Fed rate cut a DUD! Fed rescues go WILD! by Martin D. Weiss, Ph.D.
While all eyes were focused today on the Fed's rate cut, the big news was the Fed's latest cockamamie effort to save world.
Indeed, just when you thought the insanity couldn't get crazier, the Fed announced it's now going to funnel a massive $120 billion of U.S. funds into Brazil, South Korea, Singapore, and Mexico.
And that's on top of the IMF bailouts already committed to the Ukraine ($16.5 billion), Iceland ($2.1 billion), and Hungary ($25.5 billion)!
In response, some folks are cheering with glee, blindly believing that Mr. Bernanke can play Santa Claus, the Pied Piper and the Fairy Godmother all in one act.
But anyone with any experience with the real world is quickly coming to the realization that Mr. Bernanke is
Desperate — resorting to the most radical measures of all time.
Playing his last cards — realizing that if these last-ditch rescues don't work, it's game over.
Taking huge risks — that his rescue-the-whole-world schemes will backfire in the form of falling confidence in the U.S. government as a whole!
Meanwhile, the much ballyhooed Fed rate cut was a dud!
After all the hope and prayer implied in yesterday's stock-market surge, today, the market literally saw a ghost: Just in the final 12 minutes of trading — from today's post-rate-cut high to the closing bell — the Dow nosedived by an alarming 372 points!
Not exactly a polite "thank you" note to Mr. Bernanke for his half-point rate cut!
Bottom line: Some investors can be fooled some of the time. But the investors that move the market are painfully aware of one simple fact:
Mr. Bernanke cannot drop interest rates below zero!
He cannot force banks to lend money!
He can't compel consumers to borrow, or make people spend.
Nor can he turn back the clock to undo decades of financial sins ... or repeal the law of gravity and stop investors from selling.
Indeed, all of this week's wild events merely underscore the wisdom of Mike Larson's strategy:
To watch the bulls drive up the price of stocks until he can see the white's of their eyes ... and then to fire with all guns with his recommendations that help you profit massively when stocks plunge. All strictly with inverse ETFs!
Good luck and God bless!
Martin
P.S. For a quick heads up on what kind of investment Mike intends to recommend and when, click here.
About Money and Markets
For more information and archived issues, visit http://www.moneyandmarkets.com
Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Tony Sagami, Nilus Mattive, Sean Brodrick, Larry Edelson, Michael Larson and Jack Crooks. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amber Dakar, Dinesh Kalera, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau and Leslie Underwood.
Attention editors and publishers! Money and Markets issues can be republished. Republished issues MUST include attribution of the author(s) and the following short paragraph:
This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.
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Showing posts with label Fed Lending. Show all posts
Showing posts with label Fed Lending. Show all posts
Wednesday, October 29, 2008
Monday, October 13, 2008
Currencies and Cotton Candy Rate Cuts
Currencies and Cotton Candy Rate Cuts by Jack Crooks
I understand that the lending system is in bad shape. Or more specifically, that it's barely functioning at all. We're well past the point when central banks and governments around the globe inexplicitly declared it their duty to save their economies. But they really unleashed their helping hands this week.
That's especially true of the coordinated rate cuts from many of the world's Central Banks — everyone from the U.S. and Europe to China.
These moves have serious implications for all financial markets, but especially the currency markets. And today I want to tell you what I think is coming next.
Governments Make Bold Moves; Markets Shrug ...
Stocks started the week with a horrendous Monday that basically stated, "Bailout package? So what?"
Monday was followed by an equally bad Tuesday.
So the Federal Reserve, and every other central bank you may have ever heard of, did what many had been hoping they would do. They cut their benchmark interest rates.
Ben Bernanke and the Fed cut rates this past week, along with just about every other Central Bank under the sun.
But the markets continued falling. In short, Wednesday simply deflated any hopes of recovery to which a very small minority might have still been clinging.
Throughout recent weeks, Chairman Bernanke has guided billions of dollars of credit into money markets, supported the Treasury's $700-billion bailout plan, and taken steps to make accessing loans easier.
But until Wednesday, the Fed hadn't caved in to the newest pressures rocking the markets with official interest rate cuts. And surely to their disappointment, it's done little to better the current investment environment.
I Didn't Think the Federal Reserve Needed to Cut; Here's Why ...
Even though the Fed Funds target had been stable at around 2%, the market-determined rate was already far lower.
Plus, as I mentioned, the Fed had already created and used so many other methods of pumping liquidity into the system.
Internal Sponsorship
Emergency Crisis SurvivalConference Online NOW!
We answered your most crucial questions about how to get through this great crisis with your money 100% intact.
We delivered our best recommendations to help you protect ...your income and financial security ... your savings, checking, brokerage accounts and money market funds ... your life insurance and annuities ... your retirement and your kids' and grandkids' college funds ... every kind of money you have.
Click here for more information ...
But the Fed did what it did, knocking another 50 basis points off an already measly 2% Fed Funds rate. But the Fed was only one guest at a rather big party that took place in the middle of the week:
The European Central Bank finally budged and knocked 50 basis points off its benchmark rate.
The Bank of England followed suit with 50 basis points.
The Swedish Riksbank cut by 50 basis points.
The Bank of Canada cut by 50 basis points.
The Swiss National Bank got in on the action by 50 basis points as well.
The Bank of China knocked rates down by 27 basis points.
The Bank of Japan offered their support, but made no change to rates.
Also note that a day before all these actions, the Reserve Bank of Australia sliced off 100 basis points. And a day after the rate cut party, central banks in Taiwan, South Korea and Hong Kong also joined in with rate cuts of their own.
When I say party, I mean it. Only investors never got the invitation to come share in the finger foods and free booze.
But at least the central banks were kind enough to toss some more easy money their way. After all ...
When Everyone's Already Heavily Indebted, What's Left to Do but Make Debt Cheaper for Them?
Here's the argument that central bankers and government officials make during crises like this:
Individuals, companies and banks are having trouble accessing credit.
This inability to secure credit is wreaking havoc on the growth of the economy.
By cutting interest rates, credit is made cheaper and encourages borrowing that will in turn stabilize growth.
Well, in reality, it's not quite that easy or obvious. The government's solution is a lot like a marathon runner fueling his body with cotton candy ...
The runner may get quite a burst of energy from the cotton candy at first, but, sooner or later, his sugar high is going to peak and subsequently collapse.
Internal Sponsorship
IS A FINANCIAL CRASH DEAD AHEAD? HURRY TO GET YOUR GOLDEN PARACHUTE FOR 2009
5 Forces Poised to Send Gold Soaring to $1,110 ... $1,500 ... and beyond
Best Ways to Buy Bullion ... and NOT Get Ripped Off!
Why Select Mining Shares Are on the Launch Pad
Why There's Even More Potential Sizzle in Silver!
Three days left to save $100. Get Your Golden Parachute for 2009.
Click here for more information ...
And in an effort to keep from losing his sugar high completely, the runner just takes in more and more cotton candy. The problem is the cotton candy intake becomes increasingly less effective ... to the point of becoming unhealthy.
A sugar high can only last so long before it becomes a massive crash!
How could allowing cheaper access to credit, at a time when it's "completely necessary" for the economy to function, become unhealthy for the economy?
My answer is that it's not completely necessary.
The problem, as many have already mentioned, is a lack of confidence in the lending system. To a much smaller extent is the problem actually due to a lack of credit.
Easy access to credit — unnecessarily low interest rates and a "loans-for-everyone" mentality among banks — is what created the bursting bubble we're dealing with right now.
Cheap money and easy access to loans have bred projects of low value and low profitability. If money was more difficult and costly to secure, these investments would have never happened in the first place.
Artificially low rates attract any ol' Joe Schmoe who's got a business idea — no matter if it's building birdhouses out of popsicle sticks or selling cell phones to scuba divers.
Market determined interest rates, however, naturally weed out the birth of wasteful and absurd projects. This kind of growth is far healthier and more sustainable.
Surprisingly (and fortunately!) quite a few parties are learning lessons from excessive intake of credit. They're not feeling so good anymore. And so they're not willing to swallow any more cotton candy credit, no matter how cheap and how easily accessible it becomes.
What needs to happen is a period of cleansing and consolidation. Particularly with the banks.
Everyone needs to know which banks are solvent and which ones are being held together with paper clips and chewing gum.
The collapsing banks will need to liquidate. The solvent banks will be able to buy up assets on the cheap and solidify their own business. The result is a healthier entity that's ready to run again.
The cotton candy credit being dished out is going to keep everything running a little while longer, sure. But that's only going to delay the inevitable collapse of troubled institutions. And it will fail to restore confidence that some banks, who will actually escape this mess, will be willing to lend and borrow between one another at healthy, responsible rates.
In the end, of course, central banks make these decisions, not me. So ...
What Do the Rate Cuts Mean for Currency Investors?
Like the $700-billion dollar bailout, these rate cuts aren't going to have an immediate effect on the lending system or on confidence in the market. Let's just keep our fingers crossed that they have a positive effect at all ... ever.
To the specific point I've mentioned plenty of times in the last couple months ... the Federal Reserve is ahead of the curve on interest rates. It seems likely to me that they have less distance to travel on the downside with policy rates.
Major central banks around the world, on the other hand, have quite a bit of room to play with. The potential for rates to drop a lot further in European and Antipodean countries will sustain the exchange-rate rebalance that's currently working to the advantage of the greenback.
The ECB just got started on this rate cut business ...
The BOE just resumed a much needed easing trend ...
The RBA has gotten the rate cut momentum moving quickly ...
And the RBNZ has set a comfortable pace for cutting rates that is far from coming to an end.
So if you're seeing Fed rate cuts and automatically thinking the U.S. dollar will fall, you might want to get your brain off cruise control!
There are too many other factors that are going to keep the rates vs. currency trend in the U.S. turned upside down.
Am I saying that the U.S. dollar is officially out of its bear market? No. But things have turned up for the buck, even though it's counterintuitive.
As I see it, now's the time for the rest of the major currencies to feel the pain. And it's time for the buck to lead the way out of this mess that's engulfed the world's financial system.
Best wishes,
Jack
About Money and Markets
For more information and archived issues, visit http://www.moneyandmarkets.com
Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Tony Sagami, Nilus Mattive, Sean Brodrick, Larry Edelson, Michael Larson and Jack Crooks. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amber Dakar, Dinesh Kalera, Christina Kern, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau and Leslie Underwood.
Attention editors and publishers! Money and Markets issues can be republished. Republished issues MUST include attribution of the author(s) and the following short paragraph:
This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.
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Optimists: House prices expected to fall until 2009 (articles.moneycentral.msn.com)Paulson Credit Push Earns Jeers From Free-Marketers (bloomberg.com)Disaster capitalism, the new Manifest Destiny (eyeonmiami.blogspot.com)SIV Bailout Plan: Don't Ask, Don't Sell (seekingalpha.com)Text of Paulson's Remarks on Housing (blogs.wsj.com)As Defaults Rise, Washington Worries (nytimes.com)Mortgage Securities Bailout Fund: A Bribe? (seekingalpha.com)Banks May Pool Billions to Avert Securities Sell-Off (nytimes.com)Boom Boom Tuesday (market-ticker.denninger.net)Wells Fargo, Regions Financial, KeyCorp Profits Miss (bloomberg.com)Wells Fargo Hit by Mortgage Woes (thestreet.com)Foreigners Sold Record $69.3 Billion in U.S. Assets (bloomberg.com)German bank hit by subprime crisis slashes results, directors leave (afp.google.com)Builder D.R. Horton Orders Fall (cnbc.com)D.R. Horton Orders Fall to Lowest in Almost Six Years (bloomberg.com)Housebuilder Outlook Falls to Record Low (biz.yahoo.com)8 Areas in the U.S. Most Unaffordable in World (efinancedirectory.com)Blame the Downturn on Homebuilders and Banks (doctorhousingbubble.com)Southern California house sales plunge 30 pct in Sept (reuters.com)2005 San Diegeo Sales (sandicor.com)2007 San Diego Sales (sandicor.com)
Bloomberg.com
market-ticker.denninger.net
eyeonmiami.blogspot.com
conotary.com
I understand that the lending system is in bad shape. Or more specifically, that it's barely functioning at all. We're well past the point when central banks and governments around the globe inexplicitly declared it their duty to save their economies. But they really unleashed their helping hands this week.
That's especially true of the coordinated rate cuts from many of the world's Central Banks — everyone from the U.S. and Europe to China.
These moves have serious implications for all financial markets, but especially the currency markets. And today I want to tell you what I think is coming next.
Governments Make Bold Moves; Markets Shrug ...
Stocks started the week with a horrendous Monday that basically stated, "Bailout package? So what?"
Monday was followed by an equally bad Tuesday.
So the Federal Reserve, and every other central bank you may have ever heard of, did what many had been hoping they would do. They cut their benchmark interest rates.
Ben Bernanke and the Fed cut rates this past week, along with just about every other Central Bank under the sun.
But the markets continued falling. In short, Wednesday simply deflated any hopes of recovery to which a very small minority might have still been clinging.
Throughout recent weeks, Chairman Bernanke has guided billions of dollars of credit into money markets, supported the Treasury's $700-billion bailout plan, and taken steps to make accessing loans easier.
But until Wednesday, the Fed hadn't caved in to the newest pressures rocking the markets with official interest rate cuts. And surely to their disappointment, it's done little to better the current investment environment.
I Didn't Think the Federal Reserve Needed to Cut; Here's Why ...
Even though the Fed Funds target had been stable at around 2%, the market-determined rate was already far lower.
Plus, as I mentioned, the Fed had already created and used so many other methods of pumping liquidity into the system.
Internal Sponsorship
Emergency Crisis SurvivalConference Online NOW!
We answered your most crucial questions about how to get through this great crisis with your money 100% intact.
We delivered our best recommendations to help you protect ...your income and financial security ... your savings, checking, brokerage accounts and money market funds ... your life insurance and annuities ... your retirement and your kids' and grandkids' college funds ... every kind of money you have.
Click here for more information ...
But the Fed did what it did, knocking another 50 basis points off an already measly 2% Fed Funds rate. But the Fed was only one guest at a rather big party that took place in the middle of the week:
The European Central Bank finally budged and knocked 50 basis points off its benchmark rate.
The Bank of England followed suit with 50 basis points.
The Swedish Riksbank cut by 50 basis points.
The Bank of Canada cut by 50 basis points.
The Swiss National Bank got in on the action by 50 basis points as well.
The Bank of China knocked rates down by 27 basis points.
The Bank of Japan offered their support, but made no change to rates.
Also note that a day before all these actions, the Reserve Bank of Australia sliced off 100 basis points. And a day after the rate cut party, central banks in Taiwan, South Korea and Hong Kong also joined in with rate cuts of their own.
When I say party, I mean it. Only investors never got the invitation to come share in the finger foods and free booze.
But at least the central banks were kind enough to toss some more easy money their way. After all ...
When Everyone's Already Heavily Indebted, What's Left to Do but Make Debt Cheaper for Them?
Here's the argument that central bankers and government officials make during crises like this:
Individuals, companies and banks are having trouble accessing credit.
This inability to secure credit is wreaking havoc on the growth of the economy.
By cutting interest rates, credit is made cheaper and encourages borrowing that will in turn stabilize growth.
Well, in reality, it's not quite that easy or obvious. The government's solution is a lot like a marathon runner fueling his body with cotton candy ...
The runner may get quite a burst of energy from the cotton candy at first, but, sooner or later, his sugar high is going to peak and subsequently collapse.
Internal Sponsorship
IS A FINANCIAL CRASH DEAD AHEAD? HURRY TO GET YOUR GOLDEN PARACHUTE FOR 2009
5 Forces Poised to Send Gold Soaring to $1,110 ... $1,500 ... and beyond
Best Ways to Buy Bullion ... and NOT Get Ripped Off!
Why Select Mining Shares Are on the Launch Pad
Why There's Even More Potential Sizzle in Silver!
Three days left to save $100. Get Your Golden Parachute for 2009.
Click here for more information ...
And in an effort to keep from losing his sugar high completely, the runner just takes in more and more cotton candy. The problem is the cotton candy intake becomes increasingly less effective ... to the point of becoming unhealthy.
A sugar high can only last so long before it becomes a massive crash!
How could allowing cheaper access to credit, at a time when it's "completely necessary" for the economy to function, become unhealthy for the economy?
My answer is that it's not completely necessary.
The problem, as many have already mentioned, is a lack of confidence in the lending system. To a much smaller extent is the problem actually due to a lack of credit.
Easy access to credit — unnecessarily low interest rates and a "loans-for-everyone" mentality among banks — is what created the bursting bubble we're dealing with right now.
Cheap money and easy access to loans have bred projects of low value and low profitability. If money was more difficult and costly to secure, these investments would have never happened in the first place.
Artificially low rates attract any ol' Joe Schmoe who's got a business idea — no matter if it's building birdhouses out of popsicle sticks or selling cell phones to scuba divers.
Market determined interest rates, however, naturally weed out the birth of wasteful and absurd projects. This kind of growth is far healthier and more sustainable.
Surprisingly (and fortunately!) quite a few parties are learning lessons from excessive intake of credit. They're not feeling so good anymore. And so they're not willing to swallow any more cotton candy credit, no matter how cheap and how easily accessible it becomes.
What needs to happen is a period of cleansing and consolidation. Particularly with the banks.
Everyone needs to know which banks are solvent and which ones are being held together with paper clips and chewing gum.
The collapsing banks will need to liquidate. The solvent banks will be able to buy up assets on the cheap and solidify their own business. The result is a healthier entity that's ready to run again.
The cotton candy credit being dished out is going to keep everything running a little while longer, sure. But that's only going to delay the inevitable collapse of troubled institutions. And it will fail to restore confidence that some banks, who will actually escape this mess, will be willing to lend and borrow between one another at healthy, responsible rates.
In the end, of course, central banks make these decisions, not me. So ...
What Do the Rate Cuts Mean for Currency Investors?
Like the $700-billion dollar bailout, these rate cuts aren't going to have an immediate effect on the lending system or on confidence in the market. Let's just keep our fingers crossed that they have a positive effect at all ... ever.
To the specific point I've mentioned plenty of times in the last couple months ... the Federal Reserve is ahead of the curve on interest rates. It seems likely to me that they have less distance to travel on the downside with policy rates.
Major central banks around the world, on the other hand, have quite a bit of room to play with. The potential for rates to drop a lot further in European and Antipodean countries will sustain the exchange-rate rebalance that's currently working to the advantage of the greenback.
The ECB just got started on this rate cut business ...
The BOE just resumed a much needed easing trend ...
The RBA has gotten the rate cut momentum moving quickly ...
And the RBNZ has set a comfortable pace for cutting rates that is far from coming to an end.
So if you're seeing Fed rate cuts and automatically thinking the U.S. dollar will fall, you might want to get your brain off cruise control!
There are too many other factors that are going to keep the rates vs. currency trend in the U.S. turned upside down.
Am I saying that the U.S. dollar is officially out of its bear market? No. But things have turned up for the buck, even though it's counterintuitive.
As I see it, now's the time for the rest of the major currencies to feel the pain. And it's time for the buck to lead the way out of this mess that's engulfed the world's financial system.
Best wishes,
Jack
About Money and Markets
For more information and archived issues, visit http://www.moneyandmarkets.com
Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Tony Sagami, Nilus Mattive, Sean Brodrick, Larry Edelson, Michael Larson and Jack Crooks. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amber Dakar, Dinesh Kalera, Christina Kern, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau and Leslie Underwood.
Attention editors and publishers! Money and Markets issues can be republished. Republished issues MUST include attribution of the author(s) and the following short paragraph:
This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.
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Optimists: House prices expected to fall until 2009 (articles.moneycentral.msn.com)Paulson Credit Push Earns Jeers From Free-Marketers (bloomberg.com)Disaster capitalism, the new Manifest Destiny (eyeonmiami.blogspot.com)SIV Bailout Plan: Don't Ask, Don't Sell (seekingalpha.com)Text of Paulson's Remarks on Housing (blogs.wsj.com)As Defaults Rise, Washington Worries (nytimes.com)Mortgage Securities Bailout Fund: A Bribe? (seekingalpha.com)Banks May Pool Billions to Avert Securities Sell-Off (nytimes.com)Boom Boom Tuesday (market-ticker.denninger.net)Wells Fargo, Regions Financial, KeyCorp Profits Miss (bloomberg.com)Wells Fargo Hit by Mortgage Woes (thestreet.com)Foreigners Sold Record $69.3 Billion in U.S. Assets (bloomberg.com)German bank hit by subprime crisis slashes results, directors leave (afp.google.com)Builder D.R. Horton Orders Fall (cnbc.com)D.R. Horton Orders Fall to Lowest in Almost Six Years (bloomberg.com)Housebuilder Outlook Falls to Record Low (biz.yahoo.com)8 Areas in the U.S. Most Unaffordable in World (efinancedirectory.com)Blame the Downturn on Homebuilders and Banks (doctorhousingbubble.com)Southern California house sales plunge 30 pct in Sept (reuters.com)2005 San Diegeo Sales (sandicor.com)2007 San Diego Sales (sandicor.com)
Bloomberg.com
market-ticker.denninger.net
eyeonmiami.blogspot.com
conotary.com
Monday, September 01, 2008
Fed Lending Going Berserk
Fed Lending Going Berserk
by Martin D. Weiss, Ph.D.
Presented by CreditScoreUSA
Anthony lives in Tokyo — thirteen time zones and 7,400 miles away.
Typically, we talk via instant messenger or computer video-chat. And I must admit that's a lot better than snail mail or ham radio (the way Elisabeth and I often had to communicate 40 years ago).
Either way, it's still not the same as being in the same place.
Fortunately, though, right now, Anthony's here for a short visit. So we want to take full advantage of some quality time together. And I assume that, on this holiday weekend, you may like to spend time with loved ones as well.
The urgency of protecting them, however, has not subsided. Quite to the contrary, right now, the Fed's lending to distressed institutions is going berserk.
Here's the picture in a nutshell:
For most of the decade, banks largely avoided borrowing from the Fed. There was plenty of cheap money available elsewhere. They had little reason to submit to the extra scrutiny that it required. And there was little stress in the banking system.
Now, all that has changed.
Now, borrowing at the Fed's discount window has surged — from a weekly average of a meager $1 million per day at its low point last year to a weekly average of $18,469 million per day last week.
What would be the growth rate of an explosion of that magnitude? "Only" 1.7 MILLION percent — not exactly a sign of stability in our financial system.
The fact is the Fed's lending is going berserk, a blatant indicator of severe stress and more big troubles ahead for banks.
Do not underestimate the danger. Take the protective action we recommended in our recent video. And if you want to use this dramatic crisis to go for potentially dramatic profits, see our latest report just posted on the Web yesterday. The deadline is Friday morning.
Good luck and God bless!
Martin
About Money and Markets
For more information and archived issues, visit http://www.moneyandmarkets.com
Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Tony Sagami, Nilus Mattive, Sean Brodrick, Larry Edelson, Michael Larson and Jack Crooks. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amber Dakar, Dinesh Kalera, Christina Kern, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau and Leslie Underwood.
Attention editors and publishers! Money and Markets issues can be republished. Republished issues MUST include attribution of the author(s) and the following short paragraph:
This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.
by Martin D. Weiss, Ph.D.
Presented by CreditScoreUSA
Anthony lives in Tokyo — thirteen time zones and 7,400 miles away.
Typically, we talk via instant messenger or computer video-chat. And I must admit that's a lot better than snail mail or ham radio (the way Elisabeth and I often had to communicate 40 years ago).
Either way, it's still not the same as being in the same place.
Fortunately, though, right now, Anthony's here for a short visit. So we want to take full advantage of some quality time together. And I assume that, on this holiday weekend, you may like to spend time with loved ones as well.
The urgency of protecting them, however, has not subsided. Quite to the contrary, right now, the Fed's lending to distressed institutions is going berserk.
Here's the picture in a nutshell:
For most of the decade, banks largely avoided borrowing from the Fed. There was plenty of cheap money available elsewhere. They had little reason to submit to the extra scrutiny that it required. And there was little stress in the banking system.
Now, all that has changed.
Now, borrowing at the Fed's discount window has surged — from a weekly average of a meager $1 million per day at its low point last year to a weekly average of $18,469 million per day last week.
What would be the growth rate of an explosion of that magnitude? "Only" 1.7 MILLION percent — not exactly a sign of stability in our financial system.
The fact is the Fed's lending is going berserk, a blatant indicator of severe stress and more big troubles ahead for banks.
Do not underestimate the danger. Take the protective action we recommended in our recent video. And if you want to use this dramatic crisis to go for potentially dramatic profits, see our latest report just posted on the Web yesterday. The deadline is Friday morning.
Good luck and God bless!
Martin
About Money and Markets
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Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Tony Sagami, Nilus Mattive, Sean Brodrick, Larry Edelson, Michael Larson and Jack Crooks. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amber Dakar, Dinesh Kalera, Christina Kern, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau and Leslie Underwood.
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