Rates cuts are coming! It's June 25, 2003 - Page 5

Lim is lost in the forest on this global credit crisis. Hein pegged him from the beginning. All posturing, but no real life understanding of how the world of credit actually functions. Reading central banking minutes from 45 to 90 days ago--has little, if any, relevance whatsoever to a real time market collapse (August's commercial credit market melt down)

Today's 50 basis point rate cut is just the first of at least three more cuts. The ECB and Pound Sterling supportors will all follow Ben Bernanke's rate cutting and junk paper redemptions---as well as selctive banking bailouts.
http://www.allheadlinenews.com/articles/7008554376

btw: banking bailouts help their hedge fund alliances too. Unaudited private Hedge Funds are just defacto banks w/o regulation. No real differences anymore.

More rate cuts are coming ($5 Trillion is a huge mess)--but today was a good day for Greenspan-like steroid trauma care. (btw: Greenspan cut rates 13 times from June 2003, then INCREASED rates 17 times from June 2004 until his retirement)

Jan Ulrich needs this type of trauma therapy at his Zurich bank.

btw: OJ supported Nike Lance had a birthday today too.

As a suggestion - when attempting to post under an alias, I would suggest that you use a different syntax and parenthesis when posting, "hemopure".
Nice try though.

And regardless of whichever alias you're using, the fact is that interest rates haven't been cut by the BoE or ECB since this "crisis" on 2nd August nor will they be cut.

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.."But finally the last thing I’ll say to the people who don’t believe in cycling, the cynics and the sceptics. I'm sorry for you. I’m sorry that you can’t dream big. [I]I'm sorry you don't believe in miracles. You should believe in these athletes, and you should believe in these people. I'll be a fan of the Tour de France for as long as I live. And there are no secrets - this is a hard sporting event and hard work wins it" - Armstrong 2005 TDF
morelike hypocrisy.

The Barings analogy is slightly different in that the balance sheet of Barings
had a gaping hole in it.
NR's situation is different in that it's situation is as a result of difficulties accessing liquidity from a wholesale market that is refusing to lend money.

Of course the BoE could have propped up Barings - but Barings were making losses.
NR's situation isn't the same as Barings.

__________________
.."But finally the last thing I’ll say to the people who don’t believe in cycling, the cynics and the sceptics. I'm sorry for you. I’m sorry that you can’t dream big. [I]I'm sorry you don't believe in miracles. You should believe in these athletes, and you should believe in these people. I'll be a fan of the Tour de France for as long as I live. And there are no secrets - this is a hard sporting event and hard work wins it" - Armstrong 2005 TDF
morelike hypocrisy.

The worst part of thiis situation is that we can no longer make fun of our neighbors to the north and their canadian pesos. The USD is now pretty much equivalent to the CAD. By this time next year the canucks will be making american peso jokes.

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"You are like the wind and I like the lion. You form the tempest. The sand stings my eyes and the ground is parched. I roar in defiance but you do not hear. But between us there is a difference. I, like the lion, must remain in my place. While you like the wind will never know yours." -- Mulay Hamid El Raisuli, Lord of the Riff, Sultan to the Berbers, Last of the Barbary Pirates

The dollar is under pressure on the f/x markets.
And it has been under pressure for a long time before the liquidity crisis.

The trade deficit and the budget deficit, along with Bush/Greeenspans policy of deliberately depreciating the dollar, have resulted in the present f/x rate.

I believe Greenspan, in his new book, criticises Bush for not vetoing huge budget expenditures for the period 2000-2006, when Congress was under Republican control.

What is of real concern is that even with a depreciating dollar - there has been no improvement in trade deficit.
You'd assume that with a cheaper dollar that goods/services, American products would be in demand.

I can tell you that if the dollar was stronger, more people in this part of the world would be screaming blue murder, given the current price of oil.

__________________
.."But finally the last thing I’ll say to the people who don’t believe in cycling, the cynics and the sceptics. I'm sorry for you. I’m sorry that you can’t dream big. [I]I'm sorry you don't believe in miracles. You should believe in these athletes, and you should believe in these people. I'll be a fan of the Tour de France for as long as I live. And there are no secrets - this is a hard sporting event and hard work wins it" - Armstrong 2005 TDF
morelike hypocrisy.

IMO Barings didn't have cross-the-board losses. It had one huge Nick Leeson drawer full of unpaid margin calls on the Nikkei.

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Check the late 80's out. Weak dollar, growing trade deficit (and fiscal deficit). Bush and Cheney think Reagan was almost the second-coming of Jesus. And that everything he did was good. I still can't believe Cheney's remark to Paul O'Neill that "Reagan proved that budget deficits and high national debt don't matter".

Unfortunately the Bush crowd think that a depreciating dollar is good for US business. When foreigners start buying all those businesses they might see the folly in their logic.

The price of oil is affected by the movements of the dollar. If the dollar strengthened, oil would go down against it, all else being equal, but not against Sterling or Euros.

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.........and Barings operated in a completely different banking sector to mortgage lending.
Leeson was gambling on futures value contracts on the Asian market.

__________________
.."But finally the last thing I’ll say to the people who don’t believe in cycling, the cynics and the sceptics. I'm sorry for you. I’m sorry that you can’t dream big. [I]I'm sorry you don't believe in miracles. You should believe in these athletes, and you should believe in these people. I'll be a fan of the Tour de France for as long as I live. And there are no secrets - this is a hard sporting event and hard work wins it" - Armstrong 2005 TDF
morelike hypocrisy.

Good point....but the only redeeming quality of Barings situation was that the size of the loss (ultimate risk) was known. Not necessarily the case with mortgages because they are constantly affected by the fluctuating property market and default picture.

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Re Barings : I read a couple of books about it's collapse.
When the losses were discovered at Barings .....Barings went to the BoE looking for finance.
BoE reviewed Barings and the cause of the losses, and decided that what had happened was self inflicted.
On that basis, BoE chairman Eddie George said they wouldn't assist Barings.

NR situation is different : NR cannot access funds from the wholesale market because banks are refusing to lend money to other banks.
BoE know that NR require access to money as the wholesale market has always funded NR's activities.
BOE decided to loan money to NR at the LIBOR rate (which is higher than the retail interest rate) in order to fund NR's activities.
Repayment of this loan by NR to BoE, is at LIBOR rate.
BoE wouldn't have extended credit to NR if NR was vulnerable (a la Barings).

One could say that NR are culpable in all of this - but given that their business has always been premised upon the fact that they utilised funds from the wholesale money market to carry out business - it a moot point as to whether or not NR should be denied funding (given that the entire wholesale lending market froze).

__________________
.."But finally the last thing I’ll say to the people who don’t believe in cycling, the cynics and the sceptics. I'm sorry for you. I’m sorry that you can’t dream big. [I]I'm sorry you don't believe in miracles. You should believe in these athletes, and you should believe in these people. I'll be a fan of the Tour de France for as long as I live. And there are no secrets - this is a hard sporting event and hard work wins it" - Armstrong 2005 TDF
morelike hypocrisy.

Yes..I see now how you're differentiating the two cases. Whilst at Barings there was a lone wolf fraudster, they (the wider company) were certainly not blameless with poor auditing and internal checks. However there are more people at stake in a Barings collapse than negligent upper management and partners. Fortunately most were saved in the Ing buyout. And one can argue, as you say, the negligence of management in NR's situation.

So in Britain, there is not a source of government funds provided above the interbank rate like here in the US with the discount rate? Does the BoE treat each request for funds outside of normal interbank lending as an ad hoc loan/bailout? The Fed does audit discount rate loan requests here - but its not usually public and its not usually considered a "bailout".

Not being sarcastic here, I'm just ignorant on this. If that is the case, there would be a lot more "bailouts" classified in the US as banks sporadically go to the Fed for their float needs As far as I know. I think the Fed likes to keep it under wraps, unless its an LTCM type situation.

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My spider-sense tells me that there was maybe more to that decision than meets the eye. Perhaps a little payback.

It wasn't like the BoE were giving them the money - Barings still had to pay it back. Seems like someone wanted to see someone suffer greater consequences. But, of course, I might be completely wrong.

I wouldn't mind betting that Peter Norris had hit a booming drive into Eddie George's group at Wentworth Golf Club or spilled his drink on him in the MCC section at Lords Cricket Ground or something similar.

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Big Deal
Not going to affect me or anyone in the slightest.

And you got your currency lesson from yours truly. So do you think I want it back from my students???

BTW Get as much posting in now as you can. Opportunity doesn't last forever

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To re-iterate the point : no change (yet again) in ECB interest rates.


4th october 2007 :

The European Central Bank kept its benchmark interest rate at 4 per cent for the fourth month running today, as expected.

Economists had predicted rates would remain unchanged due to investors' nervousness and evidence that turmoil on financial markets is curbing economic growth.

The euro has also hit record highs against the dollar and a basket of major trading currencies. This has further clouded the growth outlook but helped to keep a lid on the soaring cost of crude oil, which is priced in the US currency.

The focus is now on a news conference by ECB President Jean-Claude Trichet in Vienna later this afternoon, where the Governing Council held one of its two meetings a year outside the bank's Frankfurt headquarters.

Economists hope to learn more then about the ECB's view of how the US subprime mortgage crisis is affecting Europe's economy and money markets, and whether downside risks to growth have increased.

Early indicators show the market turmoil has hit both economic activity and confidence. Growth in the manufacturing and services sectors slid to its lowest in two years in September and economic sentiment is the weakest in more than a year.

But at the same time, inflation rose above the ECB's 2 per cent ceiling in September and is expected to accelerate further in the next few months due to the soaring food and oil prices. Crude costs have hit record highs above $80 per barrel.

The ECB also left its marginal lending rate unchanged at 5 per cent and its deposit facility rate unchanged at 3 per cent.

__________________
.."But finally the last thing I’ll say to the people who don’t believe in cycling, the cynics and the sceptics. I'm sorry for you. I’m sorry that you can’t dream big. [I]I'm sorry you don't believe in miracles. You should believe in these athletes, and you should believe in these people. I'll be a fan of the Tour de France for as long as I live. And there are no secrets - this is a hard sporting event and hard work wins it" - Armstrong 2005 TDF
morelike hypocrisy.

.........and the Bank of England too, has keep interest rates unchanged after their monthly meeting today.

Nice!




http://www.ireland.com/newspaper/breaking/2007/1004/breaking58.htm



Last Updated: 04/10/2007 12:54
No change for UK interest rates

The Bank of England kept official interest rates steady for a third month running today, but many people expect it will cut them later this year as a credit crunch in global markets starts hitting the wider economy.

Analysts had predicted the BoE's Monetary Policy Committee would keep borrowing costs at 5.75 per cent. Policy makers have said they need time to see what effect recent market turmoil has on economic growth and inflation.
The BoE offered no statement to accompany its widely expected decision but sterling rose and interest rate futures fell as there had been some nervousness the BoE could make a surprise cut.

A few months ago many economists had predicted a further rate rise this year following five since August 2006. But this was before the global cash crunch which prompted a run on British mortgage bank Northern Rock last month.

There are worries that this will soon spill over into tighter lending conditions on companies and consumers, slowing the economy as a result.
There are already signs that Britain's housing market is cooling. Mortgage lender Halifax said house prices fell 0.6 per cent last month, the first decline since December.

The BoE has said it will watch credit conditions closely and many economists believe rates have now peaked and could come down as soon as November. But the economy is still firing on all cylinders and price pressures have not abated

__________________
.."But finally the last thing I’ll say to the people who don’t believe in cycling, the cynics and the sceptics. I'm sorry for you. I’m sorry that you can’t dream big. [I]I'm sorry you don't believe in miracles. You should believe in these athletes, and you should believe in these people. I'll be a fan of the Tour de France for as long as I live. And there are no secrets - this is a hard sporting event and hard work wins it" - Armstrong 2005 TDF
morelike hypocrisy.