The global stock markets are reacting to the Federal Reserve’s emergency moves. This show of speed and decisiveness must be perceived as panic. According to Bloomberg:
The Federal Reserve, in an emergency weekend decision, cut the rate on direct loans to commercial banks and opened up borrowing at the rate to primary dealers in [...]
We are in a recession and the federal reserve is taking action that is construed as a moral hazard. Moral hazard is defined by wikipedia as:
Financial bail-outs of lending institutions by governments, central banks or other institutions can encourage risky lending in the future, if those that take the risks come to believe that [...]
Awhile back I mentioned that my credit line with American Express had been cut from $30,000 to $10,000 overnight. At first I was irritated but just decided to give my other credit cards my business. Just so you know, the rate on my American Express is 3.99% for the life of the balance as [...]
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