teddy Posted December 16, 2008 Report Share Posted December 16, 2008 And the Dow shoots up by 360 points. There are a lot of gullible people around. All this means is that it has much further to fall when the final capitulation comes Link to comment Share on other sites More sharing options...
Bangkoktraveler Posted December 16, 2008 Report Share Posted December 16, 2008 The Feds can lower the interest as much as they want but if creditors don't want to loan at a reasonable rate and terms, it hasn't accomplish one iota. Link to comment Share on other sites More sharing options...
cavanami Posted December 17, 2008 Report Share Posted December 17, 2008 Also the decrease rate will affect the US Treasury bonds, making them unattractive to invest in, so China and all the US "buddies" overseas will stop investing in the USA...which will keep the USA in a spiral downward!!! Link to comment Share on other sites More sharing options...
rchapstick Posted December 17, 2008 Report Share Posted December 17, 2008 For now, I suspect the Chinese will keep buying, as lack of demand in the US still means lack of production in their factories. China is still a long ways away from having sufficient domestic demand to tell the USA to stuff it. Link to comment Share on other sites More sharing options...
drogon Posted December 17, 2008 Report Share Posted December 17, 2008 This is true for China but they consider less and less the USA as a "reliable" market and try to diversify themselves...EU, Russia, Africa Link to comment Share on other sites More sharing options...
Lusty Posted December 17, 2008 Report Share Posted December 17, 2008 So why is the $ gone very strong again? Link to comment Share on other sites More sharing options...
drogon Posted December 17, 2008 Report Share Posted December 17, 2008 -> $ very strong?? The USD has been falling all day long against other major currencies and is right now accelerating its fall... And anyway I don't have answers otherwise I would head a central bank and I don't wish to see the USD at 0,5 euro... Egoistically I don't care if the euro or the USD gets stronger as I can receive my salary in one of the two currencies -> if it goes on like that, the euro will be back at 50 bht in a few days. Link to comment Share on other sites More sharing options...
HeartThais Posted December 17, 2008 Report Share Posted December 17, 2008 I don't think the rate cut itself had that much impact. The effective rate was already at 18bp (less than the 25bp I mentioned before) so the rate cut isn't really a rate cut and the market knew that. However, Fed made aggressive statements that they will step up their purchase of long-term treasuries and Fannie/Freddie paper. One factor driving EUR appreciation is comments by Trichet yesterday that ECB may not cut rates in January. So ECB has basically isolated themselves from UK and US. Kinda selfish, IMO. This really sets EUR up for a drop in January if Trichet changes his mind... There is only one place for Bernanke to go now. If things don't turn around, he'll announce either a commitment to keeping rates at zero for a fixed period or he'll cap long-term treasury yields or both. I think markets are reflecting their belief that Bernanke is moving in that direction and signs of hesitation will result in USD appreciation. Link to comment Share on other sites More sharing options...
HeartThais Posted December 17, 2008 Report Share Posted December 17, 2008 The Feds can lower the interest as much as they want but if creditors don't want to loan at a reasonable rate and terms, it hasn't accomplish one iota. I agree. The last time we experienced this kind of liquidity trap was the Great Depression. The only thing left in the arsenal is a massive fiscal stimulus. This is kinda scary when you consider that people like The Terminator are pushing to balance budgets and raise taxes when they should be doing the opposite. Link to comment Share on other sites More sharing options...
drogon Posted December 17, 2008 Report Share Posted December 17, 2008 Yes Trichet has passed his anouncement... I wouldn't say selfish (after all UK never wanted to join EU so why should EU fall with the £? Or solidarity with the US, when the current situation US fault and the US trying to escape by all means) but probably a mistake... Of course the old bastard might be proven "right" if EU economy restarts.... Otherwise the euro will drop again but I think the people who were dreaming (for which reason?) of a parity USD-Euro-pounds will be just dreamers... Anyway, I jsut monitor the currency exchange market, I don't try to make sense out of it Link to comment Share on other sites More sharing options...
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