Wednesday, Dec 02, 2009

Fed suddenly concerned about the impact of low rates on market practices?

FT: Fears grow about overheated US debt market

Some of the most controversial financing practices of the credit-bubble years – from cov lite loans to Pik toggle notes and dividend recap exercises – have returned to Wall Street, stoking fears that debt markets are growing overheated. “We have had a huge rally in debt,” said Dino Kos, a former New York Federal Reserve Bank official. In the minutes of its November meeting, the Federal Open Market Committee noted “the possibility that some negative side effects might result from the maintenance of very low short-term interest rates including the possibility of excessive risk-taking”.

Posted by cat and canary @ 11:23 AM (1070 views)
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1. reader said...

So in order to prop up the bubbles that were caused by excessive risk taking due to low interest rates, interest rates were lowered even more. And low, lo and behold, they are surprised that low interest rates might lead to excessive risk taking! You couldn't make it up.

Wednesday, December 2, 2009 11:29AM Report Comment

2. cat and canary said...

@1 reader, i think that summarises it quite nicely!

meanwhile, huge numbers of small businesses can't get the finance they need and at the same time consumers are paying down debt and cutting their costs.

there is a complete disconnect between the activities of Wall Street/FTSE/Giant Corps and the real economy at the moment.

Wednesday, December 2, 2009 11:42AM Report Comment

3. nobby1963 said...

Everything looks rosy cause all the giant corps are making more profits by cutting staff numbers and costs, so they have better profit n loss accounts but with huge swathes of unemployment - so where is the real economy going - yep you guest it downwards! Here in the UK its all about xmas and the next general election in May 2010 , then god help us all ?? By the way Gold at $1210 an ounce - looks like STR1 was right all along - except you cant eat or drink Gold ??

Wednesday, December 2, 2009 11:57AM Report Comment

4. inbreda said...

nobby - what's your point? That you can eat GBP? Feel free - I will stick to food.

Wednesday, December 2, 2009 12:24PM Report Comment

5. crunchy said...

1. reader, Perhaps low interest rates have now served there multiple purpose. Perhaps it's now time for the next stage.

3. nobby1963, You can't eat toilet paper as well. Gold you can cash in at an optimum time and it will never be worthless. The elite are buying into food/grain, make of that as you will.

Wednesday, December 2, 2009 01:02PM Report Comment

6. mdmick said...

Is this one of those hindsight situations?

"In hindsight, it was inevitable that the banking system, which pulled governments' strings, would continue with its depression-stoking activities until there was nothing left to throw on the fire."

Yes, HPC still has a future as a site.

Wednesday, December 2, 2009 07:24PM Report Comment

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