bank prime drops

the bank of canada reduce the bank rate to 4.25% today - a reduction of .25
this will translate to a drop in bank prime from 6.25% to 6.00%which will mean the floating interest rates will be as low as 5.4% versus the fixed 5 year at 5.79-5.99
rest assured the US fed will reduce rates next by .25-.50 and this will precipitate the possibility of a further reduction to our prime on Jan 22........unless.........
the US is building a fund to protect their dollar and their housing market. They are intent on allowing cities states etc to issue tax exempt bonds which will provide funds to enable them to buy back the subprime paper whose rates are being reset at higer interest rates.
this should put a floor under the subprime problem - investors will be happy to invest their funds tax free into the mortgage market provided the borrowers are qualified and the rate provides payments which will not trigger a default....time will tell ...but i think the US will try to put a run on the shorts and cause a stampede thus higher bank and stock prices..time will tell
greygoose out...by the way....red wine is tasty