Global interest rate cut and the ownership of banks
So much has happened in the market in just three short weeks. The first discussion of what came out to be a failed vote for the Bailout Package. Then a passage with more pork, approximately $150 Billion more and now the Federal Reserve has worked alongside other central banks to drop the interest rates across the globe and further add to the money supply.
The Administration has made it apparent that it might soon start to seek huge amounts of bank stock in return for bailouts, or buy up the bad banks themselves. While no one knows what to think of this, we could soon have a completely nationalized bank holding trillions of dollars worth of bad American debts. This plan for action would essentially socialize every last bit of the banking industry, leave losses and gains to the taxpayer and put more control of the markets into the hands of the government.
I think this global interest rate cut and the bailout package will do plenty to insert a floor below commodities prices. A greater global money supply and $700 Billion freshly printed dollars will boost up commodities prices going into the winter season. Historically during the fall months oil begins its plunge to winter lows before making a new high next summer. What I think we’ll see is a continued bull run on gold and silver which have been in a brief consolidation period, but will rally on the news of a greater money supply. Money supply was about level throughout the summer but government incentives, lower rates, and a $700 Billion fund for the express interest of pumping up the credit markets will contribute to a further run in commodities.
