gold breaks out, page-139

Hi Sid

"Do you still believe "sub prime is contained" like Ben said?"

In part.

If US real estate prices fell another 20 or 30% the US banks would definitely take another major hit, but probably not as large as 2008-9.

The subprime and other real estate loss of that time have be written off and the Fed has forced the banks to reduce exposures and increase the capital held against the loans they have kept.

To that extent "sub prime is contained".

Why do I believe it?

I have spent a bit of time talking to American bankers who belly ache a lot about Ben, the Fed and all the surplus capital they are carrying (which dilutes their earnings, which in turn affects their bonuses).