Real liquidity problem?

Discussion in 'Economics' started by dividend, Aug 23, 2007.

  1. Was there really a liquidity problem, or a confidence problem?

    Discount window is open but no stampede or grab for funds. Instead got retail people panicking to withdraw FDIC deposits at CountryWide.
  2. da-net


    I think the best way to answer that is research and what people that are in the midst of it are saying.

    try these links..I found them enlightning

    Now I do have one question of my own. How does giving money to someone that couldn't properly risk manage it before make them capable of risk managing it this time?

    The closest parallel that I can think of is like giving a drug addict does that help?
  3. vectors101

    vectors101 Guest

    50% of the market is on margin so any cut in interest rates is good for the market.

    But you see Ben Bernanke has rules to follow like if the economy is low unemployment rate or inflation is high interes rates must be equal or more than inflation rate.

    When interest rates were 1% money in bonds or fixed income funds were forced into hedge funds and stocks buying real estate etc. that yield 6% dividends....

    when the money left fixed income investments it drove inflation up for real estate, stock market, and commodities..FED has no choice now but to increase's lesser of two evils..either you want high growth with high inflation low unemployment and high interest rates. OR low interes rates and high unemployment or recession
  4. Update. No stampede for funds. Instead money pouring in this quarter from all corners in OCTOBER, right after a volatile summer. No fear. DJIA makes new all time high.
  5. not a stampede but the slope is increasing....Fed is dumping money into the system regardless
  6. vectors101

    vectors101 Guest

    FED can't control the markets nor should it.

    Why should the FED care about market volatility...

    the FED or SEC should be enforcing the rules that are in place not manipulating the markets to bail out reckless trading and lending...

    if banks goes bankrupt it's their problem for making reckless lending and if markets crash it's because the price is too high and too much margin and borrowed money or it's the market participants problem.