Central banks launch co-ordinated rate cut Central banks around the world announced a co-ordinated cut in interest rates on Wednesday, in response to mounting fears about the impact of the financial crisis on the world economy. The US Federal Reserve, the European Central Bank, the Bank of England, and the central banks of Canada, Switzerland and Sweden all cut their main lending rates by 0.5 percentage points. German and UK government bonds fell sharply on the news. In London, shares initially rose, but then drifted lower, and at 12.30 local time the FTSE 100-share index was down about 0.7 per cent on the day.
Central banks around the world announced a co-ordinated cut in interest rates on Wednesday, in response to mounting fears about the impact of the financial crisis on the world economy.
The US Federal Reserve, the European Central Bank, the Bank of England, and the central banks of Canada, Switzerland and Sweden all cut their main lending rates by 0.5 percentage points.
German and UK government bonds fell sharply on the news. In London, shares initially rose, but then drifted lower, and at 12.30 local time the FTSE 100-share index was down about 0.7 per cent on the day.
This is all about saving the City: the current crisis was created by too much cheap debt - how on earth will more cheap debt help solve that?
Lending to the real economy is not constrained because it is too expensive to borrow money, but because banks don't want to take on any additional risk (even good risk) because they realize they are carrying too much of the wrong kind and need to reduce that - and thus the price for risk (the risk premium) has skyrocketed.
Interest rates have 3 components, in fact:
Bringing the first one down is not the solution to the crisis, which impacts items 2 and 3. In the long run, we're all dead. John Maynard Keynes
Housing Pain Gauge: Nearly 1 in 6 Owners 'Under Water' The relentless slide in home prices has left nearly one in six U.S. homeowners owing more on a mortgage than the home is worth, raising the possibility of a rise in defaults -- the very misfortune that touched off the credit crisis last year. The result of homeowners being "under water" is more pressure on an economy that is already in a downturn. No longer having equity in their homes makes people feel less rich and thus less inclined to shop at the mall. (...) About 75.5 million U.S. households own the homes they live in. After a housing slump that has pushed values down 30% in some areas, roughly 12 million households, or 16%, owe more than their homes are worth, according to Moody's Economy.com.
The relentless slide in home prices has left nearly one in six U.S. homeowners owing more on a mortgage than the home is worth, raising the possibility of a rise in defaults -- the very misfortune that touched off the credit crisis last year.
The result of homeowners being "under water" is more pressure on an economy that is already in a downturn. No longer having equity in their homes makes people feel less rich and thus less inclined to shop at the mall.
(...)
About 75.5 million U.S. households own the homes they live in. After a housing slump that has pushed values down 30% in some areas, roughly 12 million households, or 16%, owe more than their homes are worth, according to Moody's Economy.com.
Judging by the French stock exchange, they launched a bubble that lasted...
3 hours and 30 minutes.
Is that ((gaah)) ? Or ((weee)) or something? "The womb that spawned that thing is fertile yet"
The bubble lasted 90 minutes.
We are going for nanoseconds of confidence soon. "The womb that spawned that thing is fertile yet"
The sum of the lengths of the bubbles converges to a finite amount: the time to the phase transition. A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
In which circumstances only a fiscal stimulus can be effective. Utsukushikereba sore de ii
Don't expect much sense from the Clockwork Orange until after the election.
that's like wondering why a heroin junkie doesn't want to taper off with methadone...
i don't think many in financial services have the equanimity you display, when it comes to contemplating the return of banking to the stodgy world it was before 'melamine' derivatives came along. The person who says it cannot be done should not interrupt the person doing it. Chinese Proverb.
