I’m wondering if there’s any financial stability left anywhere. I’d guess the answer is no:
ZURICH — UBS AG Monday said that two strategic foreign investors committed to inject capital worth 13 billion Swiss francs ($11.5 billion) as part of a broader move to strengthen capital as the Swiss bank announced a further $10 billion in write-downs on subprime holdings.
UBS, based in Zurich, also revised its outlook, saying it now expects to post a net loss attributable to shareholders in the fourth quarter, after having said earlier that it expects a profit overall. The bank said it was now possible that it will record a net loss for the full year.
From another Wall St. Journal article:
So far, the potential losses look manageable compared with the savings-and-loan crisis of the 1980s and the tech-stock crash of 2000-02. But the housing debacle could yet take years to work out, thanks to the sheer complexity of it. Until the mess is cleaned up, investors will remain jittery and banks will likely hold back on all kinds of lending — a credit crunch that is already damping global growth and could tip the U.S. economy into recession.
The new financial system — shifting risk from banks to securities markets — has worked “pretty well” up until now, says former Federal Reserve Chairman Paul Volcker. “We’re going to find out if it works well for a major-league crisis.”
