Question: Do you know why the is LIBOR used for a lot of US mortgages? Why use a cross-Atlantic interest rate?
Get out of town! I'll have to check that out. They think by throwing gas on the fire that that will solve all our problems??
edit: http://online.barrons.com/article/SB120191107370836867.html Barron's: Are we in a recession or are we perhaps talking ourselves into one? McNay: We certainly are in an economic slowdown, and my personal opinion is that we are in the early phases of a recession. Whether we are in a recession or not is irrelevant because we are slowing down, and results are becoming more negative. The Federal Reserve has been very much aware of this and has been acting consistently in that regard. They've been increasing the money supply at a much faster rate than people realize, near a 15% annual rate of increase in M3 [a broad measure of the money supply].
If we're not in a recession, then what the heck explains the worst retail Jan in 40 years http://biz.yahoo.com/ap/080207/retail_sales.html and a dreadful jobs outlook? http://biz.yahoo.com/ap/080207/economy.html
Here's another good link that shows Europe isn't going away anytime soon: http://news.morningstar.com/articlenet/article.aspx?id=193920 What's the Best Way to Invest in Europe? The scoop on a resurgent region. By Dan Lefkovitz | 05-15-07 | 06:00 AM | It's not news that emerging markets have been hot in recent years, fueled by explosive growth rates and high commodity prices. The boom has even given us "BRIC" (referring to Brazil, Russia, India, and China), the most overused investment acronym since "TMT" (technology, media, and telecommunications). Less covered has been the incredible rise of Europe, a region many were essentially writing off just a few years ago. The MSCI Europe Index has climbed 25% per year, on average, for the trailing three-year period. That's not too far behind the gains posted by emerging markets. Mutual funds in the Europe-stock category have been on fire, outdistancing all but a handful of other fund groups. We've been getting an increasing number of calls about investing in Europe lately. For that reason, we thought this would be the perfect time to take a closer look at the region, the reasons behind its rally, and the best way to get Europe exposure. Europe's Bull Run For U.S. investors, the dollar's decline versus European currencies has dramatically boosted European equity returns. If you own a mutual fund that takes your U.S. dollars and uses them to buy stocks denominated in euros, pounds, Swiss francs, or Swedish krona (or even U.S.-listed versions of those stocks), the fund's portfolio gains in value when those currencies appreciate, so long as the fund is not hedging its currency exposure. Roughly 5 percentage points of the MSCI Europe's gain over the past three years comes from currency, and it has played an even bigger role over the trailing five-year period. But the story doesn't end with currency gains; there are more fundamental drivers of European stock gains. First, many of Europe's largest companies are global players and their success reflects global factors, such as high oil prices. These days, where a company is headquartered can be incidental. Then there are factors specific to Europe, such as low interest rates, which have spurred economic growth and business activity. Low rates have also helped foment cross-border mergers and acquisitions, such as Italian bank Unicredito's purchase of German HVB, French spirits company Pernod Ricard buying the British Allied Domecq, and the frenzied jockeying for Spanish utility Endesa and Dutch bank ABN Amro. Competitiveness has improved, too, in many cases. Just like their U.S. counterparts, lots of European companies have restructured, automated, outsourced, and offshored their way to higher profits. Eastern Europe is another factor. The European Union has expanded in the past few years to include several former Communist countries, notably Poland, Hungary, the Czech Republic, Romania, and Bulgaria. Western European companies have in many cases located manufacturing and back-office operations to these lower-cost countries. Western European companies such as banks and retailers have benefited from Eastern Europe's growth. Eastern Europe has had an even more direct impact on the Europe-stock category's stellar returns. There are several funds in the category that focus solely on those emerging markets, the largest being U.S. Global Accolade Eastern Europe (EUROX). That fund, and others like it, have posted some of the biggest five-year numbers in Morningstar's entire fund database. Not only do those funds invest in the new European Union entrants, but also in Russia, which has boomed thanks to high commodity prices. A handful of dedicated small-cap funds have also been turbo-charged, as European small caps have soared, like their U.S. counterparts. Will Europe Continue to Shine? The short answer is "who knows?" Hot markets and hot fund categories often cool off. It's instructive to remember that in the late 1990s, the U.S. market was soaring, the dollar was strong, and some were writing off Europe, and the Euro currency, as failures. European stocks still look cheaper than their U.S. counterparts by most metrics, but they have advanced. It's also very possible that the same engines that have boosted Europe in recent years could lose steam. Interest-rate hikes could damp business activity, M&A activity could slow, and corporate restructurings and Eastern Europe could recede as drivers of corporate earnings. Global trends could turn against key European companies. Some exogenous shock could occur, or investor sentiment could change. In short, trying to predict which region will outperform in the next few years--or which way currencies will go--is a tough game to play.
Perusing Bloomberg today it looks to me like your boy over there is getting religion. Trichet Reverses Course, Signals ECB May Reduce Rates to Counter Slowdown European Central Bank President Jean- Claude Trichet reversed course and signaled he's open to cutting interest rates for the first time in five years as economic Trichet Signals ECB May Lower Interest Rates for First Time in Five Years European Central Bank President Jean- Claude Trichet reversed course and signaled he's open to cutting interest rates for the first time in five years as economic growth falters. Euro Drops as ECB's Trichet Says U.S. Slowdown May Hurt European Economy The euro fell to the lowest level in more than two weeks against the dollar as European Central Bank President Jean-Claude Trichet said the U.S. economic slowdown may curb growth in Europe.
Are you serious? LOL. If you honestly believe that, then you are more in the dark than the average Joe Blow.