Monday, March 17, 2008

Whack A Mole ... Turmoil In The Financial Markets

The Turmoil: I've been up all night ... glued to CNBC World. It's a sea of red out there in the financial markets. Overnight overseas markets fell on reaction to news that the Fed had lowered the discount rate and changed lending practices to primary dealers. Primary dealers make market in US Debt and MUST meet certain liquidity requirements. Here's a list of primary dealers in the US.  Obviously the Fed is a whole lot more worried about the financial crisis than it had let on. Overnight the Fed cut the discount rate another 1/4 point and there's a talk of more moves before the week is out. Understandable.

Whack A Mole: Here's what the former Fed Vice Chair told Bloomberg: ``The Fed has been playing the equivalent of Whac-A-Mole as financial turmoil keeps cropping up in new and unexpected places,'' says former Fed Vice Chairman Alan Blinder, referring to the arcade game where players try to hammer down plastic critters that randomly pop out of holes. ``Yet many of the problems facing us are beyond its reach.''

The Latest Crisis: It all started when JP Morgan said it would buy Bear Stearns for $2 a share. Talk about a fall from grace. Bear Stearns got itself in trouble with its hedge funds tied to the sub prime loans.

1930 Bank Run: Believe it or not ... the word 1930 Bank Run ... was mentioned more than once on CNBC World last night ... riveting TV. Analysts were not saying who needs the next bailout ... but one analyst gave a hint ... "We will be watching to see who runs to the discount window this week for cash."

Japanese stocks are falling fast. Sony, Toshiba, Toyota, Honda. Why? There's a feeling that the US Economy is weaker across the board now and Japanese consumer companies that sell and manufacture are going to be hit.