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Market meltdown on the cards when US markets open 15/09/2008. Asia on holiday, major indicies sell off feared.

Posted by Adrian on September 15, 2008

Lehman Brothers will most probably not exist in 17hrs from this blog entry; already major stock markets are advising brokers to not touch Lehman Brothers. Not to forget American Insurance group, which is in so much trouble, it is unlikely they will come through the next 20+ hrs as a functioning insurance company.

Of course, this will send all the indicies globally into a major tailspin. So it will be bloody day when America wakes up and Asia comes off holiday.

But, a rumour has come through that the Federal Reserve will cut rates in an emergency meeting on Monday (15th September 2008) morning EST. A .25% cut off the extraordinary low 2.00%, which will make it 1.75%. Will they do it? The US futures seem to think so (300+  point loss); the FX market says so, the EUR against the USD has shot up to 1.44.

I think back to a blog post I wrote in June 2008 called A US dollar currency crisis just a stone throw away, this post was written prior to the ‘appetite for risk’ that had occurred in the FX markets for the last month of so, with high yield currencies being sold off and the USD gaining strength. It now appears that the USD may be under major selling if the Federal Reserve do decide to cut rates to fend off a major market meltdown.

I wrote,

“In my opinion, if the US enters a stagflation depression (severe recession with rising costs), The Fed may cut further from their 2% (Ben Bernanke has indicated through speeches and thesis on the 1920′ 30′ Great Depression that a lack of liquidity was the reason the depression was as severe as it was) . This could essentially send the US dollar into a currency crisis as the world will shift the peg from the USD to the EUR, or a basket of currencies.”

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2 Responses to “Market meltdown on the cards when US markets open 15/09/2008. Asia on holiday, major indicies sell off feared.”

  1. […] reasons the Federal Reserve decided to keep rates unchanged refer to (on speculation of a rate cut) Market meltdown on the cards when US markets open 15/09/2008. Asia on holiday, major indicies sell o… . If Treasuries tank and the USD starts to melt refer to (with real time graph – Treasury Notes) […]

  2. But, with Lehman Brothers all the necessary trials are being done. Rates allows you to make more money because you have more money to the Federal Reserve. That creates an emergency meeting of how good you’re doing.

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