Acts of Desperation
In what is being interpreted as a bullish event by the markets, the major central banks of the world are teaming up to flood the financial system with cheap money. It's a huge concerted effort that may save the day, but it could also be interpreted as an act of desperation.
Today, the People's Bank of China reduced its reserve ratio requirement by 50 basis points, which is a form of easing. While some are interpreting this move as a positive development, keep in mind that this comes as the Organisation for Economic Co-operation and Development (OECD) is lowering global growth estimates across the board and has declared that Europe is already in a recession. OECD believes that Q4 will show the eurozone economy contracting by 1%, followed by a 0.4% contraction in Q1 of next year. Many major financial institutions have similarly reduced their forward estimates....403 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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