Fed interest on short-term borrowings

I have this film, and it does not end pretty. That’s what I thought about September 18, when Federal Reserve Chairman Ben Bernanke on the road frequently traveled by his predecessor, Alan Greenspan, and threw the financial markets of an investigation in the form of a significant reduction in interest rates.

It was clear, what markets wanted, as the immediate availability of 336 points jump into the stock market. But the popular decisions are not always good decisions. (It is believed only to Greenspan’s 2001 addition to reductions in interest rates have actually caused the housing bubble.)

In fact, today the heart of the measure credit whatsoever in the housing market or markets today mistreated Commercial Paper-there is a plethora of global liquidity. The situation has radically changed our perception of risk and drives a reluctance to accept traditional credit limits.

If an owner can not for a conventional mortgage, brokers were more than happy to offer a loan the borrower alien could never really pay. If a loan was too risky to be sold as investment levels, investment banks may be increasingly costly concoct all goods and toxic that the credits (allegedly) eliminates the risk.

Nowhere is this lack of financial reality even more obvious, or harmful than in housing. The case has been fuelling the bubble of several years of low interest rates, prices, finally, many people their dream homes.

But rather than little or lease, the man met his American dream (the house with a fence white picket lines, 2.7 children, dogs and 1.2) with a vengeance, hosting Adjustable - Rate, interest rates or only worse, negative - Amortization of loans.

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