[Iaato]

I think this is why they had to drop it 50 bits. Compliments of Dagg-PB board, the short term cost of money as the most urgent need:

$this->bbcode_second_pass_quote('', '"')So what does the above chart tell us? On September 12 the money market was truly ugly, with a big "hump" in the cost of money from 1 month out to 6 months. The spread in interest rates between 3 months and O/N was almost exactly 50 bp. The reason was that Asset Backed Commercial Paper (ABCP) that typically came due in 30-90 days was not being rolled over and everyone was scrambling for money to replace it. This is also why the ECB was constantly pumping huge amounts of money into the system: it was bailing out the banks' SIVs that could not find any money to replace their ABCPs (I wrote elsewhere that the ECB was doing the Fed's laundry - this is the reason).

At a borrowing cost of 5.70-5.80% against assets that yielded maybe 5.50% and leveraged 10-20x, various SIVs and other borrow short - lend long players were bleeding money like crazy. The situation was indeed critical and the cost of money had to be brought down sharply or the banks would have to sell collateral (CDOs, CLOs, etc.) in a depressed market and write huge losses in their books - If they could find a buyer, that is."

[vision-master]

You all sound like a bunch of greedy capitalist pigs, worried about your wealth. Take a hike in the woods with the dog for C'hrists sake!!!

[mattduke]

$this->bbcode_second_pass_quote('midnight-gamer', 'm')y wife is very reluctant to do anything with our savings in any way.

[Jester]

Here in Canada, the effects were almost instant, our dollar is just under par with the US now (in the 99.xx cent range).

The realty expert on the news warned people here to buy now if they plan to, as in the next couple of months it will likely become much harder to get a mortgage (and even harder to get a business loan). He said that the lenders will be much more careful with how people qualify.

He also said people better lock in now for their rates (Canada is slightly different than the US on how long you can lock a rate in) because he feels it's quite realistic to see double digit rates on the horizon...

On a personal note, I had a fairly large cheque coming to me in US funds, which got to me just as dollar spiked up... if the cheque had arrived 1 day earlier, I'd have made a fair bit more.

[FoxV]

$this->bbcode_second_pass_quote('vision-master', 'Y')ou all sound like a bunch of greedy capitalist pigs, worried about your wealth.

[vision-master]

Nope. Health is 1 & the rest are 0's.

[Iaato]

$this->bbcode_second_pass_quote('FoxV', 'A')s for taking the dog for a walk in the woods, I believe we already have a topic on that

[nth]

$this->bbcode_second_pass_quote('Tyler_JC', '
')
The European Central Bank has but one written objective, preserve the value of the Euro.

The American Central Bank (The Fed) has two written objectives keep economic growth at a healthy clip and restrain inflation.

So in a rising inflation world, which central bank is going to keep its currency strong?

[perdition79]

$this->bbcode_second_pass_quote('seldom_seen', 'M')y economic doomometer hit gold, then bags of rice, and finally ammo before it just popped and I have glass all over the floor now.

[Tyler_JC]

The ECB does not have to bow to political pressure.

The chairman of the ECB isn't dragged in front of a popularly elected Congress to explain himself on a monthly basis.

The notes of the ECB meetings aren't dragged through the media's filter and attacked by the London/Paris/Frankfurt business elite.

European central bankers can raise rates to stamp out inflation (and crush economic growth) without fear of losing their jobs.

In America, Congress has to renew the term of the Federal Reserve Governors. As you can imagine, that makes them less willing to raise rates to combat inflation and gives them an incentive to cut rates during election season.

Basically, the Fed is not independent enough to do its job and preserve the value of the American dollar.

[threadbear]

$this->bbcode_second_pass_quote('midnight-gamer', 'I') realize that putting my savings into gold or euros would have been a wise thing to have done several years ago. I had been putting it off until I saw something dramatic enough to prompt doing it. The problem I have had all along is that my wife is very reluctant to do anything with our savings in any way.
Also, this may seem like a simple thing, how do I hold my euros or what ever, once I change it? In the bank, buried in the lawn, ect.

[Revi]

I wish I had put my savings in loonies when I thought of it a couple of years ago. That dollar index is really scary! What is going on? It looks like a bobsled run! Only what's at the bottom?

[threadbear]

$this->bbcode_second_pass_quote('vision-master', 'Y')ou all sound like a bunch of greedy capitalist pigs, worried about your wealth. Take a hike in the woods with the dog for C'hrists sake!!!

[threadbear]

$this->bbcode_second_pass_quote('nth', '')$this->bbcode_second_pass_quote('Tyler_JC', '
')
The European Central Bank has but one written objective, preserve the value of the Euro.

The American Central Bank (The Fed) has two written objectives keep economic growth at a healthy clip and restrain inflation.

So in a rising inflation world, which central bank is going to keep its currency strong?

[RdSnt]

I honestly don't see the BofC lowering interest. I would expect Dodge to raise rates to hold inflation as best he can. Perhaps print more money to offset that currency's value.
To a great degree there is little Dodge can do, our country is seen as commodity central and those are becoming more important all the time.
Who would have admitted even 5 years ago that the hewers of wood and drawers of water would be the backstop of the global economy.
I would prefer to see Canada return to being a neutral, peacekeeping country, and have our currency as a backbone stabliizer to various baskets of currencies in the various economic regions of the globe.

[nth]

$this->bbcode_second_pass_quote('Tyler_JC', 'T')he ECB does not have to bow to political pressure.

The chairman of the ECB isn't dragged in front of a popularly elected Congress to explain himself on a monthly basis.

The notes of the ECB meetings aren't dragged through the media's filter and attacked by the London/Paris/Frankfurt business elite.

European central bankers can raise rates to stamp out inflation (and crush economic growth) without fear of losing their jobs.

In America, Congress has to renew the term of the Federal Reserve Governors. As you can imagine, that makes them less willing to raise rates to combat inflation and gives them an incentive to cut rates during election season.

Basically, the Fed is not independent enough to do its job and preserve the value of the American dollar.

[Specop_007]

$this->bbcode_second_pass_quote('vision-master', 'Y')ou all sound like a bunch of greedy capitalist pigs, worried about your wealth.

[nth]

$this->bbcode_second_pass_quote('threadbear', '
')
My husband and I discuss the fate of the Canadian currency quite a bit. I've been of the opinion that as the Canadian dollar strengthens, our Central Bank will struggle to keep it from rising too much agains the American currency, if they can do that without causing even more problems. Do you see the Canadian fed also cutting rates to synchronize with the U.S. dollar?

[vision-master]

$this->bbcode_second_pass_quote('threadbear', '')$this->bbcode_second_pass_quote('vision-master', 'Y')ou all sound like a bunch of greedy capitalist pigs, worried about your wealth. Take a hike in the woods with the dog for C'hrists sake!!!

[vision-master]

$this->bbcode_second_pass_quote('Specop_007', '')$this->bbcode_second_pass_quote('vision-master', 'Y')ou all sound like a bunch of greedy capitalist pigs, worried about your wealth.