Weekly News Wrapup

Markets wary of Irish debt as fresh rescue looms

This is a disturbing pattern across Europe as the global credit crisis drags on, with extreme cases in Iceland, Ukraine, Russia, Hungary and Latvia. There are fears that investors could start to shun sovereign debt in Western states where banks have outgrown the underlying economy.

Ireland is vulnerable because financial services make up 9.8pc of GDP, including its 'Canary Dwarf' enclave of hedge funds. The liabilities of its lenders are twice Irish GDP. Britain, Switzerland, Belgium, Austria and Luxembourg are in the same boat.

Faith in bailouts is quickly being replaced by reality: there is too much debt. Bailouts just transfer the risk to the government.

In other news, out of 11,584 stock mutual funds in the U.S. How many have a positive return for 2008?

0.

Junk bond yields are now at almost 21%, which is greater than during the Great Depression. I expect the Federal Reserve to start buying junk bonds within the next six months.

I'm thinking it may be time to sock away some gold, just in case (real gold, not paper gold).

Let's see how long Friday's 1-hour rally lasts.