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Federal Reserve steps in to prevent financial meltdown
The Telegraph ^ | 3/17/2008 | Richard Blackden

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."


TOPICS: Business/Economy; Government; Miscellaneous; News/Current Events
KEYWORDS: crash; downturn; economy; fed; stpatricksmassacre
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To: Kakaze
This isn't about immigration, its about instant gratification.

It's about a lot of things that add up. You have to ask, what was the trigger here? Having lots of debt is not a bad thing *if* you can finance it. The question to ask is, why were people no longer able to finance their debt? It's a lot of different things which interact - some job losses here, some inflation there, some tax hikes someplace else, bad monetary and spending policies elsewhere, etc.

61 posted on 03/17/2008 6:28:18 AM PDT by garbanzo (Government is not the solution to our problems. Government is the problem.)
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To: bruinbirdman

NO FED BAILOUT!!!


62 posted on 03/17/2008 7:10:13 AM PDT by Tempest (I'm a Christian. Before I am a conservative.)
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To: Theophilus
Home ownership is not a positive economic indicator when you owe more than the home is worth.

I agree and would add that homes are generally not income producing and in fact are often the opposite.

63 posted on 03/17/2008 7:33:24 AM PDT by palmer
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To: ovrtaxt; raybbr

It was a joke. The world’s financial markets have nothing to do with illegal immigration, the second amendment or... schiavo.


64 posted on 03/17/2008 7:55:35 AM PDT by durasell (!)
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To: garbanzo
People without jobs or who can’t stay in the country don’t pay their mortgages.

Please. Spare us your sanctimonious sophistry.

The banks had no legitimate business lending these people money in the first place. Zero.

When I applied for my mortgage, the first thing they wanted was my legitimate Social Security Number. Another question was if I was a US citizen or here legally. None of these people met the first requirement much less the second. Lending to these people was like lending money to a criminal on the lamb who will run at the first sign of trouble. Yet the banks continued on their merry way to give these criminals whatever money they wanted.

The banks involved deserve to lose whatever money they gave these people. Additionally, their loan officers and managers should be sent to jail for either gross criminal negligence or aiding and abetting a fleeing criminal.

This has nothing to do with whether they "have a job" or not. Lots of criminals on the lamb have "legitimate" jobs. They are still criminals and miserably poor loan risks to boot.

The government is negligent, the banks are negligent, and We The People are negligent for electing such fools and allowing these shenanigans to go on in the first place.

Everybody in the know knew this was going on and anybody with half a brain knew it could not end well.

But the politicians were looking for some fast votes, the banks were looking for some fast money, and We The People were looking the other way so as not to offend anybody and be called a racist or nativist.

Illegal immigrants should not be here in the United States in the first place - much less taking out huge loans so they could rent out their overpriced homes by the bunk to other illegal aliens as flophouses to make the payments. Did anybody of sound mind really expect they would hang around when the music stopped.

We are all fools and will now reap what we sowed. We are all going to lose, big time, in this fiasco, except Juan (or whatever his name is but it is probably not the one on the mortgage application) who has absconded to who-knows-where!

65 posted on 03/17/2008 9:12:48 AM PDT by Gritty (Religion and good morals are the only solid foundation of public liberty and happiness-Samuel Adams)
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To: durasell

der.. I feel dumb lol


66 posted on 03/17/2008 9:58:34 AM PDT by ovrtaxt (Member of the irate, tireless minority, keen on setting brushfires of freedom in the minds of men.)
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To: pieceofthepuzzle

Think,....CRA...Community Redevelopment Act behind some of this...I think....


67 posted on 03/17/2008 11:18:13 AM PDT by Ernest_at_the_Beach (No Burkas for my Grandaughters!)
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To: roaddog727

Schumer and Dodd plan to do more meddling....they will welcome this opportunity....


68 posted on 03/17/2008 11:30:50 AM PDT by Ernest_at_the_Beach (No Burkas for my Grandaughters!)
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To: Gritty
Spare us your sanctimonious sophistry.

It may be sanctimonious and it may be sophistry but it also has the advantage of being true. In a sense it doesn't matter whether or not the banks should have made better loans. The fact is that they didn't and people let their emotionalism cloud their long term better interests.

69 posted on 03/17/2008 12:06:04 PM PDT by garbanzo (Government is not the solution to our problems. Government is the problem.)
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To: durasell
It was a joke. The world’s financial markets have nothing to do with illegal immigration, the second amendment or... schiavo.

Oh.

But, aren't we talking about the U.S. economy on this thread?

70 posted on 03/17/2008 5:51:44 PM PDT by raybbr (You think it's bad now - wait till the anchor babies start to vote!)
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To: Ernest_at_the_Beach

Just what we need.

And then they’ll blame the whole damn financial meltdown fiasco on Bush.

F’n great.


71 posted on 03/17/2008 6:03:32 PM PDT by roaddog727 (BS does not get bridges built - the funk you see is the funk you do)
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To: raybbr

The U.S. economy is dependent on the world financial markets at this point.


72 posted on 03/17/2008 6:14:30 PM PDT by durasell (!)
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