The US Federal Reserve (US Central Bank) has just taken interest rates to near 0% ( 0.25 - 0%).
http://news.bbc.co.uk/1/hi/business/7786282.stm
Is now the time to borrow like it's 1998? and party likes it's 1999 New Year's eve.
Hopefully the rate will be passed onto the high street banks and make its way over the pond, dissavings and good times here we come, smoke me a visa card, I ain't coming home for supper
Isn't this a really bad sign?
To justify this, the fed said:
"the outlook for economic activity has weakened further"
Yet, here we are in a weakening economy and they've already used up all the rate cuts they had available to them.
It's like being in the middle of a gunfight and having used all your bullets. I suppose you could "be optimistic" that the others are ready to stop shooting...
They also said:
"The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability"
What tools?
They've already lost their main tool - control over interest rates - what else do they have?
I guess they can invent money - another tax on the saver who is already paying for the rate cuts - but that'll weaken the dollar and scare off much needed creditors so, I suspect that'll end in tears, too.
(and not just for the savers)
IMO, all these bailouts and "stimuli" teach us is that the government can't remove these problems with the stroke of a pen; all they can do is change who pays off the debts.
And, when they move the debts from the debtors to the savers, they just move the problems from one group of people to another.
Steve
PS I notice the UK bank bailout
fell on it's arse on Monday and the terms had to be re-drawn (in the banks' favour, of course).
But, on the plus side, the government managed to announce that without the media really noticing.
