What? No Fat Lady Singing?!?!?!?!?!?!?
I suppose she does deserve a break... On Oct 8, 3:41 pm, "\"Lone Wolf\"" <[EMAIL PROTECTED]> wrote: > World's central banks in joint action to halt carnage > > Update The Federal Reserve, European Central Bank and four other > central banks lowered interest rates in an unprecedented coordinated > effort to ease the economic effects of the worst financial crisis > since the Great Depression. > > The Fed, ECB, Bank of England, Bank of Canada and Sweden's Riksbank > each reduced their benchmark rates by half apercentage point. The Bank > of Japan, which didn't participate in the move, said it supported the > action. Switzerland also took part. China's central bank separately > cut its key rate 0.27 percentage point. > > ``We are now looking at the first page of the global-depression > playbook,'' said Carl Weinberg, chief economist at High Frequency > Economics in Valhalla, New York. ``The only solution is to cut rates > as close to zero as you dare,'' pump money into the banking system > ``hand over fist'' and increase government spending, he said. > > The overnight move follows a global meltdown that sent US stock > indexes heading for their biggest annual decline since 1937; Japan's > benchmark today had the worst drop in two decades. Policy makers are > also aiming to unfreeze credit markets after the premium on the three- > month London interbank offered rate over the Fed's main rate doubled > in two weeks to a record. > > Rate levels > > The Fed reduced its benchmark rate to 1.5%. The ECB's main rate is now > 3.75%; Canada's fell to 2.5%; the UK's rate dropped to 4.5%; and > Sweden's rate declined to 4.25%. China cut interest rates for the > second time in three weeks, reducing the main rate to 6.93%. > > Stocks at first rallied after the announcement, then turned lower. > Some analysts said the central banks should have lowered rates by > more, and predicted further reductions. Economists at Goldman Sachs > Group Inc. and Morgan Stanley now project another half-point move by > the Fed at its Oct. 28-29 meeting. > > The Standard & Poor's 500 Stock Index fell 1.1% to 984.94 at the close > in New York, capping a 16% loss in six trading days. Europe's Dow > Jones Stoxx 600 Index slumped 6%. Japan's Nikkei 225 Stock Average > lost 9.4% to 9,203.32 earlier today, before the announcement. > > ``The recent intensification of the financial crisis has augmented the > downside risks to growth and thus has diminished further the upside > risks to price stability,'' the central banks said in a joint > statement today. ``Some easing of global monetary conditions is > therefore warranted.'' > > World recession > > Global policy makers are reducing rates as economies weaken around the > world. The International Monetary Fund said the global economy is > heading for a recession in 2009 and increased its estimate of losses > from the financial crisis to $US1.4 trillion. > > The crisis already prompted the US to enact a $US700 billion program > to buy troubled assets from banks in an effort to prop them up. UK > banks will get a 50 billion-pound ($122 billion) government bailout, > while Spain will spend as much as 50 billion euros to buy bank assets. > European governments have also moved to rescue banks Fortis, Dexia SA > and Hypo Real Estate Holding AG. > > The US Treasury said today it sees ``severe dislocations'' in the > government bond market and plans to sell more debt to address > shortages. The market problems ``are across the Treasury market > curve'' and are primarily affecting medium- and long-term debt, from > two-year notes through 30-year bonds, a Treasury official told > reporters. > > The Fed's Open Market Committee, which voted unanimously for today's > move, said in its statement that ``incoming economic data suggest that > the pace of economic activity has slowed markedly in recent months. > Moreover, the intensification of financial-market turmoil is likely to > exert additional restraint on spending.'' > > Europe's reversal > > European policy makers were forced into action after the collapse of > Lehman Brothers Holdings Inc. last month roiled world financial > markets and caught them off guard. The ECB raised rates in July and > Bank of England Governor Mervyn King warned the government as recently > as Sept. 16 that inflation was set to accelerate. > > The decision to let Lehman go ``had enormous, very unfortunate > consequences,'' European Central Bank President Jean- Claude Trichet > said Oct. 2. On the same day, he signaled the ECB was ready to cut > rates. > > ECB council member Ewald Nowotny said in an interview that Wednesday's > rate reduction ``should not be seen as a first step in a possible > series'' by the ECB. ``The situation has to be assessed as we go > along,'' and the current rate level ``will ensure that inflation > expectations remain anchored,'' said Nowotny, chief of Austria's > central bank. > > Deteriorating economy > > The action comes a day after Fed Chairman Ben S. Bernanke failed to > assuage investors' concerns about the deteriorating economy by > signaling he was ready to lower borrowing costs. > > Fed officials, who have kept their benchmark rate at 2% since April, > may have wanted time for their record loans to the financial industry > and new programs, including purchases of commercial paper, to bear > fruit before lowering rates. Investors instead perceive the economic > outlook deteriorating more rapidly, necessitating rate reductions. > > The declines in US shares the past two days followed pre- market > opening announcements of fresh actions by the Fed to unblock credit > markets. On Oct. 6, the US central bank doubled its planned auctions > of cash to banks to as much as $US900 billion. Yesterday, it unveiled > a unit to buy commercial paper, debt used by companies for short-term > funding. > > Central bankers acted two days before they gather with finance > ministers from the Group of Seven industrial nations in Washington. > The timing suggests the central banks sought to avoid any appearance > of being influenced by governments, said Ted Truman, former chief of > the Fed's international-finance division. > > `Before Friday' > > ``It was clear that if they wanted to do it, they had to do it before > Friday,'' said Truman, now a senior fellow at the Peterson Institute > for International Economics in Washington. ``they don't want to see as > being coordinated by their finance ministers into doing this.'' > > Both US presidential candidates said they backed the Fed's rate cut. > Democrat Barack Obama said more was needed and said he hoped the > global coordinated response to the crisis continued at the G-7 meeting > of finance leaders in Washington this week. Both he and Republican > John McCain said the Fed action had to be accompanied by further moves > to help homeowners. > > Obama has surged in polls in the past three weeks as the credit freeze > worsened and global equity markets plunged, with respondents saying he > would do a better job managing the economy. An NBC-Wall Street Journal > poll conducted Oct. 4-5 found Obama supported by 49% of registered > voters, a 6-point margin over McCain. Two weeks ago an NBC-Journal > poll put Obama's lead at 2 points. > > Bernanke message > > Bernanke said in a speech yesterday that an intensifying credit crunch > means officials must ``consider'' lowering borrowing costs. > > In more typical market conditions, stocks rally when a Fed chief > indicates he'll reduce rates. Now, Bernanke's message may have less > power because traders already anticipated for weeks that policy makers > would need to make that move, and because of rising concern even rate > cuts may do little to immediately help banks scrambling to reduce > their vulnerability to loan losses. > > ``This is an extraordinary circumstance,'' said Former Fed Governor > Laurence Meyer, now vice chairman of Macroeconomic Advisers LLC. ``If > markets are totally frozen it doesn't help. It certainly builds > confidence psychologically.'' > > Bloomberg News --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more. -~----------~----~----~----~------~----~------~--~---
