It was the best or times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity – Charles Dickens manages so sum up the worlds current state of affairs better that DevDosh Ltd ever could.
Retrospective wisdom is a wonderful thing. 20 days ago the markets were at all time highs and 11 weeks ago we didn’t have the beginnings of a pandemic on our hands. Could we have changed the course of events if we had been better set up and prepared? Could we have altered the path we currently find ourselves on if we had taken action sooner. The answer is a very big probably. But we just weren’t ready.
And where are we today?
The United States Federal Reserve Bank have just cut interest rates to zero and have restarted their bond buying programme. This means that they are literally buying billions of dollars worth of bonds back from US banks with made up money in the hope that the banks will actually lend some of that money to citizens and business’s rather than retaining it and gaming it on the markets. Well that approach hasn’t worked so far has it FED.
“I don’t think they would have done this unless they felt the financial markets were at significant risk of freezing up tomorrow,” said Mark Zandi the Moody Analytics chief economist. “They’re very concerned the financial markets won’t work”
Well Jerome, just as long as the banks have sufficient liquidity to keep trading and repaying the Reserve, what else matters?
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