------------------------------------------- The Fed is now singing from a different hymn book, warning of the "possibility of some very unfavourable outcomes". -------------------------------------------
The verdict is in. The Fed's emergency rate cuts in January have failed to halt the downward spiral towards a full-blown debt deflation. Much more drastic action will be needed. [SNIP] It is hard to imagine a more plain-vanilla outfit than the Port Authority of New York and New Jersey, which manages bridges, bus terminals, and airports. The authority is a public body, backed by the two states. Yet it had to pay 20% rates in February ... It had originally expected to pay 4.3%, but that was aeons ago in financial time. "I never thought I would see anything like this in my life," said James Steele, an HSBC economist in New York. [SNIP] Like many, Peloton thought Fed rate cuts from 5.25% to 3% (with more to come) would end the panic. But this is not a normal downturn, subject to normal recovery. Leverage is too extreme. Bank capital is too eroded. Monetary traction eludes the Fed. An "Austrian" purge is under way. Half the eurozone is grinding to a halt. Italy is slipping into recession. Property prices are flat or falling in Ireland, Spain, France, southern Italy and now Germany. French consumer moral is the lowest in 20 years. [SNIP] "We are becoming increasingly concerned that the authorities in the world do not get it," said Bernard Connolly, global strategist at Banque AIG. "The extent of de-leveraging involves a wholesale destruction of credit. The risk is that the 'shadow banking system' completely collapses," he said. For the first time since this Greek tragedy began, I am now really frightened. http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/03/ccview103.xml ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Adobe® ColdFusion® 8 software 8 is the most important and dramatic release to date Get the Free Trial http://ad.doubleclick.net/clk;160198600;22374440;w Archive: http://www.houseoffusion.com/groups/CF-Community/message.cfm/messageid:255356 Subscription: http://www.houseoffusion.com/groups/CF-Community/subscribe.cfm Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=89.70.5
