Links: 2008-12-18 – more on ZIRP
Now that the United States has cut its interest rates to Zero and Ben Bernanke has helicopters flying over Wall Street, the question is: what happens next and who’s following the Fed to zero? There are a lot of different answers.
- The Dollar is going to get pounded – disorderly fall.
- The British are next to ZIRP. The Pound is dead meat.
- The Swiss are next to ZIRP.
- The Japanese are going to start selling Yen into the currency market.
- The Europeans have huge exposure to Eastern Europe and those bets are about to go pear-shaped. The Euro will tank.
Take your pick. It’s anybody’s guess really. We are in unchartered territory.
ZIRP posts
Bloomberg.com: Pound Sinks to Record Against Euro on Zero Interest-Rate Bet
Brad Setser: Follow the Money » That was fast ….
Economist’s View: Why Didn’t the Dollar Crash?
Paul Kedrosky: ZIRP-ishness Around the World
FT.com | The Economists’ Forum | Quantitative easing: Lessons from Japan
Cassandra Does Tokyo: Zero – The Loneliest Number?!?
Financial Sense Online Market WrapUp with Chris Puplava 12.17.2008
Other stuff
naked capitalism: New York Times Pulls Punches On Wall Street Bubble Era Pay
Bloomberg.com: Keynes Revival Makes Cato a Lonely Hearts Club: Caroline Baum
Paul Kedrosky: Unintended Consequences and Deposit Insurance
p.s. – anyone know what’s happening at Glencore. I see their CDS spreads going berzerk and talk about lack of liquidity. E-mail me if you have any answers.
My vote is for the British going to zero next. We have an economy a lot like yours: high debt, huge government deficit, huge current account deficit, housing crash. See you at zero soon.