After months of adamant official denial of any potential threat of the subprime mortgage meltdown spreading to the global financial system, the US Federal Reserve (Fed) on Friday, August 17, a mere 10 days after declaring market fundamentals as strong and inflation as its main concern, took radical steps to try to halt financial market contagion worldwide that had become undeniable. * * *Politicians are talking about taking measures to help households suffering from the subprime crisis to prevent as many as 3 million largely low-income households from losing their homes.
However, that will not solve the crisis in the financial markets. In fact it may add to it. But with the central banks pumping in money to help banks from failing, while families are evicted from their homes is very bad politics in a election year.
The central banks are giving financial institutions whose credit rating and cashflow are not much better than family with subprime mortgages, free credit cards with a subsidised interest rate and no spending limit for as long as needed, while these very same institutions are foreclosing on the homes of their customers. This crisis will likely build to a crescendo just before the November presidential election. Its going to be a very interesting election. * * * Source Here
Free trader cheerleaders and proponents of 'buy now, buy today!' just woke up. At least a few have awakened. Easy credit is a thing of the past. But naysayers still proclaim, 'No big deal. Nothing to see here. Time to move on.' Yeah, right.
Please check out my previous posts or my FR Page. I'm going to be adding some intriguing information there from time to time.
*Ping*!
Nevermind. I just saw that he writes for AP.