US to cut to 1%

[Mega]

Thought you like this:-
http://www.nzherald.co.nz/business/n...ectid=10539520
Mike

[FRED]

Re: US to cut to 1%

Thought you like this:-
http://www.nzherald.co.nz/business/n...ectid=10539520
Mike

Another half point cut will put the US a hair above zero interest rates.

[sn1p3r]

Re: US to cut to 1%

A once-in-a-century crash may occur if the Fed botches this and we get too close to the zero bound before the economy grows again. At this point in the race between the disinflationary impact of recession and debt deflation and the inflationary impact of moving all manner of worthless assets onto the Fed’s and Federal Government’s balance sheets, disinflation may be winning. At some point before the zero bound is reached, never mind the point of actual deflation (negative inflation rate such as -2%), if the US experience is like any other net debtor's in history a currency accident will occur as global financial markets realize that the US position as a safe haven relative to its trade partners has reversed. A rapid, self-reinforcing process of capital flight and dollar depreciation that we call “Poom” will begin.

Am I to understand this puts us 1 step closer to "Poom"?

[kartius919]

Re: US to cut to 1%

This is absolute madness. The federal reserve is determined to kill the global economy. Japan has spent 2 decades at 0% and look how great that has turned out. This is absolutely insane. We can't get out of debt by pushing more debt. God help us all. Is it ok to say I want to round up all our bankers, federal reserve members/ex-members, everyone who wrote/helped write/sold a CDS or CDO, and every congressman/senator to some cesspool in Japan preferably Tokyo and then...? God I'm pissed off. Can someone tell me how the hell this won't end with every god damn currency collapsing?

[Guest]

Re: US to cut to 1%

Am I to understand this puts us 1 step closer to "Poom"?

Not if the Euro blows up and you start seeing capital flight from multiple countries there.

Apologies (and hat tip) to Sleuniss who posted this today in the select forums. If that component blows up you can indeed see the USD at the zero interest rate bound and a run on the USD does not materialize, because the EURO just blew up in the mean time. Big wild card. I would be very interested to read iTulip scrutinize these potentials (multiple major currency blowups ex USD zone, and what that implies for the USD going forward.

http://www.telegraph.co.uk/finance/c...-meltdown.html

“This is the biggest currency crisis the world has ever seen,” said Neil Mellor, a strategist at Bank of New York Mellon.

Experts fear the mayhem may soon trigger a chain reaction within the eurozone itself. The risk is a surge in capital flight from Austria – the country, as it happens, that set off the global banking collapse of May 1931 when Credit-Anstalt went down – and from a string of Club Med countries that rely on foreign funding to cover huge current account deficits.

The latest data from the Bank for International Settlements shows that Western European banks hold almost all the exposure to the emerging market bubble, now busting with spectacular effect.

They account for three-quarters of the total $4.7 trillion £2.96 trillion) in cross-border bank loans to Eastern Europe, Latin America and emerging Asia extended during the global credit boom – a sum that vastly exceeds the scale of both the US sub-prime and Alt-A debacles.

Europe has already had its first foretaste of what this may mean. Iceland’s demise has left them nursing likely losses of $74bn (£47bn). The Germans have lost $22bn. Stephen Jen, currency chief at Morgan Stanley, says the emerging market crash is a vastly underestimated risk. It threatens to become “the second epicentre of the global financial crisis”, this time unfolding in Europe rather than America.

Austria’s bank exposure to emerging markets is equal to 85pc of GDP – with a heavy concentration in Hungary, Ukraine, and Serbia – all now queuing up (with Belarus) for rescue packages from the International Monetary Fund.
Exposure is 50pc of GDP for Switzerland, 25pc for Sweden, 24pc for the UK, and 23pc for Spain. The US figure is just 4pc. America is the staid old lady in this drama.

[kartius919]

Re: US to cut to 1%

Just because we are the last man standing, does not mean we are then immortal.

[FRED]

Re: US to cut to 1%

This is absolute madness. The federal reserve is determined to kill the global economy. Japan has spent 2 decades at 0% and look how great that has turned out. This is absolutely insane. We can't get out of debt by pushing more debt. God help us all. Is it ok to say I want to round up all our bankers, federal reserve members/ex-members, everyone who wrote/helped write/sold a CDS or CDO, and every congressman/senator to some cesspool in Japan preferably Tokyo and then...? God I'm pissed off. Can someone tell me how the hell this won't end with every god damn currency collapsing?

The whole point of the 1944 Bretton Woods regime was to prevent a repeat of competitive currency devaluations that occurred under the floating exchange rate system of the 1930s that deepened and reinforced the global depression. The US unilaterally blew it up in 1971, and 37 years later, here we are talking about a "return to the discipline of Bretton Woods."

Nothing was learned. Here we go again.

[leonel80]

Re: US to cut to 1%

That will explode our exports. You see how the Euro is going down by not lowering interest rates, thinking that they were killing the dollar. Now the dollar is shooting up, euro sinking and oil sinking.

[metalman]

Re: US to cut to 1%

Just because we are the last man standing, does not mean we are then immortal.

wait until elections in europe and asia after a few years of depression. everyone is waaaaay too eager here. the processes itulip talks about are sloooow... punctuated by periods of sheer terror. that goes for us metal hoarders, too.

peace = deflation. we will never have war and true deflation. war creates an EXCUSE to inflate. do central banks really need an excuse today? maybe so. are you guys following this?

Eight people dead after US attack on Syrian town, says Damascus

[phirang]

Re: US to cut to 1%

wait until elections in europe and asia after a few years of depression. everyone is waaaaay too eager here. the processes itulip talks about are sloooow... punctuated by periods of sheer terror. that goes for us metal hoarders, too.

peace = deflation. we will never have war and true deflation. war creates an EXCUSE to inflate. do central banks really need an excuse today? maybe so. are you guys following this?

Eight people dead after US attack on Syrian town, says Damascus

let's get this f'ing war on...

[metalman]

Re: US to cut to 1%

let's get this f'ing war on...

why do i get the feeling you piled into energy stocks? ej said not to... energy stocks because they are stocks, energy stocks especially.

[kartius919]

Re: US to cut to 1%

War is just an incredible destruction of wealth. I'm not sure how that affects inflation or deflation. If a factory gets blown up, then that just wiped out vast amounts of capital. Monetary deflation because we are spending a ridiculous amount of money for a ridiculous cause? Inflation has been rampant during times of peace as well, just see Fred's pretty graphs and charts.

[Jay]

Re: US to cut to 1%

why do i get the feeling you piled into energy stocks? ej said not to... energy stocks because they are stocks, energy stocks especially.

I heard him state that oil prices will remain high.

[metalman]

Re: US to cut to 1%

I heard him state that oil prices will remain high.

some are not good listeners then when they don't listen they blame others for their own errors.

[phirang]

Re: US to cut to 1%

some are not good listeners then when they don't listen they blame others for their own errors.

umm.. peak cheap oil?