The financial markets are entering the worst banking crisis in decades and the stockmarket is set to fall by another 20 per cent, says Blue Planet Investment Management.
Blue Planet Worldwide Financials Investment Trust manager Ken Murray warns liquidity issues are causing continuing problems in the money markets and banks are increasingly unwilling to lend to other banks they perceive to be risky.
Murray says: “We are entering one of the greatest banking crises in decades. The credit cycle has turned, bad debts are soaring, banks will go bust and stock markets will fall much further. People need to be told the truth as opposed to being spoon fed palliative words.”
He says the “conveyor belt of death” – loans drawn down with cash going out and being replaced by highly illiquid, poor quality assets- will “suck the liquidity” out of investment banks and fill their balance sheets with bad debts.
“I would not be surprised to see one or more of them become insolvent in the near future.” he says.
Murray says Blue Planet has liquidated investments, stripped its portfolio down to a small group of retail banks not exposed to these problems, eliminated gearing, hedged its remaining investments and raised cash in anticipation of much steeper falls in the market.
He says: “We have locked in some of the very large profits we have made in recent years and armed ourselves with cash so that we can re-enter the market when it has stabilised.”