Posted on 10/08/2008 8:34:04 AM PDT by TigerLikesRooster
FTSE fails to hold rate cut gains
By Michael Hunter
Published: October 8 2008 08:41 | Last updated: October 8 2008 16:11
London equities failed to hold gains inspired by a co-ordinated emergency interest rate cut of 50 basis points from the world’s leading central banks on Wednesday, with resource stocks exerting pressure on the index amid concern about the outlook for global economic growth.
The Bank of England, the US Federal Reserve and the European Central Bank as well as the central banks of Canada, Sweden and Switzerland reduced their key lending rates in a co-ordinated move to ease the global financial crisis.
“At last they all woke up,” said Riccardo Barbieri-Hermitte at Bank of America.
Charles Diebel at Nomura said: “It underlines how seriously they are taking the situation and this more than anything should help instill more confidence in the system and lessen some of the tensions in the money markets”.
But the move failed to restore confidence in the global financial system, and equity indices around the world continued to post heavy losses.
Toward the end of a turbulent session the FTSE 100 was 256 points lower at 4,416.4, a loss of 5.5 per cent, although it stayed off session lows of 4,245 before the rate cuts were announced. The FTSE 250, seen as more representative of the domestic UK economy, was 3.5 per cent weaker at 7,168.8.
Wall Street indices also failed to sustain attempts at an intraday rally. As European traders moved into the last 30 minutes of their business day, the Dow Jones Indistrial Average was 123 points lower at 9,324.1
(Excerpt) Read more at ft.com ...
Please.
No.
That's bad, but what's REALLY sobering is the LIBOR/OIS Spread. It was sitting at 321 bp last I checked. That blows away previous records.
They’lll do anything to save the country. Not! LOL
Absolutely agree. Paulson should be sacked and frog-marched to prison along with the other heads of i-banks.
Unless the Fed and the government are helping to coordinate this collapse..
I'm not a conspiratorialist, but the Fed and government haven't made a correct move yet in this mess.
It's sobering to think about....but what if?
Yep.
This is reaching a point where Bernanke and Paulson have to be realizing that what they’re doing ain’t hacking it.
This was done in Nazi-era Germany - without very good results.
Laz, we don’t have to look. LOL!! Just the what I perceive as dumb moves by “The Wild Bunch” to now help crash our economy through the last 16 years.
We’re not paying reparations to the French.
Comparisons to the Weimar Republic are every bit as silly as comparisons to 1929 here.
The comparison to be made here is 1873 and the railroad bubble.
And yes, even then, the government stepped in to re-capitalize banks.
The market is clearly telling us that Paulson’s plan won’t work. The market is clearly telling us that the Fed actions aren’t working. And the market got here because of the “free market” in credit derivatives.
So: what’s your plan on how to go forward?
That’s why I consider a M1A part of my portfolio as much as blue-chip, dividend-paying stocks.
I don't think we are dealing with conspiracy, but rather with rank stupidity, the hubris of self-styled masters of the universe, gross negligence of both government officials and CEOs of financial institutions, wrongful economic theory, and the failure to learn from the past. Neither Obama nor McCain have the right stuff in this case; their financial and economic advisers will be cut from the same cast of characters as the Bush Administration had. However, Obama will do more damage than McCain as he is likely to pursue expensive welfare state programs as President.
Nowadays, I'd say tinfoil is the new black. Did you see the yeild on the 10 year T? Yikes.
“For all the blovation I see from “conservatives” here on FR railing against “socialism” — that is exactly what is needed just now. “
Wrong answer. Socialism caused this mess in the first place. If the banks have done something illegal then it is the job of the government to prosecute them. The government FORCED the banks to loan money to people incapable of paying it back.
That’s very nice.
I suppose you’re one of those people who are prepared to engage in trade using tobacco leaves and conche shells, right?
If you aren’t, pray, enlighten us how you plan on peddling your free market dogma in the midst of a depression?
Step back and let the market purge itself.
Meaning massive collapses, massive unemployment, and massive hardships - but a cleansed system afterwards and it would take a lot less time than the propping up they're doing now.
“I suppose you’re one of those people who are prepared to engage in trade using tobacco leaves and conche shells, right?”
What a stupid response. A total non-sequitur.
I’m not a conspiratorialist, but the Fed and government haven’t made a correct move yet in this mess.
We have been conditioned to disregard any conspiracy theory irregardless of factual evidence.
In June 6, 2008 Obama ditched his press entourage at Dulles airport to meet Hillary in a secret meeting. Hillary also did the same thing to meet with Obama.
http://abcnews.go.com/GMA/Politics/story?id=5012995&page=1
However, all the movers and shakers of the world happened to also be at a secret nonreported meeting 20 miles away in a Marriott hotel in Chantilly, Virginia at the same time. This is the infamous Bilderberg guys and was actually covered by some local DC gossip types.
http://wonkette.com/tag/bilderberg
The rumor being that Hillary and Obama met there when they escaped their press entourage. Now there are multiple conspiracy people that track this group and compile the list of attendees. If you take the time to go find it you will discover that Bernake and Paulson attended the pow wow in Virginia. The fact that the attendees are a whos who of political/financial/corporate/media/political players and they do it in secret with no press coverage is why there is a cottage industry of conspiracy theorist following them.
Knowing this information and watching how the bailout crisis was used as a club to expand power and transfer wealth in unprecedented fashion, leads one to believe that maybe the conspiracy guys are onto something.
No more stupid than yours.
You have yet to offer anything other than dogma as a solution.
In a fiat money, fractional reserve currency system, you have to deal with the problem at hand: how to get the banks lending again, How to get the banks’ reserves propped up to a point where other banks will conduct transactions with them.
And free-market dogma ain’t gonna do jack right now. We have all the free market dogma we can handle right now in the credit default swap market. They aren’t even really a swap instrument - they’re REALLY insurance contracts. But because they’re called “swaps,” they’re not regulated by the insurance commissioner of NY State.
So in the CDS market, it is so free-market that there isn’t even complete disclosure of the CDS positions and counterparties, much less the terms of the contracts disclosed. There’s no regulation, there’s no laws, there’s no nothing. Complete free market. Ayn Rand and Alan Greenspan should be having a objectivist orgy, right?
Instead, these instruments are taking down one counterparty after another as it turns out that the lack of regulation allowed very lightly capitalized parties to write CDS far in excess of their ability to pay claims on the contracts.
I point back to the 1873 crash for an example of what had to happen in pre-Fed, pre-JP Morgan days: Banks quit honoring checks from other banks. The US government had to step in with something like $24 million to prop up the reserves in several banks in NY, and several million more in what would be a forerunner of something like today’s TAF, directly from the US Treasury.
The 1873 crisis started around 19 Sep, 1873. It took until the end of October for banks to start clearing checks again. That’s about as close to minimalist intervention as I can find in semi-modern US history, and even then the economic result was known as “The Real Depression” — people who lived through both 1873 and 1929 thought that the 1930’s were relatively easy by comparison.
After 1873, the US didn’t turn into Sweden. It took about four years for the economy to recover and the US went forward.
We can’t wait until the end of the month for short term credit to start flowing again. If it takes that long, you’re going to see large companies with tangible assets and significant book values go down in flames. The Fed’s new program to buy commercial paper isn’t some abstract exercise - it is specifically for the purpose of making sure GE doesn’t go belly-up.
So if you and others want to engage in free market dogma, get ready to use tobacco for currency, as we did in North America in pre-Revolutionary times. (yes, tobacco was used as a currency — go look it up...) Because the US Mint is well behind demand in minting gold coins and many gold dealers are reporting that demand has completely cleaned them out of bullion coins, so gold is going to not be able to keep up with demand merely as a safety net, much less as a currency at the rate we’re going.
Here’s a wonderful bit of wisdom I once found in, of all places, a fortune cookie:
“An empty stomach makes a poor political advisor.”
We now have a political environment in this country where, if what you wanted came to pass, we’d quickly end up with martial law, because the cities would be burning. Or we’d end up with a declaration of martial law and then a collapse of military command structure, followed by all-out race wars and/or a civil war. This ain’t the US of A of the 1930’s. There won’t be “shared hardship” and “all we have to fear is fear itself.” We have a cancer abroad in the land who would try to turn the situation to their advantage with force, and they’ve deluded themselves that they could succeed because they’re an exceptionally noisy minority. As some point the majority’s patience will snap, and the balloon will go up.
Civil wars are expensive and highly destructive.
If that’s what you’re advocating, then be honest about it.
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