Learning... may I offer up a possible reason for the rate cut to Banks!?
There has been an enormous "RUN on da-Financial Institutions" in request for redemptions and withdrawals. It's been nearly unprecidented, except for 1929, and since most should know the Financial Institutions have little to NO CASH on hand it causes them to liquidate ASSETS OR BORROW overnight!?
This borrowing at rates above 6.0% has caused most to be printing losses as they borrow to cover demand reciepts. The other option is to SELL ASSETS to raise cash and hence the Free Fall in EVERY possible ASSET price!
Now, while some have Frozen their funds to avoid this punitive process of rasing cash they open themselves up to lawsuits and obvious mismanagement in their ability to create liquidity!?
It's EXTREMEMLY important that the FED restore and KEEP confidence in the FINANCIAL entities both here in the states and abroad?
There is, and will be for some time, a WORLD-WIDE RUN on these Institutions to demand ones CASH! These cash requests are easily exceeding the available CASH positions of our World's Financial entities and to avoid defaults they MUST sell ASSETS or BORROW funds to fund said withdrawals until the request subside!?
In Summary, we have a serious LACK of CASH to support redemptions and/or withdrawal request and until this inbalance is corrected we have a popssible 1929 scenario playing out!?
We now watch as equilibrium attempts to take hold but I suspect NOT and its only a matter of wks if not days before the inbalances cause defaults to rise and confidence to wane accordingly?
We'll be NET sellers today and into Tuesday next wk with 47.50 as our primary "GO ALL SHORT" target?
Good trades,
nm
