The Fed announces a 0.25% increase in its overnight rate and the markets tremble.
Is that the sign of a solid recovery?
The overnight rate is what the Fed charges its client banks for overnight loans. This is the first line of the much talked about market liquidity’. So the world plunges its citizens several Trillion dollars into debt and the result is a ‘recovery’ so very robust, that a quarter of one percent increase on overnight loans to the big banks and…the whole stinking pile wobbles.
Think about this for a minute. These are the banks which are making multi-billion dollar profits, hosing down the mighty banker geniuses with billions of YOUR dollars in bonuses. Because ‘they’ have done so very well! And yet one quarter of one percent increase in overnight loan rate is enough to shake the whole thing?! I am the only one to find this suspect?
I dont think its that suspect, the market believes that the rise is not warranted so the market shakes to shows its dissatisfaction.
Also, the banks have been getting ultra cheap credit & making serious money. Pushing up rates means spreads will fall, its in the markets interest to have cheaper money. Whats even more interesting is, how long can the financial markets trash the real economy? Because the longer this goes on, the more money the investment banks can make. Destabilising someone like Greece, Portugal, Spain etc is in their interests.