Yes, all it takes is for a G7 decision/agreement to happen. Any decision or agreement will do!
Sure things are in suspended animation at the moment until governments agree on what assistance measures to provide to their banks. But for anyone to say that banks don't trust each other anymore and wont lend to each other is an exaggeration. Its not about nobody trusting anybody anymore. Its more about who you trust and who you don't trust. The real issue is about preventing untrusted banks from being outcast and going belly up. But of course that intent has to remain hidden to avoid a run on untrusted banks. I think what they will agree on (secretly) is when to cut rates in order to stimulate the world economy.
Banks are capable of making their own decisions about risk and are able to factor risk into their lending practices like they have always done. The ultimate objective of any bank is to fill the loan book with secure loans at a good rate. Right now there must be heaps of secure loans out there waiting to be snapped up by the banks. Who is going to balk at lending a couple of billion to BHP? Nobody! Banks would be cutting each others throats to get such a prized loan into their loan book.
So banks at the starting gun and ready to pounce on filling their loan books once again. All it takes for the starters gun to go off is for a G7 decision to be made and for it to be set in concrete. Any decision will set off the gun. It is indecision which have things on hold and markets in a tailspin.
I expect they will work something out very soon, the bottom will be behind us and the 150 year uptrend will resume.
If no earthquakes happen, our market will open up. eg BHP up around $1 to match the US close. That will set the mood for a positive day providing we don't get a G7 collapse or something else going wrong.
Recession is easy to avoid or reduce => cut rates.
Moved from the "United States" forum. Original message number: 1170
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