Central banks coordinate rate cuts
The U.S. Federal Reserve led a round of rate cuts by central banks around the world amid fear of a global recession. Jeremy Hobson reports that the move could be one of the last tricks central banks have.
The Federal Reserve building in Washington, D.C. (Chip Somodevilla/Getty Images)
More on The Economy, International, Wall Street, Canada, Europe, America's Financial Crisis
TEXT OF STORY
Stacey Vanek-Smith: Today a surprise move by the Federal Reserve and central banks all over the world. A coordinated interest rate cut. From New York, Jeremy Hobson explains.
Jeremy Hobson: The coordinated move cut rates by a half a point in England, Europe, and Canada. And here in the U.S., The Federal Funds rate drops to 1.5 percent. It's been at 2 percent since April. But today, tangible fears of a global economic slowdown have trumped fears of inflation.
Gary Shilling: Central banks don't know what else to do.
Gary Shilling is President of an economic consulting and investment advice firm. He calls this Phase 4 of the economic slowdown -- the globalization of the recession. He calls the Fed's move symbolic and says central banks have now exhausted most of the tricks in their bags.
Shillng: This is a classic liquidity trap. The Fed is pushing on the string. The banks simply do not want to lend to each other, much less anybody else. And the central banks are really impotent.
Still, some Fed watchers are predicting yet another rate cut by the time the Fed meets later this month.
In New York, I'm Jeremy Hobson for Marketplace.
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From afton, VA, 10/08/2008
The "Federal" "Reserve" has been making money out of thin air and loaning it out the discount window at auction below 2% for a long time.
If, when I was an airline captain I flew with gauges that were cooked like Enron's books - well I'd be long gone.
Any economist of financial wizard who bases his view of our financial health on GDP, Debt and inflation - is basing reality on a myth.
I look outside the cockpit and see 1929-1937. Foreclosures, 10th our nations 10th largest company failed, the worlds 10th largest economy can't sell bonds to service debt, prime foreclosures and delinquencies outnumber subprime numbers, banks closing...
I can follow my instruments - into the ground or I can believe my eyes.
Jefferson warned us about letting private banks issue create dollars, 'first by inflation then by deflation our children will wake up homeless.' Just because the bank says Federal doesn't mean it is and because it says Reserve doesn't mean it has.
Lenin said to ruin a society all you have to do is debauch its currency.
I can think of no better way to do that then to print Monopoly money.
If Paulson thinks putting fuel on a fire is the solution then we are doomed.
Congress got us here, we got us here by not following our Constitution and not listening to smart men like Jefferson.
A depression isn't the scary, what Greenspan said about democracy being dependant on a sound financial system is.
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