The following First Take is real-time analysis and opinion bythe MarketWatch commentary team.
LONDON (MarketWatch) -- Euphoria over bankbailouts and the temporarily buoyant stock markets is masking a sober reality.
The piper still has to be paid.
One fairly sanguine estimate of the cost of salvaging Wall Streetcame Tuesday morning from analysts at Merrill Lynch. They figure theinflationary effect of all the bank bailout measures now underway will push goldto $1,500 an ounce and oil back to $150 a barrel.
Seerelated item.The analysts don't offer a timeline, but the way markets have beenjumping around lately it could be any day now.
Perhaps the real question is: why stop at $1,500?
All the world's governments have managed to do so far is to stopthe bleeding from the credit crunch injuries that we actually know about.
There's still going to be a very nasty recession. And it willhappen simultaneously in most of the developed world.
Fewer people will have jobs. The interest rate on their adjustablemortgages will be shooting up. There are bound to be more foreclosures, and moretoxic debts.
That doesn't even begin to look at what happens as more credit carddebt goes bad, or the truly enormous derivatives markets.
SeePaul Farrell.For its part, Wall Street has completely lost any credibility inarguing against increased governmental spending. They are the first and biggestpigs at the troughs each day, even if they are being force fed.
And with a U.S. administration that's overseen the biggest deficitsin history about to be replaced by the closest thing to a socialist governmentAmerica's ever had, "stimulus" spending will likely remain high on Washington'sagenda.
Given all that, $1,500 for gold looks more like a floor than aceiling in the years to come.
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TomBemis, assistant managing editor
Gold could hit$1,500, say Merrill analysts
By Moming Zhou
Last update: 8:26 a.m. EDT Oct. 14, 2008
NEW YORK (MarketWatch) -- Gold prices could hit $1,500 asglobal plans to rescue the financial industry are set to increase inflationpressures, according to analysts led by Francisco Blanch at Merrill Lynch. "Theunintended consequence of the ongoing financial bailout will be a return ofinflationary pressures to the commodity markets," wrote the analysts in a notereleased Monday. The analysts didn't say when gold would hit the price target.They also predicted oil prices will rise to $150 a barrel.