RE: People getting slaughtered - ob1knobFrom what I found, banks are very aggressive when it comes to getting new deposits these days. For example, HSBC offers 4.75% on deposits. Understandable, since they need capital...
I read that they are not passing along the full rate reductions, but it's difficult to measure how much. As you probably know, advertized mortgage rates mean nothing and I didn't renegociate a mortgage recently.
Lastly, I don't see the 33 billion frozen ABCP as such a big problem. Canadian banks were asked to commit to 2 billion (relatively not that much). Furthermore, even if 1/4 or 1/2 is eventually written off, I fail to see how Canada couldn't deal with that.
I'm not saying that it's a fun problem to deal with. I'm saying that all things considered, the ABCP problem can be fixed in Canada.
In the US though, they aren't as lucky... They need cash, and lots of it. Also, rates will fall back to 1% to 2% and that could very well create all sorts of other problems (inflation, etc...) and bubbles (PMs, etc...).
Markets will be nervous and could crash. I'm buying here and there (gradually, over a 1 or 2 year period), but I'm staying mostly in CAD T-Bills.
Cheers
CQFD