Fed Acts to Rescue Financial Markets - Dollar value falls even more.

[EXreaction]

Hoping to avoid a systemic meltdown in financial markets, the Federal Reserve on Sunday approved a $30 billion credit line to engineer the takeover of Bear Stearns and announced an open-ended lending program for the biggest investment firms on Wall Street.

In a third move aimed at helping banks and thrifts, the Fed also lowered the rate for borrowing from its so-called discount window by a quarter of a percentage point, to 3.25 percent.

The moves amounted to a sweeping and apparently unprecedented attempt by the Federal Reserve to rescue the nation’s financial markets from what officials feared could be a chain reaction of defaults.

http://www.nytimes.com/2008/03/17/bu...=worldbusiness

Dow 11,951.09 - 194.65
NASDAQ 2,212.49 - 51.12
S&P 1,288.14 - 27.34

Gold - Up 2.5%
Silver - Up 5%


In 1 day. Ouch.

[Toadman]

It's going to get worse before it gets better. Have you taken measures to weather the storm? The Gov't teat is going to be dry for quite some time also.
Builds character so not a bad thing overall.

[MTAtech]

The Fed measure seems desperate and the fact that the powerhouse, Bear Stearns, worth $60 billion just a few days ago is being bought out for only $250 million, implies extreme weakness in the banking sector.

Meanwhile, foreign markets took a 2-5 percent hit. Hong Kong's Hang Seng Index plunged 1,152.50 points or 5.2 percent.

Th economic situation is worse than most realize. When banks, such as Bear Sterns, can't make their margin calls or loan payments, that's a meltdown.

[Theophylact]

Why should anyone be reassured by the fact the US government thought it necessary to lend up to $200 billion to merchant banks in order to stave off disaster? Desperate measures are not generally reassuring.

[Theophylact]

This is socialism for the rich: as Kevin Drum points out,

[T]he people running these institutions can take enormous risks that provide them with enormous payouts, and they can do it with the knowledge that if those risks cause a collapse, they won't have to give any of that money back. The feds and society at large will eat the loss.

[MTAtech]

The saving grace is that the same firms that have liquidity problems will have to sell off their oil contracts and thereby drop the price of oil. I've been arguing that these firms have been keeping oil artificially high.

[EXreaction]

It's going to get worse before it gets better. Have you taken measures to weather the storm? The Gov't teat is going to be dry for quite some time also.
Builds character so not a bad thing overall.

I haven't done anything really yet.

I was going to buy a bunch of silver about a month and a half ago when it was at $16/ounce, but I thought I'd wait for it to go down a few more $ before I buy. Now that it has just gone up 25% since then I don't know what to do.

Just checked the gold/silver prices, they went down a bit since last night. Now 1010.5/20.46

[SiliconJon]

It's going to get worse before it gets better. Have you taken measures to weather the storm? The Gov't teat is going to be dry for quite some time also.
Builds character so not a bad thing overall.

The only option I have at the moment is to not spend. Every extra dollar I'm getting (yearly bonus & tax returns) is going to pay off as much debt as I can this year, hoping to eliminate one more large bill as soon as possible. This will basically allow my income, which is increasing at less than half of real inflation, to remain capable of keeping us alive over the next 24 months of dollar devaluation, inflation, and stagnation.

The metals are too high for me to feel they're any refuge, and they're still highly susceptable to manipulation, so that's too risky.

Ex, I'm no pro, but I feel it's too late for the metals. Granted, they could get much higher...but I feel it's a gamble now, whereas it was an investment not too long ago.

[Smidley]

I wish I would have gotten into gold in 2001 @ $250/oz.

[EXreaction]

Ex, I'm no pro, but I feel it's too late for the metals. Granted, they could get much higher...but I feel it's a gamble now, whereas it was an investment not too long ago.

True, but is there anything else other than currency conversion?

The thing I don't like about trading currencies is that they usually take quite a large percentage to do the trade. Though I haven't looked into how one could possibly buy about 23 pounds of silver yet. I should do that quick.

[Gomer]

Cool... I've got about 100 Franklin 50 cent pieces I "collected" while working at the gas station. That's almost $800 worth of pocket change =)

[EXreaction]

100oz silver bars (free shipping!):
http://www.nwtmintbullion.com/silver_bars_100.php

Or silver coins:
http://www.apmex.com/Product/23/1_oz...er_Rounds.aspx

I think I'll get some work done that I need, then drive down to the bank and see if they do anything with metals...

[EXreaction]

Too yucky outside to drive, so I just called. They don't do anything like that.

Silver and gold prices are falling pretty good today. Now at 1000.6/19.91

[Chuckiechan]

For coins, contact a coin or gold dealer.

[EXreaction]

Coins usually come with a much higher premium over bars.

[surreal]

Has anyone been talking about the fact the the Feds auctioned off Tbills to banks in exchange for their bad debt mortgage loans for collateral last week or so?

[MTAtech]

Has anyone been talking about the fact the the Feds auctioned off Tbills to banks in exchange for their bad debt mortgage loans for collateral last week or so?

I may have touched on that in this or another thread. Essentially, the Fed is accepting dubious mortgages, that other banks won't accept, in exchange for Fed cash. If the mortgages are worthless, guess who ends up holding the bag?

BTW, be careful buying precious metals. I got burned in the 80s buying them at the high. Even gold isn't good as gold when it then goes into a 20 year bear market.

[The Real Bingo]

All I have to say is I hope this I hope we hit rock bottom really fast. It may hurt more in the short run, but that just means we'll have a quicker rebound...that is if the government and the Fed will let it hit rock bottom.

[EXreaction]

Maybe it is a good time to take out a huge loan?

Buy loads of gold with a big loan before the banks collapse, then maybe you won't have to pay it back.

[SiliconJon]

LOL, Ex...that's about what I was thinking may be the best investment option right now - borrow and hope you can bail on it!

God help us. If we can keep people working we can weather this through, though.