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Sunday, March 16, 2008 9:07:41 PM
U.S. Fed Cuts Discount Rate, Says Dealers May Borrow (Update2)
*$GOLD is going to go parabolic as well as $ILVER... this is end-game IMO... this on top of the news of Bear Stearns in so many words going BANKRUPT!!!... what's next?... I know something they want is the Amero... as they already control Europe through the Euro. They would love to control Mexico, Canada, and the United States of America under an Amero...
Ben S. Bernanke, Federal Reserve chairman, makes an address at the National Community Reinvestment Coalition Annual Meeting in Washington, D.C. on March 14, 2008. Photographer: Carol T. Powers/Bloomberg News
U.S. Fed Cuts Discount Rate, Says Dealers May Borrow (Update2)
By Scott Lanman
March 16 (Bloomberg) -- The Federal Reserve, in an emergency weekend decision, cut the rate on direct loans to commercial banks and opened up borrowing at the rate to primary dealers in government securities.
In an announcement before the start of trading on the Tokyo Stock Exchange, the Fed lowered its so-called discount rate by a quarter of a percentage point to 3.25 percent. The central bank also approved the financing of JPMorgan Chase & Co.'s purchase of Bear Stearns Cos., including support for as much as $30 billion of Bear's assets.
Fed Chairman Ben S. Bernanke is stepping up efforts to keep strains in financial markets from spiraling into a full-blown meltdown. Last week the central bank agreed to emergency loans to a non-bank, Bear Stearns, for the first time since the 1960s. Fed officials also announced a program to swap $200 billion in Treasuries for debt including mortgage-backed securities.
``The Fed needed to act decisively, and I believe it has,'' said Chris Rupkey, chief financial economist at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York. ``It is a crisis of confidence that these measures that these measures are trying to'' alleviate, he said.
The dollar tumbled to a 12-year low against the yen after the announcement and Treasury notes rallied in Asian trading. The Nikkei 225 Stock Average lost 3.1 percent at 9:35 a.m. in Tokyo.
From tomorrow, primary dealers will be able to borrow at the rate under a new lending facility, to be in place for at least six months, the Fed said. The Fed will accept a ``broad range'' of investment-grade collateral.
Bernanke Offers Assurances
``These steps will provide financial institutions with greater assurance of access to funds,'' Bernanke said during a conference call with reporters after the announcement.
Investors expect the Fed to lower its benchmark rate by as much as a full percentage point, to 2 percent, when policy makers meet March 18. That would exceed the 0.75-point emergency reduction on Jan. 22, which is the largest Since the overnight interbank lending rate became the main tool of monetary policy about two decades ago.
``Clearly, the Fed is trying to provide more liquidity to prevent a more vicious cycle and race to the bottom,'' said Gary Schlossberg, senior economist at Wells Capital Management in San Francisco, which oversees $200 billion. ``The problem is there's so much concern about credit quality that now there are solvency issues, and it's something the Fed has a more difficult time dealing with.''
Aimed at Liquidity
The actions are ``designed to bolster market liquidity and promote orderly market functioning,'' the Fed said in a statement. ``Liquid, well-functioning markets are essential for the promotion of economic growth.''
Today's steps indicate the Fed is increasingly concerned about the investor exodus from mortgage debt, which threatens to deepen the housing contraction and the economic slowdown.
New York Fed President Timothy Geithner said on the call that ``this is designed to help get liquidity to where it can help play an appropriate role in helping address the range of challenges facing particularly asset-backed securities markets.''
To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net
Last Updated: March 16, 2008 20:49 EDT
LINK: http://www.bloomberg.com/apps/news?pid=20601087&sid=a5MdIqIevEW0&refer=home
*$GOLD is going to go parabolic as well as $ILVER... this is end-game IMO... this on top of the news of Bear Stearns in so many words going BANKRUPT!!!... what's next?... I know something they want is the Amero... as they already control Europe through the Euro. They would love to control Mexico, Canada, and the United States of America under an Amero...
Ben S. Bernanke, Federal Reserve chairman, makes an address at the National Community Reinvestment Coalition Annual Meeting in Washington, D.C. on March 14, 2008. Photographer: Carol T. Powers/Bloomberg News
U.S. Fed Cuts Discount Rate, Says Dealers May Borrow (Update2)
By Scott Lanman
March 16 (Bloomberg) -- The Federal Reserve, in an emergency weekend decision, cut the rate on direct loans to commercial banks and opened up borrowing at the rate to primary dealers in government securities.
In an announcement before the start of trading on the Tokyo Stock Exchange, the Fed lowered its so-called discount rate by a quarter of a percentage point to 3.25 percent. The central bank also approved the financing of JPMorgan Chase & Co.'s purchase of Bear Stearns Cos., including support for as much as $30 billion of Bear's assets.
Fed Chairman Ben S. Bernanke is stepping up efforts to keep strains in financial markets from spiraling into a full-blown meltdown. Last week the central bank agreed to emergency loans to a non-bank, Bear Stearns, for the first time since the 1960s. Fed officials also announced a program to swap $200 billion in Treasuries for debt including mortgage-backed securities.
``The Fed needed to act decisively, and I believe it has,'' said Chris Rupkey, chief financial economist at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York. ``It is a crisis of confidence that these measures that these measures are trying to'' alleviate, he said.
The dollar tumbled to a 12-year low against the yen after the announcement and Treasury notes rallied in Asian trading. The Nikkei 225 Stock Average lost 3.1 percent at 9:35 a.m. in Tokyo.
From tomorrow, primary dealers will be able to borrow at the rate under a new lending facility, to be in place for at least six months, the Fed said. The Fed will accept a ``broad range'' of investment-grade collateral.
Bernanke Offers Assurances
``These steps will provide financial institutions with greater assurance of access to funds,'' Bernanke said during a conference call with reporters after the announcement.
Investors expect the Fed to lower its benchmark rate by as much as a full percentage point, to 2 percent, when policy makers meet March 18. That would exceed the 0.75-point emergency reduction on Jan. 22, which is the largest Since the overnight interbank lending rate became the main tool of monetary policy about two decades ago.
``Clearly, the Fed is trying to provide more liquidity to prevent a more vicious cycle and race to the bottom,'' said Gary Schlossberg, senior economist at Wells Capital Management in San Francisco, which oversees $200 billion. ``The problem is there's so much concern about credit quality that now there are solvency issues, and it's something the Fed has a more difficult time dealing with.''
Aimed at Liquidity
The actions are ``designed to bolster market liquidity and promote orderly market functioning,'' the Fed said in a statement. ``Liquid, well-functioning markets are essential for the promotion of economic growth.''
Today's steps indicate the Fed is increasingly concerned about the investor exodus from mortgage debt, which threatens to deepen the housing contraction and the economic slowdown.
New York Fed President Timothy Geithner said on the call that ``this is designed to help get liquidity to where it can help play an appropriate role in helping address the range of challenges facing particularly asset-backed securities markets.''
To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net
Last Updated: March 16, 2008 20:49 EDT
LINK: http://www.bloomberg.com/apps/news?pid=20601087&sid=a5MdIqIevEW0&refer=home
HI-HO SILVER !!!
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