On the 16th of August, Goldman Sachs released a report, State of the Markets – Long and Short Risk Strategies, that is currently making its way around the Internet. Originally intended as a private report for its institutional clients – hedge funds that is – a copy was leaked to the Wall Street Journal who was also the first media outlet to break the news.
Though the international mainstream media has been largely silent, the Goldman report has been causing quite a stir with the online community.
The author, Alan Brazil, a key Goldman strategist who sits on the firm’s trading desk, made three major calls about the state of global markets.
One, that China’s growth is unsustainable, and secondly, the U.S. economy is still languishing and small businesses that have traditionally been the key drivers of job creation were still fighting to stay afloat. Finally, Mr. Brazil declares that European bank funding requirements may be substantial compared to their sovereign capacity, estimating that close to US$1 trillion in capital may be needed to shore up European banks.
In Mr. Brazil’s pessimistic report, he also provides various charts and figures, detailing the numbers surrounding European financial institutions and expounds upon the depth of the problems in Europe, the U.S. and China. In particular, he spells out in detail the borrowing by 77 European financial institutions, identifying some that are highly leveraged.
Yet, such gloom and doom reports are nothing the markets have not heard of. The financial markets have been moving erratically, reacting sharply each time a negative data report is released – a key sign that investors are paranoid, jittery and staring out into an uncertain future for the world economy.
Economists and governments have also been sounding out the same worries for quite some time.
So why is there so much chatter surrounding the latest report by Goldman Sachs?
Read the fully story by Michele Lin on EconomyWatch: The Secret Goldman Sachs Report: Eurozone Collapse And How To Profit From It
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