Posted on 03/17/2008 1:48:03 AM PDT by bruinbirdman
The dollar tumbled and stock markets were left reeling after the Federal Reserve unveiled new measures designed to prevent a meltdown in global financial markets and Bear Stearns was sold for $240m.
Meeting over the weekend, Fed Chairman Ben Bernanke cut the so-called discount rate at which it is prepared to lend to banks to 3.25pc and said it will lend more to the 20 big banks that make the market for US government debt.
Coming a day before the Fed was scheduled to meet on interest rates, the action signals that the central bank is increasingly fearful of an implosion in markets. Vincent Reinhart, a former director at the Fed, told Bloomberg News that the move's "got to tell you the economy is in a pretty precarious state."
The news sent shares in Asia tumbling, with Japan's Nikkei 225 down more than 3pc, Hong Kong's Hang Seng index off more than 4pc and the dollar crashing to a new low against the euro.
The greenback, which has been battered so far this year, also fell against the yen and reached parity with the Swiss Franc. David Goldman, a strategist at Asteri Capital in New York, said: "Something is systemically very wrong and we're at a very dangerous moment."
Separately, JPMorgan announced it will buy Bear Stearns, the second-biggest underwriter of US mortgage bonds, for $240m. Shares in Bear Stearns crashed almost 50pc on Friday amid rumours of a cash shortage.
US Treasury Secretary Hank Paulson defended the bailout out of Bear Stearns, arguing that "our focus, our No. 1 priority is the stability of our financial system."
I would not disagree with your historic timeline there. Thank you palmer.
Is it at a record? What percentage of American homes are owned free and clear? Somebody who signed on the dotted line and didn’t read the fine print doesn’t count.
yitbos
What I see are institutions like BofA bending over backwards to give illegals easy, subprime signature loans over the last couple of years. Now that construction work has dried up, they’re gone, taking their saved money with them, and leaving the loan to default with no negative consequences for them. What, you think they care about their ‘credit score’? They don’t even have a driver’s license!
Okay, I’m really curious about this. Terry Schiavo?
“This is capitalism at it’s finest”
?
Financial code for economic euthanasia?
lol that would be ‘forced bankruptcy’.
I'm not saying that at all. What I'm say is that left to themselves, markets tend to be efficient in their operation. The issue here is that Congress essentially told the mortgage industry to lend to less than desirable credit risk individuals. In response to the Congressional meddling, the Mortgage bubbas came up with these questionable mortgage products.
QED, Congress needs to quit meddling in the economy. BAD things happen when they meddle.
“..but 99% of Americans are in deep kimchi.”
Absolute hyperbole.
In SC, BMW just announced a $750 milllion addition to their plant and need 500 more workers, less than one-half of one-percent of homes are in foreclosure, the ports may soon see a multi-billion upgrade and the building cranes are still working.
Most areas facing recession are run by socialist democrats, as in Michigan, which has been in recession for years.
Just because some states are run by idiots, it doesn’t mean every state is going down the crapper.
It's a tidal wave moving at the speed of thought: "I'm f**cke if I don't sell now".
Like a peeble thrown into a pond.
See post 27.
Live by the market - die by the market.
ftfy
Home ownership is not a positive economic indicator when you owe more than the home is worth.
“I’m in the same boat you are. What I fear most immediately is a redestributative attack on savings and investments.”
I too worry about that.
I think the next target of the Government will be 401K’s which is a huge pool of cash.
It's a chicken and egg thing. Our economic system was so unstable and complex, even fairly small changes in it get amplified and lead to cascade failure.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.