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Pastimes : The Naked Truth - Big Kahuna a Myth
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To: Joseph G. who wrote (12396)12/3/1998 7:00:00 PM
From: Defrocked  Read Replies (1) of 86076
 
RE: "Speculation of lower U.S. rates are also likely to mount if
Latin American markets fall victim to concern that a setback to the
Brazilian government's fiscal austerity plan will jeopardise its chances of winning international loans."

The Fed's job is not to protect banks, or the stock market in
general, from losses due to souring Brazilian loans by US banks.
Protection of bank capital and therefore depositors' money is
supposed to be handled a priori through prudential lending,
diversification of loans and oversight of management.
You won't see the ECB lowering rates because of Brazilian debt
losses. If the US Fed reacts by further decreasing rates, dump
the dollar. We cannot be lender-of-last-resort to the whole world.

The above quote assumes that the Fed will react in a manner
that many Fed critics have decried: Governmental bailout of
private concerns avoiding resposibility for poor decisions.
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