central banks: injection of capital

US treasury assisted by the FED is creating credit by buying in COD's.

The ECB also injects capital but on tender and on a 3 day basis only. So, this would be bridging capital to be used by companies caught in the squeeze.

Nevertheless, some of these companies may well return for another helping and roll over the existing arrangements.

The weak spot is Wall Street who don't disclose much and Treasury has asked the SEC to look into this so as to get some idea as to the values of the COD's.

Injection of capital will be an ongoing thing and I support it, there being no alternative. A pity that the ordinary subprime mortgage holder will miss out when in trouble. Hepling out the latter could easily cost say US$600 mill over time. Many COD's are held by foreigners as well.

Some of the injection will be inflationary and as mentioned, there is a chance that interest rates may be cut thereby accepting the negatives and hoping that Treasury, the FED, PPT and Central Banks will be able to hold the USD at a reasonable level.

It is vital to get some measure of normality back into the system as the original subprime problem has evolved into a credit crunch, governments are coping with now.

Also very important to Australians who exports metals; prices of these will be subject to the vagaries of margin trading somewhere else and although I do hold a few overseas Gold/Silver stocks, I fully support the injection of capital.

I am expecting some relief next week because the world knows that Govts are ready to act and I surmise that Australia will benefit with regards to pricing of metals depending also on the economic situation in the US.

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.