US Federal Reserve raises more than 100 bilion dollars to preserve financial markets
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Frb participation global tag and credit crisis
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The Federal Reserve and central banks around the world yesterday ripped off by the credit crisis, an extraordinary step of more than $ 100 billion pump into the financial market, since the 11th attack
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In a rare public statement, the Federal Reserve said it wanted to secure enough money to keep the financial markets running in an orderly fashion.
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"In the current situation," Federal agencies said, banks may experience extraordinary funding needs for money and credit market shift, "said.
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When the high risk borrowers enjoy near free access to huge amounts at low interest rates, the financial markets seemingly easy to react off the edge of the money era seemingly overnight overnight less than the market for subprime mortgages First broken up to people with a perfect credit history, remains the most serious obstacle but back up other kinds of commercial property
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So far, the central bank's rapid, serious intervention strategies have shown signs of work. Yesterday yesterday, the European stock market accounted for as much as 3% loss, and when the Dow-Jones Industrial Average started the day with a decline of 212 points, it supplies the US system throughout the day As money on the pump was made, stocks began to rally and the Dow ended its day at just 31.14 points, 13,239 54 Dow, despite the tremendous investor concerns and gyrations and losses in the wild market In fact-barely-with a 0.4 percent gain-finished the week.
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"Inside the stock market there is a massive shift, Frb offers you all the ease," said Kevin Cronin and investment manager Putnam's investment Boston. He said, if the lender was unable to continue to provide credit, then the interest rate has exploded, potentially leading to a broad reduction in economic activity
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"We wanted to get air out of the balloon," said Kronin.
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The Federal Reserve yesterday loaned $ 3.8 billion to a US bank to help finance its credit and lending operations on similar $ 2.4 billion offered on Thursday Yesterday, Europe, Japan, Central banks in Asia and Canada have made similar moves.
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The central bank's behavior is that creditors who have enough money available to lend to investors the securities they buy, sell, or hold as usual are credited without such additional funds Lack of money could result in the market getting stuck and prices going crazy.
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"The central bank did two things," said Art Hogan, chief market analyst at Jeffreys & Co., Ltd. Boston's "They added a lot of the necessary liquidity to the market and showed that they were ready for a system that might not need more help."
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More problems seem to arrive every day. After the largest US mortgage lender said that the credit problem among its own borrowers is worsening, the risk separately facing the big savings lending 2% reduction of mutual equity shares Inc.'s day after the next day Decline in market liquidity
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The upper bound of yesterday's equity swing is three weeks at Dow- Jones Industrial Average often moving in each trading session at three-digit levels. According to economists and traders, despite the fact that the economy itself seems to be stable, it reflects financial market instability.
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"The foundation, underlying inflation, economic growth rates, labor productivity growth is also robust," said Nariman Behravesh, chief economist Global, who is ambitious Waltham, Massachusetts in an attempt to elucidate global. "The market is a little panic, but it's still a financial story. As long as the central bank succeeds in settling the market, I do not think this is spreading to a broader economy."
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Volatility still raises long-term strategy questions for the Fed. One is whether to lower interest rates, this week's Frb policy makers are even 5.25% elected to maintain their benchmark lending rates, but by lowering their interest rates, Frb It would be cheaper to borrow money. It is the real estate sector by lowering the total cost of the transaction, such as buying a home or refinancing a mortgage, eg, total cost
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Richard-Yamarone, chief economist at Argus Research in New York's "suspect, is not the Frb, so is the interest rate on the line. He said in a statement to the market yesterday, the Federal Reserve mentions the current interest rate of 5.25% Pointed out.
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"They're telling the market," Hear, we're giving you some room, but we're still clinging to our guns, "said at interest rates, Yamarone.
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