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Coordinated Rate Cuts A Big Help


First Posted: 10- 8-08 03:00 PM   |   Updated: 11- 8-08 05:12 AM

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Read More: Credit Crisis, Economy, Finance, Wall Street, Wall Street Crisis, World Economy, Business News
Rate Cuts

Wall Street Journal:

So will coordinated rate cut do the trick?

Probably not, but it's a big help. The world's major central banks, laboring to avoid the mistakes that their predecessors made in the run-up to the Great Depression, joined together to cut interest rates to fight a virulent and spreading panic that is endangering the flow of credit and the world's economies. The one-half percentage point interest rate cut by the Federal Reserve, European Central Bank and Bank of England - joined by the Swiss and Swedes and blessed by the Japanese, whose rates are so low they cannot cut -- cannot cure the epidemic. Lower rates do help offset the unwelcome tightening of credit caused by banks reluctance to lend even to each other, and will lower the rates that the central banks themselves charge on the growing loans they are making to the financial system.

Read the whole story: Wall Street Journal

So will coordinated rate cut do the trick? Probably not, but it's a big help. The world's major central banks, laboring to avoid the mistakes that their predecessors made in the run-up to the Great D...
So will coordinated rate cut do the trick? Probably not, but it's a big help. The world's major central banks, laboring to avoid the mistakes that their predecessors made in the run-up to the Great D...
Filed by Dave Burdick  |  Report Corrections

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koluidj
1 Fans
09:16 AM on 10/09/2008
George Bush acknowledged that it now money is not help economy
Watch here: http://tinyurl.com/Bush-on-nbc
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thincaboutit
0 Fans
09:26 PM on 10/08/2008
FINANCIAL CRISIS: THE MUSICAL
The economy is no laughing matter. But this parody about the economy is.
Check it out at: http://www.youtube.com/watch?v=henMX35nkJg
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FredOCal
2 Fans
04:46 PM on 10/08/2008
Wow. This article is just nonsensical. I'll quote Illargi from today's AutomaticEarth:
"As predicted, the nonsensical global rate cut lifted shares for about half an hour. The reason why this can’t work is really simple. Banks won’t start lending to each other because of a half point rate cut, simply because they didn’t stop that lending on account of a half point. They stopped it because of the casino toilet paper each has in their vaults. And that paper is still there. Until it comes out, there is no solution."

The problem cannot be solved until banks know who is solvent and who isn't. Only then will they start lending to each other. It's really not that complicated.
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KillTheMessenger
106 Fans
06:46 PM on 10/08/2008
The rate cuts improve the banks' balance sheets ever so slightly. It also takes some of the risk out of loans. All by themselves they won't be enough. But since it is an instrument the central banks have, they should use it.
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