Posted on 07/15/2008 7:39:29 PM PDT by DeaconBenjamin
Merrill Lynch has warned that the United States could face a foreign "financing crisis" within months as the full consequences of the Fannie Mae and Freddie Mac mortgage debacle spread through the world.
The country depends on Asian, Russian and Middle Eastern investors to fund much of its $700bn (£350bn) current account deficit, leaving it far more vulnerable to a collapse of confidence than Japan in the early 1990s after the Nikkei bubble burst. Britain and other Anglo-Saxon deficit states could face a similar retreat by foreign investors.
"Japan was able to cut its interest rates to zero," said Alex Patelis, Merrill's head of international economics.
"It would be very difficult for the US to do this. Foreigners will not be willing to supply the capital. Nobody knows where the limit lies."
(Excerpt) Read more at telegraph.co.uk ...
You are welcome. It is no fun but it is common sense and smart to save and scale back and keep your money safe if you are expecting tough times. You are smart. Once this blows over, eventually, down the road, there will be a time for aggressive investing once again and for playing with a chunk of the fun money. Times are just too uncertain to guess wrong, go deep in debt or blow all your savings, and rely on hope alone to weather a possible financial crisis in your life.
Ah, but you are looking for Economic logic in a purely political decision made by filthy politicians. They are just playing politics and trying to delay the pain until after the elections.
Anybody at all? Can ANYBODY tell me the tangible benefit of 2.0% toward ending the liquidity crisis and restoring insolvent banks? Anybody? I know it gave speculators more money to buy gold stocks and oil stocks? But what good has it done to fix the systemic crisis that is worsening on a daily basis?
Anyone?
*** Crickets chirping in the heat of a still night as a pin strikes the tile floor with a resounding PING!... ***
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