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Tuesday, January 22, 2008

Fed Steps in with Rate Cut to stem Panic

Time to panic?---
Bears roarBloomberg:
Stock Tumble Drives 43 Benchmarks Into Bear Market -- More than half of the world's biggest stock indexes fell into a bear market as mounting concern about a U.S. recession dragged down banking and retail shares across Asia, Europe and Latin America.

The MSCI World Index's 3 percent decline yesterday, the steepest since 2002, left benchmarks in France, Mexico, Italy and 35 other countries at least 20 percent below their recent highs. Declines today turned Indonesia, India, the Philippines, Taiwan and Thailand into bear markets as well. [...]

Blown Mortgage:
Helicopter Ben Slashes Rates .75% --

Helicopter Ben
From Market Watch:
Acting forcefully against economic risk and financial market meltdown, the Federal Reserve cut its overnight lending rate by 75 basis points to 3.50%, the Fed announced Tuesday. It was the first time the Fed had cut interest rates between meetings since the 9/11 attacks in 2001. “The committee took this action in view of a weakening economic outlook and increasing downside risks to growth,” the Federal Open Market Committee said in a statement.
Dow Jones AM ticker: stocks poised for lossesInt'l Herald Tribune:
Fed's deep rate cut seen as 'once-in-a- generation' -- "It's a once-in-a-generation event," Mark Zandi, chief economist at Moody's Economy.com, said. In recent years, the Fed has rarely acted between scheduled meetings of the committee, and almost always in increments of one-quarter or one-half point. It was the biggest single cut since October 1984. [...]
Global Selloff Reveals Decoupling Myth - Editorial, Wall Street Journal
Flashing Red: Why Europe and Asia are Tumbling - The Economist
A Capitulation That Precedes a Turnaround? - Tom Stevenson, Telegraph
Disturbing Parallels to 1987, but Hope Too - Mark Hulbert, Marketwatch
Don't Jump Yet, Meltdowns End Quickly - Terence Corcoran, National Post
Down Markets Beg for Market-Friendly Candidates - Editorial, NY Sun
If Everyone's Finger-Pointing, Who's to Blame? - V. Bajaj, NY Times
The Challenge of Sovereign Wealth Funds - Philipp Hildebrand, VoxEU
Investors See a Half-Empty Glass - Paul Maidment, Forbes
Thoughts on Falling World Markets - Michael Sesit, Bloomberg
Bloody Monday in overseas markets

Global Market Sell Off
It's a Mess Out There

Credit Ripples are going everywhere.

Infectious Greed:
Monolines, Disney, and the Trouble with Arsenal Football -- Anyway, building on Friday's Fitch downgrade of bond monoline insurer Ambac, ratings service Fitch (which itself really needs a good downgrade upside the head) today downgraded some of the bonds insured by Ambac. In particular, it downgraded debt that Arsenal Football Club had issued to build its Emirates stadium in London.

What implications might that have? Among other things, if any more debt were to be required it could cause Arsenal ticket/pass prices to go up, as that debt has to be serviced at a higher cost, which has to come from somewhere, most obvious among which is Arsenal fans. More money from Arsenal fans means less money for said consumers to spend on other things, of course, which is yet another fine example of the many merry ways that credit problems bounce Brownian-style back-and-forth from market to market.

Infectious Greed:
Bank of China: Subprime Writedowns 6x Forecast

Calculated Risk

MishTalk - Mike Shedlock

Paul Krugman - NY Times

The Big Picture - Barry Ritholtz

naked capitalism - Yves Smith

Pragmatic Capitalism

Washington's Blog

Safe Haven

Paper Economy

The Daily Reckoning - Australia