Subprime Woes Spread North of the Border - Bank of Canada Cuts Key Interest Rate

Subprime Woes Spread North of the Border - Bank of Canada Cuts Key Interest Rate

www.marketwatc h.com

.. the U.S. subprime mess has thus claimed another victim, contrary to the happy talk from U.S. officials earlier in the year that it would remain "contained" ...

The bank explicitly cited the contagion from subprime in its statement announcing the quarter-point cut..

The bank acted to "neutralize" next week's expected rate cut by the U.S. Federal Reserve..

The European Central Bank and the Bank of England could come to the same decision next week and surprise the market with cuts of their ow

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www.cbc.ca

All of the G7 members are in deep trouble if not the entire G20.

Rate cuts typically take at least 6-8 months to work themselves through the system. It also takes up to a year once people start to fall behind on their mortgage payments for foreclosures and other procedures to take effect. We are currently in a period of rate adjustments for millions of mortgages in the US.

Canada's forestry industry will likely be devastated and other export industries as well unless we learn to diversify our export markets.

The math works out to end of 2008 to 2009 as the time period when maximum pain will be reached in the US economy followed about 6-10 months later in Canada.
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www.marketwatc h.com
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reply to post by Gools


Hi mate, i've been following this very closely here in Australia. I'm not very clued into the finance world, but you certainly seem to be after reading some of your posts.

Do you think this is going to hurt the Australian market anytime soon. Our interest rates keep going up and up, virtually on a 3 month basis.

A lot of people here are worried, and a lot is said. I just want to get you opinion. It seems like all markets are going to be effected by this.

this going to affect any nation that has invested on US mortgage markets.

Don't expect this to settle down any time soon like the hopefuls in wall street are trying to sell.

This is expected to keep declining until 2011, I can not imagine that as more American lose their jobs to outsourcing more and more will default on their American dreams.

With $361 billion in subprime loans made to borrowers with weak credit resetting at higher interest rates next year, foreclosures will peak in the third quarter of next year and won't drop back to more normal levels until 2011, said a Banc of America Securities report out last month.

www.rawstory.com...

reply to post by dingleberry77


Here's your answer:

RBA 'running scared' of global credit crisis

Until now, Australia's central bank has only issued a statement after its monthly board meeting if rates change, and it has never released the minutes of its board deliberations.

Today all that changed.

The first revelations from those minutes reveal that it is global financial turbulence which has saved Australians from another lift in official interest rates this month.

The continuing global uncertainty also puts further rates rises in Australia in doubt.

The contrast between the minutes of the November Reserve Bank board meeting and today's statement is marked.

Also here is some comments on the recent actions of central banks around the world by a well known economist:

Major central banks are now on the way to cut policy rates

...while many intelligent and articulate voices (Munchau, Buiter and Munchau again today) are calling for central banks to resist cutting rates or even raise them to address the risks of rising headline inflation the policy wind is clearly blowing now in the direction of a generalized monetary policy easing by most advanced economies central banks.

Like I said above, everybody is in hot water right now.
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Thanks for that Gools,

One more question. What is the timeline for things to go totally pear shaped? Are we talking months or years? It seems like everyone in Australia has been talking about the cost of living for some time now. We seem to be balancing on a pin head.

My girlfriend and I are in two minds to buy a house. It seems like a crazy thing to do at the moment, but renting is just as bad in Australia. It seems like you are stuffed either way.

I'm not that clued into finance, but all i can say is that all of my mates and family are struggling in some way. I have friends that are throwing money at huge mortgages. I just doesn't make sense. A lot of people feel like something has got to give.

Thank you for your advice. It's very helpful.

I guess Bush will step in after all to do something already too late for many homeowners that already lost their home.

Bush to unveil plan to help homeowners

The plan will freeze certain subprime mortgages for 5 years, a compromise hammered out with mortgage lenders and banking regulators.

money.cnn.com...


[edit on 6-12-2007 by marg6043]