...and now what?

Apparently the fallout from the sub prime fiasco was worse than we thought.





WASHINGTON, Aug 17 (Reuters) - The U.S. Federal Reserve on Friday said it cut the primary discount rate by a half point as the downside risks to growth have increased "appreciably", a surprise move aimed at calming jittery global markets.

"Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward," the Fed's Federal Open Markets Committee said in a unanimous statement.

The Fed cut its primary discount rate, which governs direct loans from the central bank to commercial banks, to 5.75 percent from 6.25 to "narrow the spread between the primary credit rate and the Federal Open Market Committee's target federal funds rate to 50 basis points."


This is not the rate your mortgage or your credit cards are based on. When banks or financial institutions need short term loans but can't get the funds anywhere they can turn to the federal reserve and borrow the money.

What this means is the federal reserve wanted to assure the financial markets that there would be "cheaper" money available should they need it. Rarely do you see a very conservative federal reserve move in .50% increments and even more so do you see thay move in such a suprising manner.

This could have a reassuring effect on the markets which have been very volitile as a result of the financial fallout from the subprime debacle or after a frenzy of buying sometime this morning it could have the opposite effect. It could signal that the worst is not yet over and exactly how far into the financial sector reaches could be more profound than we know.

Anybody like rollercoasters??? I haven't played the market since right before the internet bubble burst and have no desire to play....nope been there and done that. It's like gambling lol. Put your money in a solid company and periodically buy more and leave it for the long term.