The credit market is experiencing an unprecedented loss of confidence due to the lack of transparency over where exposures lie rather than underlying credit quality problems, Moody's Investors Service President Brian Clarkson said on Thursday.
I'll be repeating this argument often. The central problem in the credit markets right now is concern over what people are actually buying, not whether or not they have enough money. Lowering the cost of money will not change what people think about the market; it will only force people to dump the new money into T-Bills.
Thanks to Calculated Risk for the link.
1 comment:
I am an avid follower of your blog! --for its level-headed interpretation of the current economic situation. I have a basic question about the potential interest rate cut: (and I have no real economic background...so bear with me) wouldn't a rate cut actually be a negativ thing in the long run, as it will weaken the dollar even more than it is already? Why would the market be happy about a short term boost in investor/consumer confidence when it could come back to bite us later? And what are the potential risks of a weakened dollar? Would we be bought out by the Chinese??
Thanks for your tireless commentary!
pk
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