Interest Rates Slashed Worldwide

Federal Reserve Cuts Key U.S. Rate By Half A Point In Joint Effort With Central Banks

(CBS/ AP)  In a rare coordinated move, the Federal Reserve and other major central banks from around the world slashed interest rates Wednesday to prevent a mushrooming financial crisis from becoming a global economic meltdown.

The Fed reduced its key rate from 2 percent to 1.5 percent. In Europe, which also has been hard hit by the financial crisis, the Bank of England cut its rate by half a point to 4.5 percent and the European Central Bank sliced its rate by half a point to 3.75 percent.

The central banks of China, Canada, Sweden, and Switzerland also cut rates. The Bank of Japan said it strongly supported the actions.

"The recent intensification of the financial crisis has augmented the downside risks to growth," the Fed said in explaining the coordinated action, the latest in a series of bold moves meant to pry open tight lending and revive the global economy.

The Fed's action will reduce borrowing costs almost immediately for U.S. bank customers whose home equity and other floating-rate loans are tied to the prime interest rate. Bank of America, Wells Fargo and other banks cut their prime rate by half a point to 4.5 percent after the Fed announcement.

White House spokesman Tony Fratto welcomed the cooperation among the Fed and other countries' central banks to battle the crisis. "It's important and helpful that central banks are working in a coordinated way to deal with stress in the financial system," Fratto said.

The country's presidential contenders also embraced the action. "This is a global crisis that requires a global solution," said Democrat Barack Obama. Republican rival John McCain hoped it would contain the "financial crisis spreading across the globe."

As investors pondered the implications of the orchestrated rate cuts, stocks on Wall Street initially opened lower. By midmorning, however, the Dow Jones industrials were seesawing.

Some analysts were skeptical that the coordinated rate reductions would do much to turn things around.

"At first blush, while this is a big step, it is unlikely to prove sufficient to stem the rot. Additional rate cuts are likely and further measures to inject liquidity and re-capitalize banks are needed," said Marc Chandler, global head of currency strategy at the investment firm Brown Brothers Harriman.

The rate cuts came against a backdrop of increasing anxiety in global financial markets. Investors have been fleeing shares on worries that neither the Fed, nor other central banks, could move fast enough to stop the rising turmoil.

The International Monetary Fund, in a World Economic Outlook released Wednesday, slashed growth projections for the global economy and predicted the United States will continue to lose traction.

"The world economy is now entering a major downturn in the face of the most dangerous shock in mature financial markets since the 1930s," the IMF said in its report.

European indexes, which were down about 5 percent before the rate cut, pared only some of their losses. In Britain, the FTSE-100 fell 4.24 percent, Germany's DAX dropped 4.98 percent, and France's CAC-40 dropped 4.58 percent.

In Asia, Japan's Nikkei 225 closed 9.38 percent lower and Hong Kong's Hang Seng tumbled 8.17 percent hours before the rate cuts were announced; their declines showed the extent of the worldwide gloom.

The Fed's action Wednesday was the latest in a long series of moves over the last several weeks that the central bank has taken in coordination with other federal agencies, Congress and the White House to shore up a financial industry stung by bad loans, mounting losses and - in many cases - collapse. President George W. Bush signed a $700 billion financial bailout bill into law on Friday.

The Fed's action reversed its current policy on interest rates, which had been to hold them steady out of concern that more cuts would fuel inflation. Since Fed Chairman Ben Bernanke and his colleagues put a stop to interest-rate cuts in June, economic and financial conditions have deteriorated significantly.

"The pace of economic activity has slowed markedly in recent months," the Fed said. "Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit."

On Tuesday, Bernanke said the Fed will "need to consider" whether its current stance of holding rates steady "remains appropriate" given the fallout from the worst financial crisis in decades.

"The outlook for economic growth has worsened," Bernanke said in remarks Tuesday to the annual meeting of the National Association for Business Economics.

Although inflation has been high, the Fed believes the recent drop in energy prices and the weaker prospects for economic activity have reduced this threat to the economy.

In addition, the Fed reduced its emergency lending rate to banks by half a percentage point to 1.75 percent. Given the intense credit crisis, banks have been ramping up their borrowing from the Fed's emergency "discount" window.

The fact that the Fed felt it couldn't wait until its regularly scheduled meeting on Oct. 28-29, underscored the urgency of the situation.

One of the goals of the coordinated rate cuts is to spur nervous consumers and businesses to spend more freely again. They clamped down as housing, credit and financial problems intensified last month, throwing Wall Street into chaos. Many believe the United States is on the brink of, or already in, its first recession since 2001, one that could quickly spread to other countries around the globe.

Even with the unprecedented $700 billion financial bailout plan, the failing economy and the jobs market probably will get worse. Many believe the economy will jolt into reverse later this year - if it hasn't already- and will stay sickly well into next year.

One of the most crucial pillars of the economy - the jobs market - has cracked, and wage growth is slowing. This means that consumers will be even more hard-pressed to spend in the fashion that helps grow the economy.

Increasingly skittish employers slashed payrolls by 159,000 in September, the most in more than five years. A staggering 760,000 jobs have disappeared so far this year. The unemployment rate is 6.1 percent, up sharply from 4.7 percent a year ago.

The U.S. unemployment rate could hit 7 or 7.5 percent by late 2009. If that happens, it would mark the highest rate of joblessness since the months immediately following the 1990-91 recession. Some economists say the jobless rate could rise even more before the situation starts to get better.

Mounting job losses, shrinking paychecks, shriveling nest eggs and rising foreclosures all have weighed heavily on American voters, who will be electing a new president in about four weeks. The economy is their No. 1 concern, polls have shown.

[gcsgz5]

The BBC has several articles on England, Scotland, and Australia''s banks cutting interest rates. For an aggregate, visit http://www.aitj-co.com/gcsgz5/blog

[grandesign]

the Republican''''s grand plan was to invest Social Security in the Stock Market. How much of a disaster would that have been? Mc.Cain voted with the pres on Posted by usclimey at 09:50 AM : Oct 08, 2008

In the present situation, we may be forced into Socialism, had SSI been invested in Wall Street, we''d be on the verge of Communism. The GOP doesn''t understand economics, that''s a historical point that keeps raising its ugly head.

[t_barr]

Have you seen,

Russian president Dmitry Medvedev calls for Europe to freeze out US

The Russian president, Dmitry Medvedev, has called on European leaders to create a new world order that minimises the role of the US.

www.telegraph.co.uk/news/worldnews/europe/russia/3159998/Russian-president-Dmitry-Medvedev-calls-for-Europe-to-freeze-out-US.html

Confident that a spat with Europe prompted by Russia''s invasion of Georgia in Aug was over, Mr Medvedev arrived in the French town of Evian determined to woo his fellow leaders into creating an anti-US front.

Yet there was little doubt that Medvedev was playing the divide and rule tactics of his predecessor Putin by seeking to pit the US against its European allies.

In a speech delivered to European leaders at a conference hosted by Sarkozy of France to discuss the international financial crisis, Medvedev sought to show that the United States was at the root of all the world''s problems.''

[grandesign]

The rich look at solid american companies and are buying them up NOW. In five years they will have tripled their money and the ignorant and the poor will still betrying to pay off mortgages they stil can not afford. I am not rich and could not afford to pay the high prices of 8 months ago but now I am buying.
Posted by Debbiemack at 08:54 AM : Oct 08, 2008

The equities market is completely irrational. I will take several months for it to correct from the most recent battle, Credit Default Swaps that compose a market between $10 - $50 trillion in losses. The unregulated markets have become a black hole, sucking up all value to undergird their failure.

A rational market would behave like you suggest, that of supply and demand, and P/E ratios for determining risk based on earnings. We CANNOT have this right now. The market is broken based on a type of betrayal that might call these white-collar types: Economic Terrorists.

The Mutal Funds market is next for pillaging.

[Cas2dy]

I just logged into my bank online where my 30-year fixed mortgage is and the mortgage rates are UNCHANGED from what they were 3 months ago. I see absolutely no way that this interest rate change will help anything. Until home mortgage rates drop and people are able to refinance to lower their monthly payment, consumer spending will continue to drop.


--------------------------------------------------------------------------------

Posted by tmittelstaed

You have to refinance through a mortgage broker. They don''t automatically refinance your mortgage just because the rates go down. Though to be honest, I am surprised there are no representtives blowing up your phone line with offers to help you refi.

[tmittelstaed]

I just logged into my bank online where my 30-year fixed mortgage is and the mortgage rates are UNCHANGED from what they were 3 months ago. I see absolutely no way that this interest rate change will help anything. Until home mortgage rates drop and people are able to refinance to lower their monthly payment, consumer spending will continue to drop.

[t_barr]

''They must find it difficult...
those who have taken authority as the truth,
rather than truth as the authority.''

Zeitgeist: Addendum - 123 min - Oct 3, 2008

http://video.google.com/videoplay?docid=7065205277695921912&hl=en

[t_barr]

Glenn Beck: We are turning into France?

www.glennbeck.com/content/articles/article/198/16291

[lastdance127]

"CENSORED" From ABC News :

With This Bail-Out comes :
One World Dominating FINANCIAL INSTITUTION

Controlling The Economic Infrastructure and The WAGE Earnings of
Each Person Throughout Each Country in the World

Controlled Only by the - MASTER - SLAVE - Mentality of
The NAZI FASCIST IDEOLOGY of :
World - Political - Financial and Economic DOMINATION ! !

This is what WORLD WAR II - Fought AGAINST ! !

Hitler and The German NAZI FASCIST Dream of :
WORLD CONQUEST Come Full Circle

Through The Criminal : NAZI Fascist Bush
His Appointment of : The Criminal : NAZI Fascist Paulson
With the APPROVED SUPPORT of :
The Republican NAZI Fascist Party
_____

If your Comments have have been Censored from
ABC News Comments

Contact the : Civil Liberties Union
Ask for a CLASS ACTION LAWSUIT Against :
Brian Ross and The ABC News

Ask The Civil Liberties Union :
To Advertise For People Who Have Been Censored By
Brian Ross and ABC News
To Join in That Class Action Law Suit
http://www.aclu.org/contact/general : (Request Legal Assistance)

http://www.aclu.org/contact/general
Posted CBS News - Ruters (BBC) - MSNBC - FOX (Others)

(The Civil Rights Abuse of the : Political Criminal ABC News)

[june-moon]

I can''t believe these FED is fueling the same idots. More of our money down the drain. Wasn''t bad credit practices that got us here?

[hypnotoad72]

Fascinating -- it genuinely is nice to see other countries working in tandem to fix these problems.

Think optimism.

[slim1h2o]

Posted by slim1h2o..is my 3rd he,he


--------------------------------------------------------------------------------

Posted by Hacker11001 at 12:48 PM : Oct 08, 2008

As it would seem, you suffer from reading comprehension, as it would seem.

For I was not speaking to you.

[archiej2]

Possible Temporary Safety Net

For those of you who have IRAs outside your place of employment, I just want to share some information that I learned from Chase earlier this week. There is a 60 day window that you''re granted where you won''t incurr a penalty if you sell your present IRA and transfer that money into another bank''s IRA. Based on that information and as a result of present market conditions, I sold all my stocks that were in separate funds in my IRA. I will be truthful I did incur a loss. Nonetheless, as a result of the continuing downward spiral that I continue to witness in the market in spite of the fact that these individuals received the $850 billion that they''ve been crying for, I decided that the benefit of selling my IRA and leaving my money in an insured institution for 60 days to actually see where this market is headed in the next two months far outweighed the loss that I incurred. I guess what I''m trying to say here is the administration continues to say not to panic, however I feel that with the daily news filled with examples of corporate abuse, I''d rather sit tight for 60 days with cash in hand to really evaluate where the market is truly headed instead of losing my entire IRA.

[lastdance127]

Censored From ABC News :
Topic : Indictment in Palin Yahoo! E-Mail Hacking Case
Son of Tennessee State Legislator Faces Charges

Strange and odd
The Political-Criminal FBI Refuses to Retrieve E-mails
from Congressman who send S*e*x*ually
Graphic E-mails to Under Aged Children (Foley)

BUT ! !

The Political Criminal FBI out of an ACT of :
Political Nepotism - Patronization and Fraternization to :
The Bush NAZI Fascist Crime Regime
Tracked down These E-mails ! !
____

If your Comments have have been Censored from
ABC News Comments

Contact the : Civil Liberties Union
Ask for a CLASS ACTION LAWSUIT Against :
Brian Ross and The ABC News

Ask The Civil Liberties Union :
To Advertise For People Who Have Been Censored By
Brian Ross and ABC News
To Join in That Class Action Law Suit
http://www.aclu.org/contact/general : (Request Legal Assistance)

http://www.aclu.org/contact/general
Posted CBS News - Ruters (BBC) - MSNBC - FOX (Others)

[archiej2]

Possible Temporary Safety Net

For those of you who have IRAs outside your place of employment, I just want to share some information that I learned from Chase earlier this week. There is a 60 day window that you have to transfer money from IRA stocks that you sell into another IRA without incurring a penalty. Based on that information and as a result of present market conditions, I sold all my stocks that were in separate funds in my IRA. I will be truthful I did incur a loss. Nonetheless, as a result of the continuing downward spiral that I continue to witness in the market in spite of the fact that these individuals received the $850 billion that they''ve been crying for, I decided that the benefit of selling my IRA and leaving my money in an insured institution for 60 days to actually see where this market is headed in the next two months far outweighed the loss that I incurred. I guess what I''m trying to say here is the administration continues to say not to panic, however I feel that with the daily news filled with examples of corporate abuse, I''d rather sit tight for 60 days with cash in hand to really evaluate where the market is truly headed instead of losing my entire IRA.

[drinuk]

Ignore all this BS, forget it and get on with your life. Make Today Beautiful ! from Linda Eder''s new album The Other Side Of Me, available at B&N, sing and be happy and let the crooks destroy themselves.

[retter1]

check out the FED''s just issued report:
Shared National Credits Program1 Reports Large Increase in Credit Volume and Significant Deterioration in Credit Quality

Why the big boom in bad credit, $2 trillion to 5500 borrowers just last spring

[inventagod2]

It''s a Correction, stupid...

[antoniof123]

Interest Rates Slashed Worldwide

What it should say is we don''t have a clue as to what to do next so we will just try anything.

[swwils]

The FED,and it''s rate cuts.We are going to owe so much money too the world it is going to be like the old day''s when you didn;t pay the loan shark.Obama,andMcCain are so out of touch they probably have an assistant pick out their toilet paper.When will everyone realize that the big Trillion dollar companoies run this world not elected officials.The last Prez, that we had that was a man was Hoover,after that the we''re all bribed or on the take anyway.These two yahoo''s are clueless.We have a crisis of Biblical proportions on our hands.The N.Korean''s are making a nuke,the Iranians are also.The Taliban are trying to get ahold of Pakistan,because they have roughly 50 or so.Next door India has about as many.Israel is sitting on 300 plus.We have 1000 plus,so does China.ussia has a few hundred.So the big discussion should be about world tactic''s against the bad guy''s.The economy will faulter but not collapse completely it will rebound,it always does we must tighten our belt''s a little.The new Puppet can only do what the Master''s tell them or face certain consequences.Face it this isn''t Grandma,and Grandpa''s days anymore.Money talks Bull S.H.I.T talks.