Friday, September 21, 2007
The Canadian dollar has reached parity against the US dollar. A very interesting article noting the basic pluses and minuses deriving from this fact.
After throwing everything but the kitchen sink at the situation following Northern Rock, overnight LIBOR is finally falling. Most observers think the kitchen sink is bound to follow; to date the BofE has had to do everything else but the final step of lowering rates. They now have done everything that the Fed did EXCEPT that. They needed to, because if they didn't A&L and Brad & Bing were going to follow in Northern Rock's footsteps.
The probability of an ECB rate cut keeps rising as growth projections slow. Spain's banks have already received some infusions from the ECB.
I experienced mild panic at China's announcement that it was freezing some prices. China already controls prices for some commodities, so it is not as big a move as one would think.
FWIW, the feedback I'm getting is that rates on good mortgages are dropping while rates for risky mortgages continue to rise. This is the desired and expected effect.
I go to Montreal every year on a vacation and have been doing this for the past ten years. It used to be great...a steak dinner in the best restaurants for (USD) $15, lap dances in the strip bars on St. Catherine Street for $3 per song (try it sometime, it really is fun), tickets for the Canadiens games for $20, nights at the downtown Sheraton for $160. So, ok, the party is over. No more tone deaf drunks singing "O Canadaaaaaa", or having a Marlboro in church on Sunday. They can now blow their loonies and toonies here in our casinos instead, while our greenback wilts yellow in the fall. It's their turn to kick us around for awhile but their pro-socialist political slant will figure out a way to squander their newfound wealth sooner or later.
This is a big deal. It shows just how fragile the Chinese economy is. They have to hold it together through Aug 2008 and I stand by my prediction of 3 years ago that it will be a near thing. If they don't engineer a recession they risk an instance of hyperinflation. That damages their international status for a generation at least and risks social upheveal. They have corrupt banks and are inexperienced at central banking. A few scared generals with a few stuffed suitcases and their system could lock up. The last "Weimar Republic" was the incubator for the Third Reich.
Rob - Scares the heck out of me. I think the Chinese gov is scared. Who the heck has to turn off text messaging to prevent civil unrest?
The Fed is scared and the ChiComs are scared. This is not a "happy time."
Be careful about that answer because MOM is from the south and the husbands can get pretty funny 'bout that sort of thing.
There would of been room for his used engine.
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