Economy
I’ve recently discovered A Random Walk - Irish Financial Blog and find it an interesting read on a daily basis, especially considering the US sub-prime mortgages, the worldwide credit crunch, the Irish property bubble and so on.
The ECB has to step in and loan €155.85 billion to banks to save them from a credit crunch.
Goldman Sachs has to plug a hole into one of its hedge funds - at least $2 billion
I think the ECB will raise rates at the next meeting. They used their usual codewords “strong vigilance” but in the meantime the credit crunch hit and the ECB gave out extraordinary loans. BUT the central banks work together and the Norwegian bank gave out a few billion too and still raised rates - Norway Raises Key Rate to Head Off Higher Inflation
Are things okay and returning to normal? The Financial Times doesn’t think so - ECB chief fails to reassure markets
August 16th, 2007 at 9:57 am
Note that the Bank of England hasn’t put any money into its markets. It seems to believe more in a “you made your bed now sleep in it” situation. Although I think that borrowing criteria and reserves policy work slightly different in the London markets as well.
August 16th, 2007 at 12:17 pm
Yeah - but the US Federal Reserve hasn’t put in half as much as the ECB either. I think the ECB blinked first and led the initiative to keep the money markets stable.
The Times (UK) has an article on this too - “It reminded traders that it stands ready to provide theoretically unlimited levels of liquidity, but not, as the European Central Bank has done, at the same price as its ordinary lending rate” … “The Bank charges financial institutions one percentage point above the Bank Rate to access its facility” - see http://url.ie/53j