Calamity Poole
By Adrian Ash
August 16, 2007
Well, bless Poole's beautiful
hide...!
ONLY A "CALAMITY" would justify an
interest-rate cut now, says St. Louis Federal Reserve chief
William Poole.
In which case, he either liquidated his personal
stock investments before June...or the guy's got some real hide.
"The daily effective federal funds rate
is a volume-weighted average of rates on trades arranged by
major brokers," says the New York Fed. And as you can
[see], it's
slipped sharply below target...closer to the current yield on
10-year Treasuries, in fact.
So why does the US central bank insist on lending
fresh cash to the money markets through its open-market
operations? The Fed's put in $88 billion over the last week,
ostensibly to keep the Fed funds rate on target by making money
more readily available.
Some $36 billion of that liquidity is still
outstanding right now (as of 10:20 EST, Thurs 16 Aug.), with the
latest $17 billion being auctioned for repurchase agreements
right around today's Wall Street open.
Does that make the current slump in global asset
prices a calamity yet?