The Fed cuts interest rate in emergency meeting by 50 basis points to 1.50%

October 8, 2008 by · Leave a Comment
Filed under: Global News 

No surprise, there was a 75% chance of a half percent rate cut at the next FOMC meeting at the end of the month.  The fact that they did this well before their meeting shows the dire situation and leaves the door open for another rate cute at the next meeting if the credit and stock market conditions worsen.  Along with this cut, other central banks are following suit to try and stabilize the global market.

I feel there is enough uncertainty in the credit market and risk with other banks that we are still going to see a sever contraction and much higher inflation in a time when consumer purchasing power and credit are being greatly reduced.  Just because there is “cheap” money available does not mean people want to borrow.

Release:

Central banks around the world cut interest rates in unison on Wednesday, responding to a worldwide clamor for concerted action to contain the worst financial crisis since the Great Depression.

The surprise announcement set off volatile trade in global stock markets, which have seen trillions of dollars in wealth wiped out over the past year. But it failed to win a ringing endorsement from any one market.

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Gold Bullion Reserve lending by central banks has “almost completely stopped”

October 8, 2008 by · 1 Comment
Filed under: Commodities News 

This is a sign of the financial community is reigning in all good assets and preparing for the coming storm which most media outlets and analyst are finally acknowledging.  I am still surprised that central banks actually lease gold and we let that show on both balance sheets when in reality it only exists in one physical location.  In the article, they mention that they are worried that banks will not be able to fulfill their bullion lease terms and this is why central banks are not leasing to any banks.   I am watching a gentlemen (Mr. Blanchard) from the International Monetary Fund (IMF) stating that we will not see any turn around til mid-2009.  He even made sure to state that this was based on current estimates which in my opinion are still far too optimistic.  He said industrial countries will see zero or negative growth and emerging markets will have limited growth.

News Piece:

Central banks have all but stopped lending gold to commercial and investment banks and other participants in the precious metals market, in a move that on Tuesday sent the cost of borrowing bullion for one-month to more than twenty times its usual level.

The one-month gold lease rate rocketed to 2.649 per cent, its highest level since May 2001 and significantly above its five-year average of 0.12 per cent, according to data from the London Bullion Market Association.

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Bank of Canada not joining Fed to increase global liquidity

July 30, 2008 by · Leave a Comment
Filed under: Industry News 

The Bank of Canada said on Wednesday it is not coordinating with the U.S. Federal Reserve and other central banks in operations to boost market liquidity.

“The Bank of Canada is not participating in this,” said Jeremy Harrison, a spokesman for the Canadian central bank. The Fed said on Wednesday it would extend a loan program it began in March after the near collapse of Bear Stearns.

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