World chokes on bad spell on Wall St


	World chokes on bad spell on Wall St

JICWyllie

2-3-2008 12:39 PM

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tags:

economy, financial markets, i-risks, i-policy, i-recession, i-forecas

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<div style="margin: 12px 0px; font-family: arial; color: #333333; background: #ffffff; border: solid 4px #e5e5e5; width: 100%; clear: left;"><div class="CM_CTB_Content_Wrap" style="margin: 0px; padding: 0px;background-color: #ffffff;"><div style="border-bottom: solid 1px #dcdcdc; white-space: nowrap; margin-bottom: 8px; background-color: #eeeeee ;background-image: url(http://www.clipmarks.com/images/source-bg.gif); background-repeat: repeat-x; height: 24px; line-height: 24px; vertical-align: middle; padding-bottom: 4px; color: #666666; font-size: 10px;" ><a href="http://clipmarks.com/clip-to-blog/" title="see clips that are hot right now"><img src="http://content.clipmarks.com/blog_embed/f94b0556-e94f-408c-90d0-8ea824e194ed/84EA91E2-5359-4324-9BA5-B78BA8A218A4/" alt="" width="19" height="19" border="0" style="vertical-align: middle; margin: 0px 4px; display: inline; border: none; float:none;" /></a>clipped from <a title="http://www.atimes.com/atimes/Global_Economy/JB01Dj03.html" href="http://www.atimes.com/atimes/Global_Economy/JB01Dj03.html" style="font-size: 11px;">www.atimes.com</a></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.atimes.com/atimes/Global_Economy/JB01Dj03.html">Banks now have less equity capital 
                              relative to their loans, as needed to remain 
                              within financial standards. Until that's repaired, 
                              banks will likely be conservative in making loans. 
                              This problem is not solved by low interest rates, 
                              though they might ease the problem over time. With 
                              inflation at 4% and a weak dollar, it's not clear 
                              if the Federal Reserve can lower interest rates 
                              much below 3% without running risks. As of 
                              Tuesday, the Fed lowered the overnight rate on 
                              interbank lending to 3%, and now has little room 
                              to maneuver.</blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.atimes.com/atimes/Global_Economy/JB01Dj03.html">Fiscal policy 
                              in the United States is similarly hobbled. </blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.atimes.com/atimes/Global_Economy/JB01Dj03.html"><DIV>Each part of the US financial 
                              system became fee-oriented and ignored basic rules 
                              of fiduciary responsibility. </DIV></blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.atimes.com/atimes/Global_Economy/JB01Dj03.html">the feasible amount of tax cuts is 
                              small, only about 1% of GDP.</blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.atimes.com/atimes/Global_Economy/JB01Dj03.html">there's an 
                              ongoing massive decrease in both housing and 
                              financial wealth, aggravated by reduced bank 
                              lending, and limited ability of monetary or fiscal 
                              policy to respond. </blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.atimes.com/atimes/Global_Economy/JB01Dj03.html"><div align="center"><img src="http://content7.clipmarks.com/blog_cache/www.atimes.com/img/CAB2E984-0A4B-48F0-8425-98D44C6A0785" alt="" /></div></blockquote></div><div style="margin: 0px 6px 6px 4px;"><table style="font-size: 11px;border-spacing: 0px;padding: 0px;" cellpadding="0" cellspacing="0" width="100%"><tr><td style="background:transparent;border-width:0px;padding:0px;">&nbsp;</td><td align="right" style="background:transparent;border-width:0px;padding:0px;width:107px" width="107"><a href="http://clipmarks.com/share/84EA91E2-5359-4324-9BA5-B78BA8A218A4/blog/" title="blog or email this clip"><img src="http://content8.clipmarks.com/images/c2b-foot.png" border="0" alt="blog it" width="107" height="17" style="border-width:0px;padding:0px;margin:0px;" /></a></td></tr></table></div></div>