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Fed Joins Other Banks To Ease Credit Crunch

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posted on Dec, 12 2007 @ 08:51 AM
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Fed Joins Other Banks To Ease Credit Crunch


www.cnbc.com

The Federal Reserve announced it is coordinating with other central banks to deal with the global credit crunch.

The central bank said it had reached an agreement with the European Central Bank as well as the Bank of England, the Bank of Canada and the Swiss National Bank to address what it termed "elevated pressures" in credit markets.
(visit the link for the full news article)




posted on Dec, 12 2007 @ 08:51 AM
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This is what the central banks did after 9/11.

The ECB and the Fed are also setting up a swap line aswell. I have to say, this is a smart move by the worlds most powerful central banks. And long overdue too.

www.cnbc.com
(visit the link for the full news article)



posted on Dec, 12 2007 @ 09:06 AM
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this is folly in the long run,

its just a continuation of the credit/debt bubble, to get the banks over the holiday & year end hump...

the shrewed borrower will get a year end loan with a default in mind,
what are the banks gonna secure the new loan with,
the devalued house that isn't worth the high payments any longer?

or how about that salaried position which is being eliminated as the
multi-national employer is trimming 20% of its workforce??


eat-drink-be merry... for tomorrow we die



posted on Dec, 12 2007 @ 09:09 AM
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Well what can anybody expect from the elites of the world, they can not go on during the holidays without their obscene bonuses.



posted on Dec, 12 2007 @ 02:18 PM
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We're so far up the creek without means to steer it's not funny.

Two people who's opinion I tend to respect:



Mortgage Market Off the Rails, Economy to Follow

The latest effort by government to engineer money aggregates via government consumer behavioral engineering promotions arrived yesterday in the form of a tiny bailout of a small bit of a subset of the now rapidly collapsing U.S. housing market. This was aimed not so much to keep consumers spending as to keep the Democrats from hogging the populist limelight.

Some day all this direct consumer and voter lobbying will come back to haunt us.

The Great Depression was American’s last lesson in the wisdom of saving for a rainy day. For several generations since it’s been bailout city–and nothing teaches spendthrift habits like the moral hazard of repeated, multi-generational debtor bailouts.

The Housing Crash has not Started Yet

Sub-prime is what is being focused upon to draw attention away from the fact the lenders and Wall Street banks made all loans too easy to attain for everyone.

Sub-prime aren’t the only kind of loans imploding.

We have 90% fewer qualified buyers for five-times the number of homes.

... the debt crisis is generalized and will therefore be hard to manage, ... for every home that sold in CA last quarter, one went into foreclosure. ... current inventory in hard hit areas like San Joaquin County is good for five years...
...
In case you are tempted to go around the Treasury Dept. manipulated mortgage bond market and go directly to the source, not so fast. On December 3, the Treasury announced that effective January 1, 2008 the annual purchase limit for savings bonds will be reduced to $5,000 per year from $30,000.

[Much more at the link above]




Gold & Mortgage Failure Avalanche

The greatest deception in the bank sector this year has been the misrepresentation of the mortgage debacle as a subprime problem.

the USGovt maestros will gradually introduce increasingly broader rescue elements, since everything they try at early stages will fail. The USFed remains badly behind the curve, as yesterday they cut the official Fed Funds target rate, but did not sufficiently cut the Discount Window rate that imposes a Stigma Tax. Today, the USFed announced a much broader bank liquidity policy, focused upon more auctions at set rates and a swap line with the Euro Central Bank. They have announced more coordination with the Bank of England, the Bank of Canada, the Swiss National Bank, and the US Federal Reserve.

The threat to the banking system will be staggering. The threat to the economic system will be broad and deep. The avalanche will expose the combined system as insolvent, broken, in need to total rescue.

They realize several looming tragedies:

* Prime ‘AAA’ mortgage bonds have lost roughly 20% of value
* Innovative flexible adjustable mortgages are due to default in droves
* Enormous growing list of under-water mortgages are beyond rescue
* Big banks are facing dire insolvency threats, as new defaults approach
* Enormous bond writedowns have only begun for big banks
* Insolvency can turn to bankruptcy with more debt rating agency downgrades
* Mortgage bond investors contemplate lawsuits, accusing Wall Street fraud
* Wall Street banks face the prospect of over $1 trillion in mortgage bond buybacks
* Rescue & remedy will trash the USDollar and catapult the gold price

As a preface, one should know that politicians did not advance this plan. The key initiators of the HOPE NOW project were three banks. It was an alliance led by the Federal Deposit Insurance Corp (insurer of banks), along with big banks and their lobbyists from Citigroup, JPMorgan, and Wells Fargo. These banks in my opinion are insolvent, soon to be forced into bankruptcy as the next round of the mortgage debacle unfolds from the ‘innovative’ adjustable and option laden mortgages. They all face bankruptcy, insured by the FDIC. If lawsuits are filed and that road is traveled, declared bankruptcy is assured.

THE FINANCIAL SYSTEM HAS OFFICIALLY ENTERED CHAOS, with that chaos more widely recognized in year 2008. To be sure, it is an early stage. Massive housing losses have occurred. Even more massive mortgage bond and related credit derivative losses will occur. Rewards are being prepared for the most reckless of participants. Encouraged destruction of credit and credit ratings is possibly around the corner, so that marginal households can participate in freezes, bailouts, or whatever is handed out.

...as the national emergency becomes more widely recognized, the need to flood the bank & bond arenas, as well as the corporate credit & household arenas, will become broadly understood as desperate. Without that flood, the system will enter a deeper economic recession than already is in progress. Without that flood, the system will see the banking system actually fail.

[Much more at the link above]


The fun has just begun.
.



posted on Dec, 12 2007 @ 02:37 PM
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Gools, I need not ask but I take it you have noticed the markets were not even moved by this today? Which is quite shocking.

The huge gains after this annoucement are lost.

And, for anyone who thinks this is not serious, a small piece from Gools post should explain HOW bad it is...



* Wall Street banks face the prospect of over $1 trillion in mortgage bond buybacks


....If that $1 trillion, or more happens, it's gonna be ugly.


[edit on 12-12-2007 by infinite]



posted on Dec, 12 2007 @ 02:46 PM
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And, this has been predicted to get much worse

Fidelity's Bolton Says Subprime `Cancer' to Get Worse





Dec. 12 (Bloomberg) -- Anthony Bolton, who helped turn Fidelity International into the U.K.'s biggest mutual-fund manager, said the fallout from the U.S. subprime collapse is like a ``cancer'' that will further unravel markets.

``I would expect the contagion to seep into most stock markets'' Bolton said in an e-mailed statement today. ``Effects can take some time to work their way through. Banks will remain a difficult call for investors next year.''

Some banks may have to cut dividends or sell more shares to overcome a shortage of capital, Bolton said. Stocks in the media and pharmaceutical industries are most undervalued at the moment and provide the best investment opportunities, he said.


www.bloomberg.com...



posted on Dec, 12 2007 @ 03:02 PM
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This was never posted.

Morgan Stanley predicts new stock market crash





Morgan Stanley issued a stark warning at the beginning of June this year, predicting a market correction in the order of 14% in European equities - which could wipe out as much as 1000 points from the FTSE 100.

Bull traders continued on till August. Then the credit bubble finally burst, the credit crunch hit, and the FTSE 100 sank from 6700 points to 6050 within a week.

And now Morgan Stanley have announced that it’s not over yet.

As detailed in The Telegraph, Morgan Stanley are now predicting a strong possibility that a bear market that could see the FTSE 100 fall to around 5350 over 2008.


www.financemarkets.co.uk...

Many pundits of CNBC and Bloomberg have said the same thing.

2008 looks very bleak

more from the link..



The Sticking Plaster

The big problem with the Credit Crunch is that we are now faced with a situation very much like that of a sticking plaster.

You know it’ll hurt to deal with it, so you have two options:

1. A quite hard removal, which will hurt quite a bit, but be over quickly
2. A long slow removal, which hurt and continue to hurt as the plaster is slowly removed

And it’s obvious the financial sector has chosen the second method.


Cranmer has launched another attack on the Fed..a MUST watch.

www.cnbc.com...

[edit on 12-12-2007 by infinite]



posted on Dec, 12 2007 @ 05:34 PM
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reply to post by Gools
 



thanks Gools for your '2nd link' which was by Willie & 'Hat-Trick'
web page...
i have that site in my daily 'intelligence briefing'
(my personal counterpart to what the President gets daily)

It's not that complicated... but one has to become aquainted with
the concepts & language of the money handlers/ fiscal realm to be able to digest the information --> or 'go with the flow'
...so the apparent disinterest is not what it seems.


its just a language, interest barrier......
thanks for the thread & presentation



posted on Dec, 12 2007 @ 06:21 PM
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Washington will step in no to help the homeowners but to keep Am erica’s ability to finance its outrageous deficits.

If US can not borrow US can not function and maintain its superpower and ability to spread around the globe.

Our deficit around the world is 800 billion dollar annually, we are in hole and unable to get out of it anymore.

The only ones to be the sacrificial lambs in our volatile and shaky economy is us the regular joes and tax payers of this nation.

We the tax payers can not afford our nation’s bills anymore.



posted on Dec, 12 2007 @ 07:23 PM
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reply to post by Gools
 


Gools, I greatly appreciate your posting-up commentary from Jim Willie. I actually invited him to ATS a few months ago via email. I'm sure he's a busy guy...but I'm confident that he would appreciate much of the tenor & content of the conspiracy forum.

Below are a few excerpts from a JW post on The Contrary Investor Cafe (formerly CometGold), regarding his decision to vacate the US in favor of life in Costa Rica. Thread title: A note from Jim Willie, re: Costa Rica.

I hope you have time to read JW's important disclosure. Jim joins the thread discussion on page 2.


Posted: 17 April 2007

Tom,

please post this segment on your GoldComet website ....Thanks a lot
/ jim

This brief note is a sincere, honest, and slightly restrained attempt to explain my departure from the Untied States and move to Costa Rica as a new home....

When a country renders its citizens as unsafe, it is time to consider other alternatives. In no way do I plan to talk openly about all that I have come to learn concerning events in the last six years regarding terrorism and the national reaction....

.....For me, it would be dangerous to discuss in gory detail.

....I was approached in the shadows and threatened, during which many suspicions were confirmed directly in a lengthy discussion with the man who refused to identify himself....

An turning point event occurred last November 2006 when I was in [Munich] Germany for a conference. A man who refused to identify himself gave me firm warning on certain further implications made by me in my work on geopolitical events of a certain nature. He confirmed many of my suspicions for the unfolding sequence of mega events, a nightmare to imagine. Full Text



posted on Dec, 12 2007 @ 08:59 PM
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The Sales have begun, Blood is in the Water.


According to Reuters: “ Financial analysts on Friday said E*Trade got anywhere from 11 cents to 27 cents on the dollar for its $3.1 billion portfolio of asset-backed securities. The portfolio sale was part of a $2.5 billion capital infusion from a group led by hedge fund Citadel investment Group
What is particularly distressing about the E*Trade sale is that over 60% of the $3 billion portfolio “WERE RATED DOUBLE-A OR HIGHER”. That means that even the best of these mortgage-backed bonds are pure, unalloyed garbage. This is really the worst possible news for Wall Street. It means that trillions of dollars of bonds which are currently held by banks, insurance companies, retirement funds, foreign banks and hedge funds will be slashed to $.27 on the dollar OR LOWER. Banks will have to hoard reserves to meet the new capital requirements on the falling value of their assets, which means that they'll have less money to loan to businesses and consumers. In fact, this is already taking place. (which is the real reason the Fed keeps injecting money into the banking system) The E*Trade “firesale” confirms that the country--and perhaps the world---is now headed into a downward deflationary spiral. The Fed will HAVE to cut interest rates 50 basis points on December 11, just to keep the financial system from freezing up entirely. That will, of course, further emasculate the dollar and send food and energy prices through the roof.


www.marketoracle.co.uk...



posted on Dec, 12 2007 @ 09:19 PM
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Originally posted by OBE1
I hope you have time to read JW's important disclosure. Jim joins the thread discussion on page 2.


Thanks for that!

I wasn't aware of the whole story and now I have more. I've been reading his stuff for years on Financial Sense and I'm not really surprised that he got "too close" to the truth. Same thing happened to Michael Ruppert with break-ins, sabotage and death threats.

I you read the two articles I linked then this will confirms some of what it being said:



&s iteid=yahoomy]Merrill Lynch downgrades banks

Analysts at Merrill Lynch & Co. downgraded several banking stocks Wednesday, saying rising credit risks and an economic slowdown could further pressure corporate earnings. Merrill Lynch cut its ratings on shares of Bank of America, J.P. Morgan, Wachovia ...

Merrill Lynch sees profit being hit by lower revenue on structured products, commercial mortgage-backed securities, leveraged lending, mergers and acquisitions, and private equity.

Several banks, including Bank of America and Wachovia, warned Wednesday of higher losses in the fourth quarter as the turmoil in the credit and mortgage markets continues to weigh on the financials sector. The companies were presenting Wednesday at an investment conference hosted by Goldman Sachs.


The recent bailouts of Citigroup and UBS by foreign interests are looking like either desperate moves to stay alive (11% interest AND a chunk of the company for a LOAN to Citi!!) or a very big blunder by fools with money to burn who don't realise they just threw good money after bad.

More bailout billions have been announced...



Central Banks Act On Credit Fears

The Federal Reserve, European Central Bank and central banks from the UK, Canada and Switzerland ... have each announced that they will provide billions in loans to banks in order to lower interest rates and ease the availability of credit.

It is a sign that despite rate cuts, banks are nervous about credit risks.

Central banks are worried that if banks are having trouble getting credit, they will raise rates they charge to customers, bringing spending among indebted populations to a standstill.

The move comes after interest rate cuts by both the Fed and the Bank of England had failed to cut the inter-bank interest rates which banks charge each other, which indicated that they were still reluctant to lend money.

.



posted on Dec, 12 2007 @ 09:31 PM
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I fail to understand the supply side mind set here. They keep acting like if they lend more, borrowers will appear out of thin air to borrow from them. Have they forgotten that they've loan-sharked all the borrowers into serfdom?



posted on Dec, 12 2007 @ 10:20 PM
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Originally posted by HimWhoHathAnEar
I fail to understand the supply side mind set here.


"The definition of insanity is doing the same thing over and over and expecting different results."

The quote is sometimes attributed to Einstein and sometimes to Benjamin Franklin and it probably was never really uttered at all... but it sure applies here.

.
edit: bb code


[edit on 12/12/2007 by Gools]



posted on Dec, 13 2007 @ 05:04 AM
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There has been no reaction by the markets.

Japan got wiped out last night, and Europe is heading that way. The futures in the States do not look pretty either.

I've heard these words so much over the last 24 hours.

too little, too late

Global Stocks, U.S. Futures Drop; UBS, Mitsubishi UFJ Decline





Dec. 13 (Bloomberg) -- Global stocks fell on concern central banks' plan to ease a credit squeeze won't be enough to prevent an economic slowdown. U.S. index futures declined.

UBS AG, Europe's biggest bank by assets, dropped for a third day, while Mitsubishi UFJ Financial Group Inc., Japan's largest by market value, sank the most in more than three years. HBOS Plc had its steepest retreat since 2003 after the U.K. mortgage lender forecast lower profit margins. Lehman Brothers Holdings Inc. fell in German trading before reporting earnings.

``Central banks have the will to help, but they have limited elbow room,'' said Vafa Ahmadi, who helps oversee $38 billion at CPR Asset Management in Paris. ``Investors realize this. There's the financial crisis and a slowdown in the U.S. Those are two dark points'' for the stock market.

Please visit the link provided for the complete story.


www.bloomberg.com...

There is something quite serious that is starting to happen in China...

The stock market is slowly starting to decline, it dropped near 3% last night.

Here is the five day chart;



If the Chinese stock market bubble bursts, it's going to add more pressure to the global markets.

We all know what happened in February when the SHANGHAI COMPOSIT dropped 9%

[edit on 13-12-2007 by infinite]



posted on Dec, 13 2007 @ 06:07 AM
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List of European indices, not a good read...

finance.yahoo

The Irish stock market is a very interesting read, it hit 10,000 in the early part of this year...and there's been a HUGE sell off.




posted on Dec, 13 2007 @ 07:56 AM
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Originally posted by infinite

Fed Joins Other Banks To Ease Credit Crunch


www.cnbc.com

The Federal Reserve announced it is coordinating with other central banks to deal with the global credit crunch.






have you considered;

the U.S. Federal Reserve has several Trillion$ at its disposal.
so this central bank teamwork is allowing more 'funny money' into the economies, which recently seems to be drying up because of the operating rules the banks must follow about having actual assets on hand.


#2...and i think this is more important than the severely Limited credit expansion the banking world is confronted with.

It's about making the USD (aka; federal reserve note) more tied into the value of other countries... the Fed is losing more with the dropping value of the dollar in relation to the Franc, Mark, Pound, Lira , etc
than it is losing in the interest not realized from loans & credit .
The flood of money coming out of the US Fed is attempting to stabilize
the value of the dollar by making the European and possibly Asian economies more or less tied (imagine a three-legged race participant)
to each economy...so they will have to adjust their policies so the exchange rate remains favorable to the dollars value.

another poison pill is being given to an (unsuspecting) appreciative player

but....



posted on Dec, 13 2007 @ 10:25 AM
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Originally posted by St Udio
The flood of money coming out of the US Fed is attempting to stabilize
the value of the dollar by making the European and possibly Asian economies more or less tied (imagine a three-legged race participant)
to each economy...so they will have to adjust their policies so the exchange rate remains favorable to the dollars value.


I see what you are getting out,
and yes the Fed has made the Dollar it's main focus (personaly, I don't think it cares what the stock market does)

It's going to be interesting how the reaction is after the auction period that is coming up.



posted on Dec, 13 2007 @ 12:20 PM
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Some good reading:



NO WAY BACK - The Horrible US Economic Morass

Thus there is now no way out of the enormous hole that they have dug for themselves, the towering sides of which are now starting to collapse in upon them.

What we are currently witnessing is a fascinating process of procrastination and obfuscation, with everyone right up to, or should that be right down to the President getting involved.

The chief purpose of this is twofold - to allow the many spread across the Mortgage and Real Estate industry, the rating agencies and Wall St involved in the fraudulent aspects of the sub-prime scam time to cover their tracks and destroy as much evidence as possible, and to try to hatch a way to renege on the contractual obligations pertaining to the original loans, perhaps by issuing “updated” versions whose small print protects the issuer from liability relative to the original loans, in the hope that the gullible foreigners who are belatedly wising up won’t read it. Finally lawyers can be expected to feast on everyone involved...

... [they] must have known the consequences of their actions, must have known that it would ultimately lead to an almighty train wreck - they are not that stupid, so the question is why they allowed these things to happen. Either they were guilty of short-termism - let’s party today and to hell with tomorrow - or these developments were part of a grand plan that was meant to lead to the major crisis facing the world today.

...from the standpoint of the maintenance and enhancement of global Anglo-US hegemony there are two threats that require to be dealt with urgently. One is the alternative currency to the US dollar, the Euro, which, as mentioned above, can effectively be undermined and crippled by first laying economic siege to the Eurozone with a weak dollar. Saddam paid the price for trying to trade oil in Euros by losing first his country and then his life. The other is the rapid ascent of China which promises to become a global superpower in its own right. The way to deal with China therefore is simply to pull the plug on its economy before it has weaned itself off dependence on the US as a primary export market. According to the logic of the chess game they are playing there are thus compelling reasons for the Anglo-US elites to let the world economy implode now.

...it is not known, ... if the Federal Reserve will continue to expand the money supply exponentially and continue to drop interest rates in an effort to bail out the major US banks, which would cause the dollar to collapse further leading to hyperinflation, or whether they will suddenly and unexpectedly ramp interest rates in the not too distant future, purportedly to support the dollar, causing credit gridlock and an economic meltdown, but whichever track they send the train down it will still end up going over a cliff.


The central banks' actions in the last week make it clear that they are attempting a balancing act between both options. The quarter point cut when the market expected a half point was perhaps a sign that cutting is coming to an end (with a reversal in the near future) but the liquidity pump has been primed to keep the party going.

I also find the arguments relative to countering Eurozone competition and the rise is China very compelling.

I'm one who has argued that China's internal economic activity has reached critical mass and that they could weather the coming collapse, not without pain mind you (they are also due for a stock market crash à la 1929), but they will (like the US last century) build upon the upcoming chaos (Order out of Chaos). I've seen many articles lately countering the decoupling argument so maybe I'm wrong, but China's new middle class outnumbers both the US market and the Eurozone, so it remains to be seen.
.



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