Tuesday, 18 December 2007

Lender Of Last Resort

"Emergency help for financial markets entered new territory on Monday as the European Central Bank announced it would on Tuesday offer unlimited funds at below market interest rates in a special operation to head off a year-end liquidity crisis."

"The European Central Bank loaned 348.6 billion euros ($501.5 billion) for two weeks to banks to bring down the cost of money at year-end."

"The ECB said 390 banks bid for the two-week loans at a marginal rate of 4.21 percent."

"President George W. Bush warned “it will take a while to get through the housing bubble” but reassured Americans “we have got a strategy”." Well the republican have about one year to rebuild their damaged reputation before the democrat takes power in 2009.

The ECB will lend to the banks, believe it or not at a rate of 4.21%. The credit growth is at record high and still they are willing to maintain it, creating imbalances that generations have never seen.

Why do they do that? is it because they want to bring back to control the "credit monster" they indirectly helped to engineer? or are they trying to put time on their side to sort the mess they miscalculated?
Never the less what they want is to ease credit "suffocation" (indeed, 4.8% is too high?) at around the year end. We know that beginning of next year lots of reset are going to happen, they don't want to create massive insolvencies among consumers...

At the end it's better to deflate a balloon slowly then to burst it with a big bang!

Source: ECB, Bloomberg, FT


k said...

Perfect !
Since I invested in gold ,this is the right way for me ...
But for a lot of homeowners,and less fortuned people the ECB has just given them a slap in the face ...

This is no bailout ,but a temporary halt to the execution. They're just pulling the blade of the guillotine a bit higher ,so that more blood will be splattered when it falls ...
Typical american mentality ... : we'll check it later ...

Anonymous said...

I can inform you are not a typical person by how you create content.
Your articles is far too engaging and sensible in the future from an ordinary thinker.
Thank you.

Also visit my web-site what food to eat to lose weight

Anonymous said...

Hi, Neat post. ТҺere's a pгoblem along with yօur website in internet explorer, would check thіs?
IE still is tɦe marketplace leader and а large part of people will
leave oout уour fantastic writing ԁue to tnis pгoblem.

My blog :: casino på nett

Anonymous said...

Truly if one diet worked there wouldn't be hundreds
of them but it is my suggestion to give one cheat day a week a try if you are at a plateau (Fitness 101:
Plateaus) in terms of weight, if you aren't feeling fit because you are
finding yourself nibbling too much during the day and are sluggish,
or if the video motivates you. Th dialoue right here is not oriented towrd the
matters that have brought on substntial devatation of the mankid.

They will show you a story in the turmoil among the
Greek Gods.

Feel free to visit my web-site: six guns cheats

Anonymous said...

Greetings! Very helpful advice in this particular article!
It's the little changes that will make the largest changes.

Many thanks for sharing!

Here is my site; china essay writing provider

Anonymous said...

Mac Pro that you should want to think about size. Then you and your family can share the same Online world connection, printers and data between them, yet still have the exact luxury
of a portable system when you need it.

my site que son las laptop

Anonymous said...

Great work! This is the kind of information that are meant to be shared across the internet.
Shame on the seek engines for not positioning this submit higher!
Come on over and consult with my website . Thank you =)

My web-site ... Prosolution

Anonymous said...

I’m not that much of a online reader to be honest but your blogs really nice, keep it up!
I'll go ahead and bookmark your site to come back down the road.
All the best

My website ... dragon city tool free