Bank of England Cuts Rates

As predicted earlier this week, the worldwide rush to cut rates to prop up the US economy (and save the dollar) is now on... Canada, now UK... and will we be surprised to see Europe next? Remember, these were people complaining about inflation just weeks ago. Now all that doesn't matter and it's a race to the bottom. Sadly, economists in England still think central banks are here to fight inflation and not just provide easy credit to reinflate assets. (34 of 62 did not forecast a rate cut). These academics will soon learn.... politics above everything. It's amazing how policy can change 180 degrees in just weeks. Thus far only those stodgy Australians have held the line... a few more phone calls of pressure and we should be able to get them to drop their rates too; I mean it's in everyone's best interest after all. Bailouts, easy money, rate freezes the works - we all benefit.... this is how free markets work....

Bank of England Cuts Rates, Says Inflation Will Slow

• The Bank of England cut its benchmark interest rate for the first time in two years, saying inflation is likely to slow as higher credit costs hurt economic growth. The nine-member Monetary Policy Committee, led by Governor Mervyn King, reduced the bank rate by a quarter-point to 5.5 percent.


• Economists were the most split about today's decision in three years, with 28 of the 62 economists surveyed by Bloomberg News forecasting the central bank would lower rates.


• ``Conditions in financial markets have deteriorated and a tightening in the supply of credit to households and businesses is in train, posing downside risks to the outlook for both output and inflation further ahead,'' the bank said in a statement accompanying its decision in London today.


• The slowest services growth in four years and surging money market rates led Bank of England policy makers to set aside concerns about faster inflation expressed just last week by King.


• ``This is likely to be the first of several rate cuts,'' said James Knightley, an economist at ING Financial Markets, who changed his forecast yesterday and predicted a reduction.

As for the market, we once again sit at this key S&P 1490 level - been the key level for over a month now... first as support, now as resistance. If we break above it in the flurry of 'interventions' by all pieces of our government (remember, recessions are not allowed to cleanse the system) than I will need to sharply reduce all shorts as the markets run to new ALL TIME HIGHS in the face of potentially the worst credit crunch since the early 90s, a potential recession, a housing bust, and state governments now finding 'subslime' on their books. But aside from that things are swell. The way the market is so happy you can almost here Uncle Ben whispering to Goldman Sachs "I got your back, 50 basis points are a coming, and heck we might drop that discount rate 75....just watch what we can do this to stock market.... together." In fact I am slowly liquidating the short hedges as we speak as we enter "happy time"....

As predicted in my outline for the next 1-6 months - politicans are now falling over each other to come up with plans to 'fix' the free market, and provide 'solutions' - I thought the free market was supposed to do that? Thats why we cheer the free market and push it onto other countries. The height of hypocrisy.

Now please excuse me while I go try to land a subprime loan for $500K here in the next few days so I can start to default and be 'saved' by 'innovative' government plans... who wants my vote? Hillary? Obama? Paulson (Paulson, you're running?) I want this $500K for 1.25% for the next 5 years - give it to me.... I deserve it.