[slwiser]

Note the Monday morning surprise came today with this:

" March 16 (Bloomberg) -- The Federal Reserve, in an emergency weekend decision, cut the rate on direct loans to commercial banks and opened up borrowing at the rate to primary dealers in government securities."

A quarter point drop in interest rates and opening the FED to open up borrowing to primary dealers, whoever they are (people who need to buy tomorrow to reverse any panic????), the PPT as noted above in post #28. I think the PPT just got a lot bigger than before.

 

[Hopstretch]

Hell, why nor let all the broker-dealers into the taxpayers' pockets too! They were feeling left out.

We're right on the brink now. The Fed is running out of bullets.

 

[slwiser]

washingtonpost.com - nation, world, technology and Washington area news and headlines

" The Federal Reserve took dramatic action on multiple fronts last night to avert a crisis of the global financial system, backing the acquisition of wounded investment firm Bear Stearns and increasing the flow of money to other banks squeezed for credit."

The more liquidity pumped into the market the lower the dollars goes....the more inflation that is created associated with the dollar. Prices are only going to get a lot higher with the drop in the relative value of the dollar. This just pushes other countries that have reserves in dollars to dump them even more causing additional pressures on the markets.

Can the FED really control this? I am not sure as of today.

The world banks will have more to say on this maybe sooner rather than later. The USA may be in for a "talking too" like other countries have had when they got in trouble. The world banks will not let the dollar totally collapse (I hope!) but they will have their say in whatever happens in the end and our fate will not be totally controlled by our on desires or interests. This is a result of having not controlled our own appetite for living on debt.

Foreign investors veto Fed rescue - Telegraph

Bloomberg.com: Worldwide

Dollar Doomsayers Draw Signs From Bernanke Rate Cuts:

"The Federal Reserve reduced the rate on direct loans to commercial banks by a quarter-point to 3.25 percent before Asian financial markets opened today. It will likely lower its target rate for overnight loans between banks tomorrow to at least 2.25 percent from 3 percent, according to futures traded on the Chicago Board of Trade. Lower borrowing costs work against the dollar by making fixed-income securities issued by the government less appealing to global investors"

 

[Roam]

Quote:

Originally Posted by Carmantom /img/forum/go_quote.gif It seems when all are predicting how gloomy it is going to be, the worst is over. I think investment firm go back up slowly from here and there are no more to go down.

I have some prime ocean front property to sell you. It's in New Mexico. Or would you prefer a certain bridge in NYC?

 

[XGJFilmsX]

JP Morgan will never go under.
Even when the world ends.
Mr. Morgan made a deal with the devil.

 

[KUNFUCHOPSTICKS]

Lehmans. No one buys iShares.

 

[Konig]

Quote:

Originally Posted by Roam /img/forum/go_quote.gif I have some prime ocean front property to sell you. It's in New Mexico. Or would you prefer a certain bridge in NYC?

LOLX!!! haha

although im not a keen follower in financial events but i got this feeling that the federal reserve is forcing American citizens and USD holders to take on ridiculous
level of risk. Foreigners can easily dump USD and tell the fed to screw themselves, but what can the normal average American do? stop paying taxes and pay with gold certs?

 

[vcoheda]

this really isn't a joking matter. the whole US economy is in a very fragile state right now.

 

[Konig]

Quote:

Originally Posted by vcoheda /img/forum/go_quote.gif this really isn't a joking matter. the whole US economy is in a very fragile state right now.

of course its no joking matter, lots of people are suffering now for problems caused by a few very smart guys and lots of dumb guys.

 

[Uncle Erik]

Quote:

Originally Posted by vcoheda /img/forum/go_quote.gif this really isn't a joking matter. the whole US economy is in a very fragile state right now.

QFT. The Fed has pulled off narrow escapes three or four times since last summer. I'm worried that the problem might be more than it can handle.

Quote:

Originally Posted by Konig /img/forum/go_quote.gif LOLX!!! haha although im not a keen follower in financial events but i got this feeling that the federal reserve is forcing American citizens and USD holders to take on ridiculous level of risk. Foreigners can easily dump USD and tell the fed to screw themselves, but what can the normal average American do? stop paying taxes and pay with gold certs?

Konig, you might feel secure with the Canadian Dollar, but keep in mind that Canada is the biggest investor and (I think) biggest trade partner with the US. The effects will be felt in Canada. Apologies from the south - I don't want to see Canada put through the wringer, either. Lots of other investors around the world bought these securitized mortgages, too.

And there are ways of dealing with US tax laws.

 

[Konig]

Quote:

Originally Posted by Uncle Erik /img/forum/go_quote.gif QFT. The Fed has pulled off narrow escapes three or four times since last summer. I'm worried that the problem might be more than it can handle. Konig, you might feel secure with the Canadian Dollar, but keep in mind that Canada is the biggest investor and (I think) biggest trade partner with the US. The effects will be felt in Canada. Apologies from the south - I don't want to see Canada put through the wringer, either. Lots of other investors around the world bought these securitized mortgages, too. And there are ways of dealing with US tax laws.

nahhh most of my holdings are in CNY, CHF and SGD (since im from there). I dont think CAD can deviate much from USD since 60% of Canadian exports go to the States. CNY, SGD and most south east asian currency is pretty much a safe bet in the long term as long as you are fine with a slow appreciating currency with close to 0 yield. I think its a good strategy to hold your cash reserve in these currencies until you are comfortable enough to move back into higher risk asset classes.

I think the Fed pulled it off in the past because people are still relying on trans atlantic phone cables and big media press for information in. In this age of financial globalization you suffer the consequence before the press starts printing.

 

[Agent Kang]

Quote:

I dont think CAD can deviate much from USD since 60% of Canadian exports go to the States

This makes no sense. CAD/USD has less to do with the level of trading and has everything to do with energy prices, which has direct effect of our terms of trade.

Quote:

I think the Fed pulled it off in the past because people are still relying on trans atlantic phone cables and big media press for information in. In this age of financial globalization you suffer the consequence before the press starts printing.

lol....this is a good thing. The quicker the dissemination of information, the greater is the influence of the fed policy. The Fed 'pulled' it off because they realized not too long ago that both main street and wall street are too smart to be deceived, and the most effective policy is one which is most transparent.

 

[Roam]

Quote:

Originally Posted by Uncle Erik /img/forum/go_quote.gif QFT. The Fed has pulled off narrow escapes three or four times since last summer. I'm worried that the problem might be more than it can handle.

The Fed had around $860 billion in reserves before this whole mess started last summer. Half of their reserves are now gone.

Other fun facts. It generally takes around 6 months from the time a person defaults on his mortgage until the home is foreclosed, in other words, the homes being foreclosed now are the ones where the owners defaulted on the payments last September. That was just the starting trickle of defaults, we will see the main floodtide in the coming months. Also, Alt-A mortgages have just entered into their peak reset months, rates are currently resetting upwards and starting a new wave of defaults, which in around 6 months translates into another large wave of foreclosures. This will sodomize the entire housing backed financial industry.

The banks and other financial institutions could take a write-down in the range of a trillion dollars, that's trillion, with a "t". The Fed has around $400 billion left. You do the math. And that's not even counting the highly leveraged derivatives schemes the banks have worked themselves into over the last decade. JPMorgan Chase alone has around $91 trillion in derivatives exposure. This is an amount greater than the GDP of every single country put together. God help us all if that unwinds & implodes.

 

[Wodgy]

Quote:

Originally Posted by Roam /img/forum/go_quote.gif Also, Alt-A mortgages have just entered into their peak reset months, rates are currently resetting upwards and starting a new wave of defaults, which in around 6 months translates into another large wave of foreclosures. This will sodomize the entire housing backed financial industry.

ARMs and Alt-A mortgage resets are based on short-term LIBORs. These rates are continuing to fall and so resets aren't going to be the problem they would have been even six months ago.

It's the 30 year fixed mortgage rates that will continue to go up.

 

[Lazarus Short]

So the Fed cut the prime rate, and may well cut it some more very soon. More of the cheap, easy money that got us where we are. I suspect that Bernanke, who I understand is a world-class expert on the Great Depression, knows that it was precipitated by [in part] tight money. I expect he will continue to keep the money floodgates open, thinking the unspeakable can't happen on his watch. Greenspan [who I knew of from his Randian days] will enjoy his retirement. Bernanke may well end up lynched.

What it means to us is the vicious inflation we all expected in the late 1970's, but didn't get. Now we will. Smart money will get out of the dollar, and into tangibles, esp. precious metals. Really smart money will get into food. This is no joke. Those of you on this thread who are still bantering financial terminology especially need to wake up - you're still living in the post-WWII dream world.

Laz