EU and US take no chances

[FarCenter]

Source: The Standard, Hong Kong

Nishika Patel

Tuesday, August 14, 2007


The European Central Bank and the US Federal Reserve continued to pour more funds into the financial system as the injections appeared to be working in easing the US subprime mortgage- fueled credit crunch.

Last week's move by central banks to inject liquidity into the banking system calmed jittery markets that have been roiled by the subprime fallout.

Stocks rallied worldwide yesterday, with European markets soaring for the first time in three days and their Asian counterparts rebounding from their biggest dive in five months. US index futures also advanced.

...

Robert Subbaraman, chief economist at Lehman Brothers in Hong Kong, told Bloomberg: "In Asia, the financial systems are working, so central banks are letting markets price risk as they should be priced. The ECB and the Federal Reserve needed to provide liquidity to stabilize the money markets, but it is not clear that this is happening in Asia."

Financial institutions in Asia, excluding Japan, have at least US$258 billion worth of bonds outstanding as at the end of March, according to the Bank for International Settlements.

By comparison, institutions in the United States have US$4.12 trillion in outstanding debt.

"Asia doesn't have as big a credit quality problem, so the contagion effect is limited," said Tomo Kinoshita, chief Asian economist for Nomura Securities in Hong Kong. "After their bad experiences during the 1997 financial crisis, financial institutions have been keen to keep assets healthy."



Read more: http://www.thestandard.com.hk/news_detail.asp?pp_cat=1&art_id=51213&sid=14920289&con_type=1

[Sinistrous]

1. I wonder how long it will take for these "infusions of capital"

to cause a nice spike in the rate of inflation?

Sinistrous

[CountAllVotes]

2. soon I bet

Bernake has said he won't be looking to cut rates. He did not say he was unwilling to raise rates.

Look out below!!!

:kick:

[fasttense]

3. And they call this a "free market"? n/t

[UpInArms]

4. "free"dumb isn't free!

[Deja Q]

7. Define 'free'. I'm still amazed at how Canadian drugs are dangerous,

even though most drugs are made under questionable conditions in China and India. At the prices being commanded for drugs, I thought they were all made in the USA...

[Javaman]

5. Starting off as yet another stellar day on wall street...

:sarcasm:

why am I reminded of the soviets pouring more and more concrete on the fried reactors of chernobyl when I read about the fed pouring more money into the market?

[Tempest]

6. The Fed can pump money into the market until the printing presses break down

Still not going to do any good if companies are seeing a decline in sales and are reporting lower profits.

The Fed is doing no more than trying to stop the Titanic from sinking with a lunch bucket.