what about the "coordinated" part of this action? isn't that aimed at preventing the US dollar from going into free-faill as the FOMC cuts interest rates?
On 12/12/07, raghu <[EMAIL PROTECTED]> wrote: > We have seen many "liquidity injections" since August but this one > appears to be very different. From what I understand, the Fed is going > to auction a fixed amount of money (at least $40B according to > Bloomberg) and let banks bid for the rate. In effect they are > force-feeding $40B into the banks at whatever rate necessary. Such a > move clearly undermines the Fed's attempt to control interest rates by > fiat through the Fed Funds and the Discount Window rates. So why are > they doing it? Some possibilities: > 1) Maybe they are trying to overcome the stigma of the discount > window. But this implies that the discount window is basically > useless. The "stigma" story is not really credible to me. > 2) The Fed likes the rates where they are but need to make a temporary > move. Which raises the very interesting question: what's the > emergency? Is some big institution in big trouble? > > http://www.bloomberg.com/apps/news?pid=20601087&sid=armCqTJRYg3M > -raghu. > > > > On Dec 12, 2007 2:10 PM, Charles Brown <[EMAIL PROTECTED]> wrote: > > http://www.rgemonitor.com/blog/roubini/232095 > > > > Nouriel Roubini | Dec 12, 2007 > -- Jim Devine / "The conventional view serves to protect us from the painful job of thinking." -- John Kenneth Galbraith
