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[Michaelangelica]

World markets hit by credit woes
A commuter in Japan on 2 November
Some Asian markets had been at record levels
World markets have fallen back on renewed fears about the full impact of the sub-prime crisis on the US economy, echoing heavy falls on Wall Street.
. . .
While stocks in the US had risen on Wednesday after the Federal Reserve opted to cut rates to 4.5% from 4.75%, by Thursday fears about the credit crisis and the wider economy dominated markets.

BBC NEWS | Business | World markets hit by credit woes

Opposition keeps close eye on its promises

Matthew Franklin, Chief political correspondent | October 26, 2007

KEVIN Rudd says he is closely watching his election promises amid fears that higher inflation will trigger an increase in home loan interest rates.

The Opposition Leader's caution yesterday came as both John Howard and Peter Costello stressed there was no case for Australian banks to raise standard interest rates in the wake of the US sub-prime crisis.

Mr Rudd renewed his pledge not to match dollar for dollar the Howard Government's election promises in the wake of Wednesday's release of figures showing inflation at 0.9 per cent in the September quarter.

Opposition keeps close eye on its promises | The Australian

The Daily Reckoning Australia

Subprime Crisis: US Economy Needs a Correction
Posted by Bill Bonner on Aug 27th, 2007

We were at a dinner party last night. Among the guests were three bankers – two French bankers…and an investment banker with Lehman Bros. (NYSE:LEH) in London.

“This credit crunch is hitting harder than most people realise,” said the man from Lehman Bros. “It’s not just a subprime problem any more. You can put together a great deal…you still won’t be able to get financing for it.

“But so far, only people in the financial industry are affected. And, let’s be honest, none of us are really hurting. We made so much money in the last few years…we could all retire if we wanted to. And I don’t think the crunch will last too much longer or go much deeper. There’s just too much going on.”

Bob Diamond, president of Barclay’s Bank, is quoted in the Financial Times:
“We have a ‘real cracking of the liquidity bubble,’ he said.”

The question is whether the crack can be mended with a little central bank epoxy. Most people think so…all hope so. And all are working on it.
Goldman (NYSE:GS) put US$2 billion of its own money into its troubled hedge fund. The Bank of America (NYSE:BAC) bought US$2 billion worth of Countrywide Financial (NYSE:CFC), America’s biggest mortgage lender. And central bankers all over the world are providing as much liquidity as the market is willing to take.