Fed, major central banks slash rates
More moves expected in effort to stabilize financial system

WASHINGTON (MarketWatch) -- The U.S. Federal Reserve and other major central banks moved in concert Wednesday to slash key interest rates as part of an ongoing effort to quell financial turmoil that has threatened to flatten the international economy.

In moves announced simultaneously before the opening of U.S. markets, the Fed cut its key lending rate by half a percentage point, to 1.5%.

The European Central Bank trimmed its key rate to 3.75% from 4.25%, and the Bank of England cut its benchmark rate to 4.5% from 5%. The Bank of Japan sat out the move but issued a statement backing the action.

Central banks around the world acted in concert Monday, hoping a half-percentage-point rate cut would restore confidence to battered markets, WSJ's David Wessel reports. (Oct. 8)The Bank of Canada, the Swiss National Bank and the Swedish Riksbank cut rates as well.




Fed, ECB, Central Banks Cut Rates in Coordinated Move

Oct. 8 (Bloomberg) -- The Federal Reserve, European Central Bank and four other central banks lowered interest rates in an unprecedented coordinated effort to ease the economic effects of the worst financial crisis since the Great Depression.

The Fed, ECB, Bank of England, Bank of Canada and Sweden's Riksbank each cut their benchmark rates by half a percentage point. The Bank of Japan, which didn't participate in the move, said it supported the action. Switzerland also took part. Separately, China's central bank lowered its key one-year lending rate by 0.27 percentage point.




Ponder this. Ponder, and pray.

I do not like the way things are heading.



***

Yesterday:

U.S. Stocks Drop; S&P 500, Dow Post Worst Retreats Since 1937

The S&P 500 slid 60.66 points, or 5.7 percent, to 996.23, extending its 2008 tumble to 32 percent in the market's worst yearly slump since 1937. The Dow Jones Industrial Average dropped 508.39, or 5.1 percent, to 9,447.11, giving it a 29 percent retreat in 2008 that would also be the worst in 71 years. The Nasdaq Composite Index lost 5.8 percent to 1,754.88.



Fed's new tool: Business loan bailout
Federal Reserve to buy loans crucial to business to unfreeze markets.

NEW YORK (CNNMoney.com) -- The Federal Reserve announced a new program to help the battered market for short-term business loans - taking its closest step yet to lending directly to businesses.

The program addresses commercial paper, a form of short-term funding crucial to many businesses operations.

"The Treasury believes this facility is necessary to prevent substantial disruptions to the financial markets and the economy and will make a special deposit at the Federal Reserve Bank of New York in support of this facility," the Fed stated.




£50bn bid to save UK banks

Gordon Brown will today announce the use of up to £50bn of taxpayers' money to take major stakes in high street banks, in a last-ditch attempt to restore confidence in the financial system.

Precipitous collapses in shares of Royal Bank of Scotland and HBOS forced the government to accelerate a plan to partially nationalise the bank sector, which teetered on the brink of collapse yesterday.

After another tumultuous day, Brown summoned the Bank of England governor, Mervyn King, and Financial Services Authority chairman, Lord Turner, for emergency talks last night on the future of the banking system.

They also discussed concern that UK customers of the collapsed Icelandic bank Landsbanki risked losing thousands of pounds in savings. The Treasury is racing to hammer out a rescue for the high street banks and holding high-level negotiations with Icelandic authorities about the payouts for 300,000 customers of Icesave, an offshoot of Landsbanki, who have a total of £5bn saved with the bank.




Facing Economic Collapse, Iceland Seeks To Borrow 4 Billion Euros From Russia

The government of Iceland is seeking a 4 billion-euro loan from Russia to help strengthen its foreign reserves and support its sinking currency amid the global financial meltdown.

Iceland's prime minister, Geir Haarde, warned this week that the country -- one of Europe's smallest but richest -- could face "national bankruptcy" if its financial problems are not contained.

Haarde said that representatives of the country's Central Bank will be going to Moscow to discuss the terms of the loan. That concluded a day of mixed signals regarding whether or not the loan would be forthcoming.




Israel, Russia to upgrade strategic ties

Israel and Russia will upgrade their strategic dialogue and use that forum to share intelligence assessments and discuss Russian arms sales to the region, a senior source in the Prime Minister's Office said Tuesday, following Prime Minister Ehud Olmert's meeting in the Kremlin with Russian President Dmitri Medvedev.

Olmert raised the issue of arms sales, including the proposed sale of S-300 anti-aircraft missiles to Syria and Iran, with the Russian president, the source said, adding that the Israeli team left the meeting feeling that "[the Russians] understand more clearly now our concerns."





Russia's LUKoil Urges Iraq To Approve Oil Deal

MOSCOW (Reuters) -- Russian oil firm LUKoil has urged Iraq's oil minister to remove obstacles to its investment in the West Qurna deposit, a month after China became the first country to renegotiate a Saddam Hussein-era oil deal.

LUKoil Chief Executive Vagit Alekperov told Reuters that Iraqi Oil Minister Husayn al-Shahristani was solely responsible for delaying the West Qurna deal, despite Russia's willingness to write off most of the Middle Eastern country's debt.




Tense stand-off in Thai capital

Troops are on the streets of Bangkok after its worst anti-government protests for 16 years left at least two dead and hundreds injured.

Demonstrators had set up a blockade outside the parliament building, which Prime Minister Somchai Wongsawat escaped by climbing over a fence.

The activists were trying to stop the inauguration of a government they say is run by ousted PM Thaksin Shinawatra.




Yahoo worker accused of role in India terror

A computer programmer employed by Yahoo in south India is allegedly behind emails put out by the country's most-wanted Islamic terrorist group, Islamic Mujahideen, which claimed responsibility for coordinated bomb blasts in three Indian cities this summer that left more than 120 dead, police said yesterday.

Investigators said Mohammed Mansoor Peerbhoy, 31, was the head of a "media terror cell" made up of "highly qualified, computer-savvy people belonging to good and educated families" who had drafted emails sent just before or after the blasts in Delhi, Ahmedabad in Gujarat and Jaipur in Rajasthan.

"The Indian Mujahideen started a media wing with software engineers," Rakesh Maria, joint commissioner of Mumbai police, told reporters. "They had the technical knowledge to know to send out messages just before the blasts and after the blasts took place."




Bloomberg’s Gift to the People: Moi

Which is essentially what Mr. Bloomberg is saying to New York as the City Council considers a proposal that might reasonably be called the Incumbency Protection Act of 2008.

These are obviously tough times. The stock market is cratering. Local tax revenues are sure to plunge more sharply than a major league sinkerball. In this toxic atmosphere, the multibillionaire businessman turned $1-a-year politician has in essence announced loftily to his fellow citizens: “I make a gift of myself to New York to lessen its misfortune.”

It is a present that many in the city would happily accept. The mayor remains remarkably popular after nearly seven years in office. At this stage of the game, government leaders tend to be about as well liked as oil company executives (see: Bush, George W.). Mr. Bloomberg defies the normal pattern. Recent polls suggest that most New Yorkers would be glad to have him stay at the helm through a financial crisis that is likely to be with us for a while.



***

Today (so far)


Nikkei plunges 9% to 5-year low on panic selling

TOKYO — Tokyo stocks nosedived Wednesday, with the key Nikkei index plunging more than 9% to a level unseen in more than five years, on panic selling amid escalating fears over the global repercussions of the U.S.-triggered financial crisis.

The 225-issue Nikkei Stock Average posted its third-biggest one-day drop on record of 9.38%, or 952.58 points, from Tuesday to 9,203.32, marking its lowest close since June 30, 2003, when it finished at 9,083.11. It briefly declined to the 9,100 level.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 78.60 points, or 8.04%, to 899.01, closing below the 900 level for the first time since June 26, 2003, when it ended at 887.86.

The Nikkei went into free fall after briefly sinking below the psychologically key 10,000 mark for the first time in nearly five years the previous day, as the spiral of global equity plunges continued.




Global markets gyrate on shock rate decision

Both the US and the UK markets failed to sustain early gains made when the US Federal Reserve and the Bank of England joined four other central lenders to reduce borrowing costs by half a percentage point.

London's FTSE 100 index of blue chip companies fell 238.53 to 4,366.69 at close.

While traders initially welcomed the Bank of England's decision to join other central lenders, including the US Federal Reserve, to cut interest rates, investors had expected the Bank's Monetary Policy Committee to reduce borrowing costs by a half point tomorrow — at its usual monthly meeting.

The London market also failed to be lifted by the Government's historic £500 billion plan to part-privatise UK banks and shore up the UK financial system.




U.S. stocks gain after rate cuts in see-saw action

NEW YORK (MarketWatch) -- U.S. stock indexes rose on Wednesday afternoon after multiple wild swings into positive and negative turf after the Federal Reserve axed interest rates with other central banks in an effort to stem the panic freezing the credit markets.

"It seems to be a tug of war between the bulls and the bears," said Robert Olman, president, Alpha Search Advisory Partners. "What we're really seeing is a complete lack of conviction from anyone of where the market is going."



The Dow has closed at 9,256.11, down 191.00 (-2.02%).