Sunday morning 8:00 AM the Federal Reserve of New Zealand announced a most unusual strategy. Te Fed is going to buy up Asset Backed paper.
They had a very good reason to do so in those early hours of Sunday and not say at the opening of another disastrous financial week because with the announcement that Internaional banks banking here would get help in getting rid of the toxic sludge in their system. And this makes for a very frightening reality.
New Zealand has just admitted that its financial system is just as broken as that of Island, the USA and the rest of the world. That’s it NZ’finacial system is just as broken as the rest of the world. Kaput. The Federal reserve will buy worthless pieces of paper with fiat and worthless pieces of other paper called the NZ dollar. Prepare for deflation and inflation.
The Reserve Bank has approved the purchase of billions of dollars worth of residential mortgage-backed securities from two major banks as security should they run short of money.
The central bank has agreed to accept $8.7 billion of housing loans from the ANZ National and Westpac banks as security.
The banks are the first to take up the Reserve Bank’s offer to provide extra liquidity during the global financial crisis, Radio New Zealand reported