(Reuters) - China's central bank cut benchmark interest rates by 25 basis points in a surprise move on Thursday to shore up slackening economic growth, its first rate cut since the depths of the 2008/09 financial crisis.
The new rate of 6.31 percent is effective from June 8, the People's Bank of China (PBOC) said in a brief statement on its website. The PBOC also cut deposit rates by 25 basis points to 3.25 percent.
The consensus view of economists had been that the PBOC would refrain from an outright cut to interest rates in 2012 and instead cut the required reserve ratio (RRR) of the country's banks to boost credit creation and deliver money supply growth in line with the 14 percent official target.
The PBOC has cut RRR for the country's biggest banks by 150 basis points from a record high of 21.5 percent in three moves since November last year, after a two-year tightening campaign to rein in inflation and cool steaming economic growth.
The last move to the borrowing rate was in July 2011 when the 1-year benchmark lending rate was raised by 25 bps to 6.56 percent.
If this news is true then it's huge. One good thing which came out of last French election is that Hollande is pro-Eurobond. Now it's Hollande + PIIGS vs Merkel. Even an announcement of a Eurobond roadmap will cause the markets to fly.
www.reuters.com/article/2012/06/09/us-eu...dUSBRE8580EE20120609
An interesting research article by PIAS: the different scenarios for Greece election: *Scenario (Likelihood)* *Description* A (50%)**** **·         **Political parties that *support* the austerity measures win the next election.**** **·         **The parties get the Eurozone governments to compromise at least a little on the austerity measures.**** **·         **Fears will come down, and markets make a relatively quick recovery.**** B (20%)**** **·         **Political parties that are *against* the austerity measures win the next election.**** **·         **The new parties are able to get the Eurozone governments to compromise quite significantly on the austerity measures.**** **·         **Fears will come down, and markets make a relatively quick recovery.**** C (15%)**** **·         **Political parties that are *against* the austerity measures win the next election.**** **·         **The new parties are *not* able to get the austerity measures softened.**** **·         **Greece is likely to eventually *exit* the Eurozone and the Euro.**** **·         **The rest of the Eurozone *employ more measures* to assure investors that they will do whatever it takes to protect the other troubled economies from suffering the same fate.**** **·         **Fears remain until investors see more convincing measures being deployed. Markets eventually make a recovery after some time.**** D for Disaster**** (15%)**** **·         **Political parties that are *against* the austerity measures win the next election.**** **·         **The new parties are *not* able to get the austerity measures softened.**** **·         **Greece is likely to eventually *exit* the Eurozone and the Euro.**** **·         **The Eurozone governments are *not able to agree* on the measures to protect the other economies. **** **·         ***Crisis worsens* and markets continue downwards. Eventually after an extended period of time (3-9 months?), markets find a bottom and start to recover.**** Based on our own estimates, the likelihood of a disaster is on the lower side. The âanti-austerity measuresâ political parties winning the next Greek elections is not a foregone conclusion based on the latest Greece opinion polls. The Eurozone governments are also planning some contingency plans in case that happens. It would be quite unlikely that the European governments would want to see a repeat of the Great Financial Crisis that almost caused another great depression. The cost of repairing another Lehman-like crisis would be far greater than bailing out the troubled economies again, a lesser evil. **** Markets are expected to be more volatile during this period, but there is a potential that markets can also recover quickly from any significant falls if the European leaders are able to implement confidence building solutions swiftly.**** Our defensive positions have helped the model portfolios so far in terms of lower losses, with the concerns of Greece, and the contagion effects, playing out. At the same time, we are mindful that we need to restore to the neutral strategic asset allocation eventually over time. As markets continue to fall, we will assess a potentially suitable re-entry point into the higher risk asset classes. It is not likely we can time it right at the bottom of markets, but we hope to buy good assets at much lower prices. As before, we continue to watch and monitor the situation as it progresses. Markets will remain volatile as worries persist over the uncertainty of the outcome for Greece and the contagion effects. **** For opportunists who wish to take advantage of the large market falls, you may consider topping up your portfolios in the form of at least two tranches, coming in at different times.  ****
For those who trade, Greece is good for us, but for those who long( unless your stock is good fundamentally) you need not worry, except to average down, ( for blues only).
Why should you worry about next week market crash? You can get your favourite counter cheap. Think this way.
And also your price is not next week, your stock price is 10 to 20 years from now, because you long. 10 yrs, Greece will be history and forgotten.
For long term and value invester here, your price is 10 to 20 yrs from now, unfortunately, most value invester don't always see this way, like one fund manager told me. Then at the same time, you also get the annual div while waiting.
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