Thats pure speculation that banks cannot find buyers for their paper. If they can't their is a good reason. This is not 1998, commodity prices are extremely elevated and appear to no longer be transitory, the feds main job is to control inflation. How they can cut rates with commodity prices so high is just plain irresponsible. This credit issue is a smoke screen plain and simple. And were suppose to belive what the banks tell us hahaha.
You have absolutely zero idea what you're talking about. Maybe take up a career in journalism like Timothy Sykes. You know, he also retired from trading... I could see you release a best seller book titled "How the Federal Reserve, Goldman Sachs and other crooks are manipulating the markets and stealing money from the average American". Could win a Pulitzer prize.
Seems the fed job is to fight inflation, but what was the reason again to drop rates by 50bp last month and the discount rate another 50?? Thats right to pump more liquidity into the system. They could care less about inflation and where the dollar is headed.
I beg to differ. Inflation will run higher no question. Everyone knows that, the Fed, too. But thats not to worry. We can live with elevated inflation, look at inflation historically and thats exactly what the Fed does. It balances pros and cons. Do we want to slide into a global recession but can be proud we watched inflation or do we cut rates now and lower the risk of a huge slight somewhat. Thats the question. By the way, tight credit is not something I pulled out of my arse. I work as bank trader and believe me tight credit is a serious problem to the economy. Companies finance themselves short term with commercial paper and other short term securities in the rates market, nowhere else. Without this source companies are dead. There was a huge fund SIV fund set up for this very purpose. So, I suggest we put the rethoric aside and look at the facts.
the fed has a hand in stabilizing markets, which in their view if not attended to can cause contagion negative effects in the broad economy. of course, job #1 is formally 'price stability maintenance' (keeping inflation away). We'll see who's the bitch today - the equity and credit markets or Bernanke. I'm cheering for Bernanke to either hold or if he cuts 25, to say 'hey market. this is your last cut - oil is too expensive', probably in more obscure language. If he cuts 50, I'll have to move to another country.
you are stupid or blatantly ignorant. But for a fact you do not know anything about fixed income markets.
because the financals are still weak the the housing market this fed is savvy and will cut rates he will cut them as low as 3 if he has to and the dow will crosss 18,000 in the process so much $$ to be made so easy
That's half of the job description. The full one reads The stated goals of the Federal Reserve Open Market Committee are to maintain price stability and sustainable economic growth. So what do you do if your market models and research suddenly shows that growth risks outweight inflation risks? Do you keep fighting inflation and take a risk of a very deep recession in the next 12-18 months (that once its unleashed is impossible to stop with "late" cuts) or go for the lesser evil.
That's the perception the Fed and Gummint WANT us to have. In reality though, the Fed's REAL purpose is to PROMOTE INFLATION.. better yet if most of us don't realize it.