Its a charade how central banks act as the bailed out the banks and lowered their financing to historic lows and still they admit that banks do not provide credit to main street - they are hiding the fact that banks can not lend due toı the fact that their balance sheets are imploding on a daily basis as the economy collapses. The rate cuts are purely serving some people to make money but not the economy and will wipe out the value of the savings of most people as we have negative interest rates globally. They even push the next bubble to burst since as soon as investors recognize that governments can only print excessive money rates will explode with the inflation which will bring some governments to a default on their debt. Bonds are insanely overvalued and the bubble is about to burst.
If you have any money in government bonds its time to get out and not to return in USA. Europe is a bit delayed but has bigger geopolitical risks involved as they even have not an army to protect their interest literally. Political unrest und geopolitical tensions will rise sharply as they usually do in this kind of times. Its not only the old life style at stake here - to avoid WW3 is the real challenge as the economic contraction will trigger even fights for resources as the second threat of Russia to cut of gas supply is not acceptable but that kind of event might get more usual also for other commodities.
Jan. 8 (Bloomberg) -- The Bank of England cut the benchmark interest rate to the lowest since the central bank was founded in 1694 as policy makers tried to prevent the credit squeeze from deepening Britain’s recession.
The Monetary Policy Committee, led by Governor Mervyn King, trimmed the bank rate by a half point to 1.5 percent. The result matched the median forecast of 60 economists in a Bloomberg News survey. The pound rose against the euro and the dollar.
“The availability of credit to both households and businesses has tightened further, pointing to the need for further measures to increase the flow of lending to the non- financial sector,” the Bank of England said in a statement. “Output is likely to continue to fall sharply during the first part of this year.”tend there rate cuts serves the public interest
Excerpts from Bloomberg
European Confidence Dropped to Record Low in December (Update2)
By Emma Ross-Thomas
Jan. 8 (Bloomberg) -- European confidence in the economic outlook fell to the lowest on record and unemployment rose to a two-year high, adding to pressure on the European Central Bank for more interest-rate cuts.
An index of executive and consumer sentiment dropped to 67.1 in December from 74.9 in the prior month, the European Commission in Brussels said today. That is the lowest since the index started in 1985. Separate data showed euro-area unemployment rose to 7.8 percent in November from 7.7 percent a month earlier.
European companies are cutting jobs and reducing investment in order to weather the first recession in the euro region’s 10- year history. A combined rate cut of 1.75 percentage points since early October and billions of euros in stimulus measures have failed to reverse the slide in confidence and data today confirmed the economy contracted for two straight quarters last year.
“It’s a real shocker,” said Martin van Vliet, senior economist at ING Bank in Amsterdam. “Today’s worse-than-expected data make an even more compelling case for the ECB to cut rates significantly further from here.”
Investors indicate they expect the central bank to reduce rates at least 50 basis points, or hundredths of a percentage point, at its next meeting on Jan. 15, Eonia forward contracts show. That would take the benchmark rate to 2 percent, which would be a three-year low.
BOE Cuts Rate to Lowest Since Bank’s Creation in 1694
Jan. 8 (Bloomberg) -- The Bank of England cut the benchmark interest rate to the lowest since the central bank was founded in 1694 as policy makers tried to prevent the credit squeeze from deepening Britain’s recession.
The Monetary Policy Committee, led by Governor Mervyn King, trimmed the bank rate by a half point to 1.5 percent. The result matched the median forecast of 60 economists in a Bloomberg News survey. The pound rose against the euro and the dollar.
“The availability of credit to both households and businesses has tightened further, pointing to the need for further measures to increase the flow of lending to the non- financial sector,” the Bank of England said in a statement. “Output is likely to continue to fall sharply during the first part of this year.”
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