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.

  1. The Dollar is going to get pounded – disorderly fall.
  2. The British are next to ZIRP. The Pound is dead meat.
  3. The Swiss are next to ZIRP.
  4. The Japanese are going to start selling Yen into the currency market.
  5. 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 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 | 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 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.

1 Comment
  1. Charlie says

    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.

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