Thursday, August 9, 2007

There may be trouble ahead..

ECB offers emergency funds to boost liquidity

Things seem to be swinging into action for the credit crunch: The European Central Bank took emergency action on Thursday to stabilise money markets amid broadening fears of a liquidity crunch. It injected €94.8bn as part of an unlimited cash offer to borrowers at its main lending rate of 4 per cent after overnight rates shot up to 4.7 per cent, their highest in nearly six years. ”This liquidity-providing fine-tuning operation aims to assure orderly conditions in the euro money market. The ECB intends to allot 100 percent of the bids it receives,” the central bank said when it called for bids.

Posted by dohousescrashinthewoods @ 02:16 PM (466 views)
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7 thoughts on “There may be trouble ahead..

  • things are clearly worse than they are letting on… It appears they like to paint too much varnish for us uneducated idiots as the FT define us…lol

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  • voiceofreason says:

    I am not an economist, so excuse me for being a numpty.

    But if there is a liquidity problem brought about by careless lending, then allowing the system to borrow £63bn more is surely like giving alcahol to an alcaholic to cure his hangover ?

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  • Cheekie Charlie says:

    Good job UK doesn’t employ many people in the financial industry, I’m sure our powerfull manufacturing base will lead us through the storm. NNNNNNNOOOOTTTTT.

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  • dohousescrashinthewoods says:

    Good call, Voiceofreason 😉

    I think the lax lending caused people to lend to those who couldn’t pay back. They have realised all of a sudden and pulled the plug completely (like driving too fast and then slamming on the brakes). The ECB is trying to press the acceleralor slightly to stop everything grinding to a halt.

    Latest update:
    Global markets plunge as liquidity fears grow

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  • Emergency is emergency. However I think this is not true emergency yet, and ECB wasted a lot of money and has sent wrong signal to banks, creating greenhouse for them and not rewarding savers/saving banks, conservative banks. Another thing might be, that ECB related persons had personal loans/troubles and thus decided to finance their own things, but hopefully open investigation will be conducted, because that is awfully large amount of money as of “emergency” and thus should be probed for the public sake. After eemergency always hospitalisation should follow. Will bad banks be punished? Will we hear roadmap to economical peace? Who will take the responsability?

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  • More money, more inflation – higher interest rates – more trouble.

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  • sold 2 rent 1 says:

    More money, more debt.

    There is only one way to stop this debt bubble from bursting – keep feeding it.

    Hope all you guys have your strategies in place.

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