Forex Trading - Global Foreign Exchange Markets

In a surprise move, The Federal Reserve cut the discount lending rate charged to banks from 3.5 to 3.25. Providing another avenue of specialized lending meant to assist banks in surviving the credit crisis.

Comment: Whew! There for a minute I was worried that no one would bail out the banks! I was worried that as a capitalist nation we would have to see survival of the fittest and smartest and that in the future we would only be able to trust smart people with our investment money.

It’s a good thing that Ben Bernake and The Federal Reserve are there to bail out any banks that have made mistakes and poor lending decisions. Think about it, if it wasn’t for that, we would have to suffer with the horrible consequences of a free market and a strong dollar. It’s so nice to see The Fed stepping in to save all the golden parachutes and to make sure that those wall street bonuses can continue to drain the equity off of main street.

I was worried that the focus might switch from banks to consumers since consumers are paying the same or higher interest rates than just a month ago.

Despite the fact that banks are refusing to lower rates for consumers and ease pain across the board, I have no doubt whatsoever that Ben Bernanke and crew will deliver a 75–100 basis point rate cut in the next 48 hours to give banks an even better spread in rates than they have now.
These actions by The Fed are sparking a danger of coordinated central bank intervention. The world is in a panic that the rates on the dollar are being slashed and they are not worth much to even hold on to. It is not likely that the world CBs are going to sit idly by while the Fed destroys the dollars that they are holding.

I would be willing to bet the worthless dollars in my pocket that there is a conference going on that spans across the seas right now that has the word intervention being tossed around. Price action in the next few days should tell us whether the central banks intend to clean up this mess, or whether the markets are going to try to implode themselves. Only time will tell.