A sign that the Federal Reserve recognizes that the US economy is in a severe down turn. An inter meeting rate cut of 75 basis was made this morning after Asian and European markets sold off on Monday. The Fed has been viewed as being behind the curve in addressing the serious banking crisis and credit squeeze that has swept the US financial Markets.
Other news...Bank Issuer MBIA raised capital last week to avoid a downgrading by rating agencies and is still on the ropes this week. Should insurers for banks become insolvent, it will make life difficult for banks as their balance sheets are eroding due to the inability to value CDOs and other derivatives of the past financial engineering methods.
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2 comments:
Interesting post. Insurers becoming insolvent is quite a thought.
I think it is safe to say that the recession is here, but my question is how long will it last. The dynamics in our marketplace with the war, our deficit, subprime meltdown and on and on.....has "us" in a situation that has never been experienced before.
Curious to see what type of financial innovation is created over the next year.
Andy,
Last night was the State of the Union Adress given by President Bush. Bi-partisant approval for Tax-Rebates appear to be on the way. However, unlike years past, consumers will like spend those rebates on paying off their debts. I think the rebates will have little effect on the saging economy. Beside, Tax payers won't get these benefits until June of this year.
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