FED INJECTS $20 Billion to Stabilize Markets --
Haim,
I'm fairly confident that the cash cushion from the Fed is not, as some have suggested, an attempt to engage in a nefarious plot to shore up some unknown insolvent monster.
The injection of cash seems to me to be rational prudence. At least until someone can prove otherwise.
-Ray
guardian.co.uk
Fed puts up $20bn to cushion markets
Heather Stewart and Richard Adams
Saturday August 16, 2003
The Guardian
The Federal Reserve yesterday stepped in to provide US financial markets with an emergency injection of cash to cushion any impact from the power failure.
The Fed said it would make available $20bn (£12.5bn) in additional liquidity to smooth out any kinks in the financial system over the weekend, although officials at the bank's New York arm said its operations yesterday continued working as planned.
Patrick Anderson of Anderson Economic Group forecast that the failure could cost more than $5bn in lost earnings, sales and production.
Some of New York's financial markets decided to close early, with the Bond Market Association having recommended to its members that they end trading after lunch, New York time. The Chicago Mercantile Exchange, the world's largest futures market, followed suit but the New York stock exchange stayed open. "It's actually a fairly full house here," said John Shin of Lehman Brothers, on the floor of the exchange.
"There are a couple of people out, but an equal number of people in because they never left," he told Reuters.
On the markets, oil prices jumped initially as traders fretted about the cost of the blackout, pushing Brent crude up 35 cents a barrel to $29.22. But analysts said the effect of the shutdown on the world's largest economy was likely to be minor.
David Bloom, economist at HSBC, said the wide area affected by the power cuts had effectively lost about half a day's output, which would have a noticeable impact on the US as a whole.
Upbeat data from the US has led analysts to expect a strong recovery later in the year.
Steve Barrow, currency strategist at Bear Stearns in London, said: "If there's momentum in the economy, I'm sure it won't be derailed."
Julian Jessop of Standard Chartered said the shutdown highlighted the longer term economic risks of the overburdened US energy infrastructure. |
