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Technology Stocks : Discuss Year 2000 Issues
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To: David Eddy who wrote (8708)9/18/1999 9:45:00 AM
From: flatsville  Read Replies (3) of 9818
 
David--

You wrote:

>>>Withdrawals by the BIG depositors...they were connected, & warned by the bank owners. The little guys left their money in.<<<

Why am I not surprised by this? Someone has to be the bag holder.

and:

>>>Fairly esoteric information, but if you follow this sort of stuff, it does indicate that Greenspan & Co. is paying attention & proactively moving to be ahead of the curve.<<<

If IIRC the "drive through" discount window rate for y2k is 1/2 point above the established discount rate for the same period thus making this "very expensive" money for the banks who choose to borrow. My understanding is that the Fed essentially wants to be a lender of last resort.

Now granted the Fed has expanded the class of paper they'll accept as collateral, but if they really wanted this to work they would have "discounted" the discount rate for the "drive through" window.

The Fed may well think this is proactive, but will it work if banks can't afford it? The situations as it stands does not inspire confidence.

(I think Cheryl has a link to the y2k discount rate story. Help? Also I have lost my link to fed funds rate/discount rate changes. Can anyone help?)

Also IIRC correctly "three steps and a stumble" applies to the "discount rate" only. When was the last time we saw a change up or down in the "discount rate?" I doubt we'll see one at the next FOMC. If the Fed does raise the discount rate it will be nothing short of suicidal.
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