthy Boomer blog I made the following comments:

15 August 2007 –

“…..the current risks in the market place are extreme. No-one really knows the full extent of the sub prime credit risks, the full impact of the unwinding of these risks on credit derivatives and market liquidity, market leverage and hedge fund risk management and ultimately economic activity. These risks are in addition to a very real and significant downturn in the US real estate market, which precipitated the current risk event, and a very highly indebted US consumer. Yes, the world economy has been growing strongly in the first half of 2007 with central banks worldwide (with the possible exception of Japan) more concerned over rising inflation and capacity constraints, but this world economy has been and remains to a large extent dependent on US consumer demand which is itself in a very difficult situation. We always have economic and market risk, to lesser or greater extent, but what has been proven already is that these risks are now leveraged and quite probably to a far higher degree than they have ever been. It would not be so bad if we at least knew the full extent of the risks. Unfortunately we do not.”

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