Aug. 17, 2007 (LPAC) -- The Federal Reserve lowered the discount rate Friday morning by 0.5%, from 6.25 to 5.75. Lyndon LaRouche forecast on Thursday that there would be drastic measures taken to prevent a market crash on Friday, so that the weekend would not become a cauldron for panic around the world.
LaRouche also noted that such drastic measures at this time, with the financial system effectively out of control, can only come at the behest of very powerful people who are bankrupt, and are demanding that their personal demands be met.
Following the Fed rate cut, Edward Marrinan, head of high-grade credit strategy at JPMorgan in New York, admitted to Reuters: "Markets got what they were hoping for.... The main beneficiaries in credit markets of this announcement are financial institutions, which have been under such intense pressure over the last three weeks."
The more closely watched Fed Fund rate, which sets a benchmark for interbank lending, was not officially lowered from its current 5.25%, but the pumping of tens of billions of dollars into the system over the past week by the Fed has effectively lowered the rate anyway. David Wessel of the Wall Street Journal wrote today: "In recent days, the rate has traded well below the Fed's target at some points of the day - even coming close to zero at times."
The Wall Street Journal's lead editorial Friday praised Treasury Secretary Hank Paulson for orchestrating the $11.5 billion bailout of Countrywide yesterday (see LPAC coverage), but screamed that the LBO giant Kohlberg Kravis Roberts (KKR) deserves the same federal largesse. KKR is not only holding $80 billion in scheduled buyouts, with little hope of finding the needed credit to finance them, but they also were stuck this past week with $5 billion of asset-backed commercial paper which creditors would not role over, leaving KKR begging for a six month delay.
The Journal, now owned by Bank of England agent Rupert Murdoch, is demanding that the Fed, the European Central Bank, and the Commonwealth banks in Canada and Australia bail out the system, with disdain for the real economies, and real people, which are being decimated in the process.
