Race to zero percent

[TexasDevilDog]

Nov. 6 (Bloomberg) -- The Bank of England unexpectedly cut the benchmark interest rate by 1.5 percentage points to the lowest since the 1950s as policy makers tried to limit damage caused by the worst banking crisis in almost a century. http://www.bloomberg.com/apps/news?pid=20601087&sid=ajAOT4YkfUMo&refer=home

Nov. 6 (Bloomberg) -- The Swiss central bank unexpectedly cut its main lending rate by 50 basis points and said the economy may contract next year.

http://www.bloomberg.com/apps/news?pid=20601087&sid=ahRD13l9K30U&refer=home
This huge deflationary spirl can't be stopped, banks can't be forced to leand and people can't be forced to borrow with zero interest rates.

On the other hand, the cental banks are doing a great job of killing seniors that are trying to live off their savings.

edit:FRANKFURT (Reuters) - The European Central Bank slashed interest rates by 50 basis points on Thursday, hoping to breathe life into the euro zone economy as it faces its first recession.


http://biz.yahoo.com/rb/081106/business_us_ecb_rates.html?.v=5

[Mustangman_2000]

Interesting.

Looks like they are taking desperate measures to do whatever they can to stimulate the economy in this vast economic crisis. It may be necessary just to allow people to keep their heads above water first and foremost.

[TexasDevilDog]

Interesting.

Looks like they are taking desperate measures to do whatever they can to stimulate the economy in this vast economic crisis. It may necessary just to allow people to keep their heads above water first and foremost.

How does lowering interest rates to banks help people, when banks will not lend to people?

Banks are raising their standards to get loans. They are cutting lines of credit.

[Mustangman_2000]

How does lowering interest rates to banks help people, when banks will not lend to people?

Banks are raising their standards to get loans. They are cutting lines of credit.

I guess I'm confused then because this is what I read from the first URL.

Prime Minister Gordon Brown's administration stepped up pressure on commercial banks to pass on rate reductions to businesses and consumers struggling with higher food and fuel costs. Lloyds TSB Group Plc said its customers would feel the full impact of the central bank's reduction. Barclays Plc and HSBC Bank Plc said they had the matter under review.

Pressure on Banks

``We really do expect them to pass cuts on now to customers,'' Yvette Cooper, a junior Treasury minister, said on Sky News. ``People around the country would expect that. They now need to see the benefits from the Bank of England today.''

[TexasDevilDog]

I guess I'm confused then because this is what I read from the first URL.

Lets discuss this: If a bank is seeing that it loans are going bad, then i don't think because the central bank target rate was lowered will cause the bank to believe that the customers are in any better shape to repay their loans, yet alone get more loans.

The consumers are strapped. They borrowed on their houses with refi's and heloc's to spend, spend, spend. Now their houses are worth less than they owe on them. This source of credit will be dead for years, maybe a decade. Many people are upside down on their cars. They are behind on the credit cards.

Reported this morning, nearly 3.9 million people are collecting unemployment. People will wake up to see that piling so much debt is not good. People forgot that debt has risk with comes along with it.

This is a once in a century deflationary spirl.