aircatalonia
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Fed Cuts Interest Rates Again

Tue Dec 11, 2007 8:42 pm

http://news.bbc.co.uk/2/hi/business/7139040.stm

Will we see the EUR over the 1.50-dollar mark soon?
 
Pope
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RE: Fed Cuts Interest Rates Again

Tue Dec 11, 2007 9:07 pm

It's an embarrassment. The Fed should be raising rates not lowering them. People gambled and loss and now want everyone else to pay for their mistakes.

The quickest way to fix the economy is to pop the asset pricing bubble that exists.

IMO, this artificially low level of interest rates which depreciates the US$ versus other currencies means that the US government is as big as a currency manipulator as China.
Hypocrisy. It's the new black for liberals.
 
TUNisia
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RE: Fed Cuts Interest Rates Again

Tue Dec 11, 2007 9:15 pm

Glad I set up my trust in Euros a few years ago  Smile
Someday the sun will shine down on me in some faraway place - Mahalia Jackson
 
andessmf
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RE: Fed Cuts Interest Rates Again

Tue Dec 11, 2007 9:33 pm



Quoting Pope (Reply 1):
The quickest way to fix the economy is to pop the asset pricing bubble that exists.

The government, again, is late to the party.

The bubble popped long time ago, and only now are they getting in the game, with a 'cure' that is worse than the disease. How typical.

Quoting Pope (Reply 1):
People gambled and loss and now want everyone else to pay for their mistakes.

Some gambled and loss. Others played the 'my house is a piggybank' game and now are deep in debt. Let the chips fall where they fell.

Quoting AirCatalonia (Thread starter):
Will we see the EUR over the 1.50-dollar mark soon?

Probably.
 
D L X
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RE: Fed Cuts Interest Rates Again

Tue Dec 11, 2007 9:39 pm



Quoting Pope (Reply 1):
The quickest way to fix the economy is to pop the asset pricing bubble that exists.

How would you do that? And, isn't that what gave us the depression?

Quoting Pope (Reply 1):
IMO, this artificially low level of interest rates which depreciates the US$ versus other currencies

You sound like you know a lot about this (and I admitedly don't!), but how does the interest rate effect the dollar? The reason I asked is because as a person about to refinance a house, I'm jumping for joy that I can get a better rate.
 
AGM100
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RE: Fed Cuts Interest Rates Again

Tue Dec 11, 2007 10:05 pm

WOA ! Stocks dropped like rocks on that news ,, I was up now I am down ! guess that is how it goes.  fight 

Kudlow was right , .50 was the number ... well we will see how it works out.

Quoting D L X (Reply 4):
I'm jumping for joy that I can get a better rate.

Thats right DLX .. You should be ! Its all about the consumer ,lower rates let people move money and that is always good. Now go buy yourself a nice Plasma or something with you extra $$$$ !
You dig the hole .. I fill the hole . 100% employment !
 
andessmf
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RE: Fed Cuts Interest Rates Again

Tue Dec 11, 2007 10:40 pm



Quoting D L X (Reply 4):
How would you do that? And, isn't that what gave us the depression?

The depression occurred when people realized that wildly overpaying for assets with money that you don' t have is not always a good idea. At it was a slow unwinding into full depression, with the tariff act passed by the government as a cure being a worse problem.

http://en.wikipedia.org/wiki/Smoot-Hawley_Tariff_Act

At the same time, the cut in interest rates caused worse problems, as people are not interested in investing or saving money when the returns of your investments are so low. In other words, a cut in interest rates causes money to be moved to places where a higher return will be provided. Hence, lowering rates causes credit to shrink further.

Quoting D L X (Reply 4):
The reason I asked is because as a person about to refinance a house, I'm jumping for joy that I can get a better rate.

But the price for your better rate is much higher prices for everything else.

Quoting AGM100 (Reply 5):
Now go buy yourself a nice Plasma or something with you extra $$$$ !

'Don't buy stuff you can't afford'

 
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casinterest
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RE: Fed Cuts Interest Rates Again

Tue Dec 11, 2007 11:00 pm



Quoting D L X (Reply 4):
You sound like you know a lot about this (and I admitedly don't!), but how does the interest rate effect the dollar? The reason I asked is because as a person about to refinance a house, I'm jumping for joy that I can get a better rate.

It affects the value of the dollar to other countries. If the US interest rate is lower, then Money invested in US funds gains less interest. This causes the value of the dollar to fall relative to other countries, as it would be better to invest your funds in a currency that pays better average returns on it's investment.


Like you, I look at this as a good thing, since I now have to pay less for my HELOC, and this frees up money for me to spend. This is what the Fed wants. They want to stimulate spending, borrowing, and keep the economy from going into a recession, by introducing more funds(ie. inflate the economy).

On the flip side of this, imports from countries and travel too countries, with currencies that appreciate , grows more expensive. This means goods will grow more expensive that rely on imports from such countries.

The Fed has to balance how much it cuts funds, because too much of a cut could bring on heavy inflation if the ecomomy get's going too strong to quick. Too little of a cut and the Economy goes into a recession.


In the recent case, we are really where we are now, due to unscrupulous lending practices done during the last round of fed cuts. for Awhile I had a HELOC at 4.5 percent, and some people had interest only/ARM loans at as little as 3 or 4 %. It was these loans that reset after 2-3 years for their borrowers that has caused the current crisis. 2 to 3 percent can be a big dollar amount to certain strained budgets and this caused the current crisis.


Some could argue that the FED under Greenspan was far too aggressive cutting rates after the Dot-Com bust and 9/11, and also was far too aggressive raising rates after a 1-2 year lull at the extremely low rates.

When people have access to a lot of cash, they get addicted, and they do things that are unwise in leaner(less recessive) times. These people, some knowingly, and some unknowingly, are what got us into this crisis.


The rest of the world(Europe) is not pleased with a lower dollar, as it makes the US (the biggest consumer nation) harder to sell too. The Chinese peg on the dollar makes it easier on the US, as we tend to buy most of our imports from the Chinese. Airbus, Volkswagon, Nokia, and other corporations are going to have a hard time with a lower US dollar. Of course you can argue, that many of these companies are multinational compaines and have taken steps to balance currency deficits. However when Airbus makes deals in Dollars, it hurts when the dollar falls, and they have so many people to pay in Euros. Competition from US companies also increases, as companies that previously were not competitive on a world stage, now will be with a better cost structure from which to work from.


The whole mess gets extremely complicated from scenerio to scenerio. The End result though is that the Economy keeps growing in the US, and people don't loose jobs.
Older than I just was ,and younger than I will soo be.
 
andessmf
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RE: Fed Cuts Interest Rates Again

Tue Dec 11, 2007 11:28 pm



Quoting D L X (Reply 4):



Quoting CasInterest (Reply 7):

Hopefully you both won't have any housing problems. But from where I stand all I see is trouble brewing, with plenty of people not even coming close to addressing the big issues.

1. In many places, housing became way overpriced, with the fundamentals not supporting the price increase at all.
2. Due to the 'sure' bet that housing was going up, speculation and construction became rampant. This is to the tune of about 40-50% above normal levels.
3. There is so much housing out there, that it will take several years for the excess inventory to be absorbed.

In the meantime, bubbles are called bubbles for a reason, and that is because they POP! Any attempt to support the current pricing takes money of out people's hand who could have used it in other ways.

WARNING!!

The popping of a bubble has never been pleasant. All government should do is try to have it unwind in a proper way, not try to keep it up.
 
futurecaptain
Posts: 1918
Joined: Sat Sep 09, 2006 1:54 am

RE: Fed Cuts Interest Rates Again

Tue Dec 11, 2007 11:37 pm



Quoting AGM100 (Reply 5):
WOA ! Stocks dropped like rocks on that news ,, I was up now I am down ! guess that is how it goes.

 checkmark  And it's not only today, the entire year of 2007 has been horrible for me and the market. My stock investments have lost nearly 40% this year.

Quoting AirCatalonia (Thread starter):
Will we see the EUR over the 1.50-dollar mark soon?

It's our plot between the government and Boeing to run Airbus out of business.  devil 
AirSO. ASpaceO. ASOnline. ASO.com ASO. ASO. ASO. ASO. ASO.
 
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casinterest
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RE: Fed Cuts Interest Rates Again

Tue Dec 11, 2007 11:39 pm



Quoting AndesSMF (Reply 8):
The popping of a bubble has never been pleasant. All government should do is try to have it unwind in a proper way, not try to keep it up.

That is what the Fed's actions are all about. If they don't lower interest rates, the market pops harder since way too many people cannot refinance at the higher rates. The hope is that the people refinance, and less mortgages are defaulted. This keeps the economy going. This does not come without a cost though. It makes saving money by people less affordable, and generally encourages people to spend. Which will cause inflation. However at this point it is more important for the Fed to keep Mortgages afloat, thant to worry about inflation.

In 6 months time, it may be that the economy is humming along, and then interest rates will rise again.
Older than I just was ,and younger than I will soo be.
 
Pope
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RE: Fed Cuts Interest Rates Again

Tue Dec 11, 2007 11:44 pm



Quoting D L X (Reply 4):
You sound like you know a lot about this (and I admitedly don't!), but how does the interest rate effect the dollar? The reason I asked is because as a person about to refinance a house, I'm jumping for joy that I can get a better rate.

It's all about supply and demand. If you had two choices where to invest and both had the same level of risk where would you put your money? The rational choice is the one that pays the higher return. Therefore when the Fed eases interest rates debt securities whose interest rates derive from US interest rates become less attractive to investors willing to assume that level of risk. The less money that flows into the country the less the demand for US$. The lower the demand for dollars the low the price people are willing to pay for dollars.

Quoting D L X (Reply 4):
How would you do that? And, isn't that what gave us the depression?

If you raise interest rates (thereby making monthly payments higher for people who finance their home purchase through mortgages [most of us]) then the price of housing has to fall because of supply and demand. The demand for housing is weaker because less people can afford it. The supply remains essentially the same and housing prices fall.

By artificially propping up housing prices in the US, the fed is dragging out the inevitable. The truth is, the person who bought a $500,000 house that is only really worth $300,000 has to lose $200,000 at some point. By ripping the band-aid off quickly housing prices will fall and the economy essentially resets itself.

Granted the guy who now owes $500,000 on a house he can only sell for $300,000 is screwed but it was his bad decision that got himself into the problem in the first place.

Quoting CasInterest (Reply 7):
Like you, I look at this as a good thing, since I now have to pay less for my HELOC, and this frees up money for me to spend. This is what the Fed wants. They want to stimulate spending, borrowing, and keep the economy from going into a recession, by introducing more funds(ie. inflate the economy).

But that's exactly the problem. Without speaking about your personal financial situation in particular - as I know nothing about it - many people took what they thought was equity out of their house to spend during the last economic down cycle. However this equity was really just a figment, it was paper gains because until you sell your house (or any non-exchange traded asset) you're not exactly sure what it's worth. It's no different than all those people who claimed to be Enron millionaires because their 401k's had Enron stock worth $1M in them. Unless you sell that asset at that particular moment, it's unlikely that it's worth exactly what you think it is.

By artificially propping up the housing market, we reward people who gambled on an ever increasing real estate market by subsidizing their gamble. I as many others on this forum decided not to speculate. While all my colleagues were buying bigger and bigger homes, I was paying down the debt on mine. Risk and reward have become detached. People who gambled and lost need to pay the economic price for this gamble. People who bet correctly need to be rewarded (relatively) to those who bet incorrectly.
Hypocrisy. It's the new black for liberals.
 
aircatalonia
Posts: 515
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RE: Fed Cuts Interest Rates Again

Tue Dec 11, 2007 11:52 pm



Quoting Futurecaptain (Reply 9):
It's our plot between the government and Boeing to run Airbus out of business.

See, just as I suspected...  Wink

Actually it's not that I care much about Airbus. I think I am going to take the oportunity to travel to the US at bargain prices Big grin
 
andessmf
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RE: Fed Cuts Interest Rates Again

Tue Dec 11, 2007 11:54 pm



Quoting CasInterest (Reply 10):
If they don't lower interest rates, the market pops harder since way too many people cannot refinance at the higher rates.

This is the crux of the problem. For many, the only way out was thru foreclosure the moment they signed the papers.

Without going thru all the figures, this is the way it goes.

For every $100,000 financed, it costs about $1000/month. This is the typical conventional loan.

The creative loans allowed people to make only partial payments. So instead of paying PITI (principal, interest, taxes, insurance) they paid either only interest, or part of the interest, never principal.

This is the way that many were able to 'afford' a $500,000 house. They had initial rates that gave them a payment of $2000/month. If they refinance into a conventional loan, their payment jumps to $4000/month. See the problem? You are assuming that people can refinance their way out of their financial problems, when there is NOTHING out there that can make their payments affordable in the first place.

That this shit was allowed to happen for so long is a damn shame.
 
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casinterest
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 12:09 am



Quoting AndesSMF (Reply 13):
For every $100,000 financed, it costs about $1000/month. This is the typical conventional loan.

Depends on interest rate, at 6% it would cost about 600 a month. Assuming a 30 year fixed mortgage.

Quoting AndesSMF (Reply 13):
The creative loans allowed people to make only partial payments. So instead of paying PITI (principal, interest, taxes, insurance) they paid either only interest, or part of the interest, never principal.

Yes,
Someone who only had a 6% interest only loan, only had to pay interest on 100K

Comes out to about $500 a month
( of course most loans with interest were much lower around 3%......300 a month,) and bingo yes, this was part of the issue.

Don't forget ARMS which adjusted after a certain timeout 3-5-7.

Everyone was betting the house would appreciate more, and when the time came to refinance, they would be able to do so easily, since the house would have more value, or they could sell.

Quoting AndesSMF (Reply 13):
This is the way that many were able to 'afford' a $500,000 house. They had initial rates that gave them a payment of $2000/month. If they refinance into a conventional loan, their payment jumps to $4000/month. See the problem? You are assuming that people can refinance their way out of their financial problems, when there is NOTHING out there that can make their payments affordable in the first place.

You pretend I don't see the issue, when I have layed out the reasons for the cut. I understand what has occurred.
People made the assumption that increases in home values would cover the losses. In places such as NYC, California, and other places this was mostly true. A lot of them are still able to sell the house at a gain and get in somewhere cheap. Like most such incidents, the last one in gets screwed royally. IE you bought at the top of the market and you bought with bad credit There are a lot fewer of these incidents in affluent areas where the houses really shot up, then you would think.

The real crisis is occurring in the Midwest where factory closings and weak economies have been progressivly lowering the value of the houses that people bought at the subprime terms. These are the people that can't refinance, becasue the housse is now worth less than they owe. This is why the goverment is lowerign rates. So these people can refinance the home and not force all the banks to eat the loss, because they can't ever regain the loan money lost. on a house that is worth less than the mortgage. The banks really don't want defaults. They would rather you pay the loan somehow. This is how the Fed is helping the banks, by making it more affordable for the homowners to refinance than to default on their loan.
Older than I just was ,and younger than I will soo be.
 
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casinterest
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 12:13 am



Quoting Pope (Reply 11):
By artificially propping up the housing market, we reward people who gambled on an ever increasing real estate market by subsidizing their gamble. I as many others on this forum decided not to speculate. While all my colleagues were buying bigger and bigger homes, I was paying down the debt on mine. Risk and reward have become detached. People who gambled and lost need to pay the economic price for this gamble. People who bet correctly need to be rewarded (relatively) to those who bet incorrectly.

Totally agree here Pope.

I bought my house in 2003, my heloc was part of an 85/15 loan with a 5% down payment on a standard 30 year mortage.. I was probably one of the few who took the old 1/4 gross income for house payment to heart. i am suffering no pain. In fact I use my Heloc to offset worse loan deals, and am able to easily make payments.

I myself see no Joy in the goverments plan to freeze the subprime lendors rates, However most of them will already be higher than those with good credit. The alternaitive to thsi freeze though is much worse. I would prefer not to go into a recession, and have the possiblilty of job loss tossed on top.
Older than I just was ,and younger than I will soo be.
 
andessmf
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 12:22 am

Quoting CasInterest (Reply 15):

I see that we are mostly in the same page.

But some of the other problems have nothing to do with interest rates, but the excess construction that went on. A lot of gamblers get left holding the bag, regardless. Since there was too much housing built, there are more homes than people in the US available to occupy them all.

The question is whether the government action will stop the inevitable.

Quoting CasInterest (Reply 14):
you bought at the top of the market and you bought with bad credit

This wasn't the only problem. The other is those who took advantage by using their current homes as ATM, with the promise that they could refi out of trouble later.

My question then is:

Refi into what?

For example. (true story) How do you help the couple that bought a $500,000 home on a trucker's salary? How do make the loan affordable to them?

[Edited 2007-12-11 16:23:47]
 
N174UA
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 3:09 am



Quoting AndesSMF (Reply 3):
Others played the 'my house is a piggybank' game and now are deep in debt. Let the chips fall where they fell.

 checkmark  It all comes down to how you manage your money, not how much you make. It's entirely possible for someone making $30,000 a year to be in better financial health if they live within their means than someone making $300,000 who spends like there's no tomorrow. A fool and their money soon part ways.

Quoting CasInterest (Reply 7):
good thing, since I now have to pay less for my HELOC, and this frees up money for me to spend. This is what the Fed wants. They want to stimulate spending, borrowing, and keep the economy from going into a recession, by introducing more funds(ie. inflate the economy).

But that's the whole problem....that's what got us to where we're at now! Loose credit guidelines that put money into people's hands now and propped up the economy through spending. People don't understand that when they factor in the costs of interest on the amount they borrowed, all of a sudden that $5,000 trip to Europe becomes $5,750 or $6,000 when/if its finally paid off. Same for the boat, kitchen remodel, etc. etc. You're better off saving in advance for those things, instead of borrowing. Have a savings reserve in place, so that when the or dishwaster fails, you have the funds, so you don't have to borrow and pay interest on it later. Worked for my parents...they had two kids and both retired at 58.  Smile

Quoting CasInterest (Reply 7):
The rest of the world(Europe) is not pleased with a lower dollar

I'm sure glad I don't own a small hotel in Europe somewhere. With a strong Euro and a weak dollar, Europeans are coming here, and Americans stay home. So that hotel owner loses...TWICE!

Quoting AndesSMF (Reply 13):
That this shit was allowed to happen for so long is a damn shame.

Banks and other financial institutions that just lent money to people who had no chance of paying it back are just as guilty as those who signed up for a loan without understanding the terms of the loan, i.e. variable rate and what can happen to their payments if rates adjust upwards.
 
threeifbyair
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 3:15 am

Disappointing news, but not at all unexpected.

We are going to see some serious moral hazard issues if these cuts keep coming. It is bad enough right now.

What I really don't like about these cuts is that they punish the Americans who actually save some money and live within their means. My 4.75% APY online savings account with WaMu better not decline again. I'm hoping WaMu's (serious) pain will continue to be my gain. Even with the Fed's cuts so far, that account has only dropped .25 so far. WaMu needs the deposits badly, I think, and they are a whole lot cheaper than the preferred stock they are planning to issue.
 
andessmf
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 4:00 am



Quoting ThreeIfByAir (Reply 18):
What I really don't like about these cuts is that they punish the Americans who actually save some money and live within their means

Bingo!

For a healthy society, you have to punish the wrongdoers and reward the producers. This is the reverse.
 
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casinterest
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 4:31 am



Quoting ThreeIfByAir (Reply 18):
What I really don't like about these cuts is that they punish the Americans who actually save some money and live within their means. My 4.75% APY online savings account with WaMu better not decline again. I'm hoping WaMu's (serious) pain will continue to be my gain. Even with the Fed's cuts so far, that account has only dropped .25 so far. WaMu needs the deposits badly, I think, and they are a whole lot cheaper than the preferred stock they are planning to issue.

I am currently rebalancing my Mutual fund with my heloc. Might as well pay off the higher interest loan with the lower interest savings.

Quoting N174UA (Reply 17):
But that's the whole problem....that's what got us to where we're at now! Loose credit guidelines that put money into people's hands now and propped up the economy through spending.

Correct...... to a point. But remember not all Non Qaualifiend lendee's are the same. Some are college studernts or otherwise just graduated, that have low credit scores. Others are folks who have always rented and hoped to own. In Other words, there is a whole gammit of folks who have never purchased a new home... who acutally become more so, or fully qualified to do so under the fed's rate cut.

Not only do some people get allowed to keep a home they could't preiviosly afford: but others who couldn't afford a home whithout the credit, but who had the cash, they can now purchase. It is a highly fickle and delicate ax that the fed swings.


Make no mistake, the US Fed cares more for the US economy than the world economy. They will easily tank the short term dollar strength for the long tern US economic gain..

The item that particularly irates the rest of the world and even the US is that China and India have pegged to the dollar. It does the whole world no good service to have 40% of the wordl population, serving less than 20%. -
Older than I just was ,and younger than I will soo be.
 
Matt D
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 3:25 pm

Here are a few points as I see it:

1. Yesterdays cut will delay, but not prevent the inevitable, which is a severe recession if not an outright depression. Maybe that's been the tactic all along: delay, delay, delay. But it cannot and will not be put off indefinitely as some hope. The longer it gets put off, the harder we will (eventually) be blindsided with it.

2. Any way you look at it, the party is over. The fundamentals were never there to begin with. For the last ten years, our entire economy has been propped up with nonexistant money that was "created" out of thin air: A speculative bubble that was feeding on itself; homeowners refinancing over and over and over and over on the runup of their home values. That was the money that was used to buy everything from jacuzzis to Ipods to new kitchen cabinets to snazzy SUV's.

Well now that home price appreciation has essentially stopped and in some cases is declining, how are those 'habits' (read: the economy) going to be supported now? Not only are many of these folks up to their eyebrows in debt, but there is no more equity to tap into. Because all of these loans were sliced and diced into an alphabet soup of 'securities', of which ownership is now an amorphous blob, who in their right mind is going to buy them now? Anyone who owns them (which means investors and bankers worldwide) are stuck holding the bag with piles of worthless paper. Once bitten, twice shy. Who's to say that this can't or won't lead to WWIII? If China, for example, were to decide and call the margins it's owed, and America stomps its foot down and says "we can't pay", and China comes back and says "well you owe us. We DEMAND it". More foot stomping, and the next thing you know, the missiles are flying. Granted, this is a pretty remote worst-case scenario. But I do think it is possible nonetheless, no matter how remote the odds.

3. The Stock Market: Although I have no information or proof besides a strong gut feeling, I am convinced that there is a whole lot of manipulation going on and the entire show being controlled by a handful of traders who are playing everyone else like a fiddle: Run it up one day, take it down the next, run it up, take it down, and so on, all making a killing along the way and laughing all the way to the bank. Seems strange that it is perpetually stuck in the range of never going (or staying) above 14,000 or below 13,000. If a Democrat wins the White House next year, I can almost guranatee you that two things will happen: One is that the Dow will plunge about 4000 points. The other is that you will see a raid on Wall Street, kind of like the Immigration Raids you hear about from time to time looking for illegal aliens. Only this time, you'll see a bus full of shiny suits getting dragged off to prison.

4. I absolutely, 100%, no questions asked believe that there is a money trail between Bernanke and Wall Street. If the scenario described in above #3 plays out, I'd bet both testicles that our Fed Chairman will be one of the ones wearing shackles.

5. It's only a matter of time before you start seeing 1930's style runs on banks. The bad news is that there is not enough money out there to cover everyones deposits. Likewise, even with FDIC insurance in place covering everyone up to 100K, that too would become insolvent should it actually be needed. The good news is that, thanks to negative savings, most people being in debt up to their necks as well as Offset Laws, few people will actually HAVE anything to pull. This is why it's NEVER a good idea to have a loan and a savings account at the same bank. However, with todays trend towards "one stop" shopping and "everything in one place", account separation is probably the exception more than the rule. The person who has little or no debt, lives within their means, and pays for things in cash...in short...todays "losers" who don't rely on one-upping one another with material goods....will eventually be the winners and the ones who escape with little or no pain.

6. Recession is treated as a dirty four-letter word. But our economy has been predicated on the premise and expectation of indefinite and perpetual growth. Obviously that is just not sustainable and even though there are many out there who would lie, cheat, and murder to stave off a recession, a recession is EXACTLY what's needed. Maybe when we finally find bankers and traders splatted on sidewalks and hanging from chandaliers, sanity and common sense will finally return to the markets. And the fleecing of the rest of us will finally come to an end.
 
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casinterest
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 3:37 pm



Quoting Matt D (Reply 21):
which is a severe recession if not an outright depression

Doubtful, The economy is still going strong.

Quoting Matt D (Reply 21):
. Any way you look at it, the party is over. The fundamentals were never there to begin with. For the last ten years, our entire economy has been propped up with nonexistant money that was "created" out of thin air

All Money is created out of thin air. There is no gold standard anymore. It is based on value and security.

Quoting Matt D (Reply 21):
3. The Stock Market

The undelying economy is still strong and consumers are spending. the dollar's drop in value is actually decreasing the trade debt and increasing US product demand oversees.

Quoting Matt D (Reply 21):
4. I absolutely, 100%, no questions asked believe that there is a money trail between Bernanke and Wall Street. If the scenario described in above #3 plays out, I'd bet both testicles that our Fed Chairman will be one of the ones wearing shackles.

Why run on the banks? We live in a cashless society of credit.



Ridiculous. The tie between Wall Street and Bernake is related to the underlying strength in the Economy.

Quoting Matt D (Reply 21):
It's only a matter of time before you start seeing 1930's style runs on banks



Quoting Matt D (Reply 21):
6. Recession is treated as a dirty four-letter word.

Recession and Inflation are natural parts of the economic cycle. Inflation always follows recession just as recession always follows inflation.
Older than I just was ,and younger than I will soo be.
 
AGM100
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 3:51 pm

OK.. Moving back up people ... should have bought more yesterday. Fed Ex is taking a nice move up .. good news . GOOG may move over 750.00 now ...

Who needs casinos when you have stocks !
You dig the hole .. I fill the hole . 100% employment !
 
Matt D
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 3:52 pm

Quoting CasInterest (Reply 22):
Doubtful, The economy is still going strong.

Based on what? Lines at Wal-Mart?

Quoting CasInterest (Reply 22):
All Money is created out of thin air. There is no gold standard anymore. It is based on value and security.

Agreed. I should've been more clear on that point. But that aside, where is the money to support the economy going to come from this time? It's not going to come from overseas. Not after the way we screwed them over. Or is Fed & Co just going to crank out the ol' Xerox machine? Is the day soon coming where, in order to fill your pocket at the supermarket when you leave, you better arrive pushing a wheelbarrow?

Something is only worth what someone is willing to pay for it. You can sit there and swear up and down that your two bedroom house is worth a million dollars. But guess what? If no one willing (or able) to pay that, then it's NOT worth a million dollars. And as for "extending credit" to fund such a purchase, sooner or later those bills WILL come due. SOMEONE will need to pay. The idea of keeping the economy going "at all costs" is EXACTLY what landed us in this mess in the first place.

Quoting CasInterest (Reply 22):
The undelying economy is still strong and consumers are spending. the dollar's drop in value is actually decreasing the trade debt and increasing US product demand oversees.

That would be fantastic if we actually manufactured anything besides mediocre cars, YouTube videos, and press releases. Next?

Quoting CasInterest (Reply 22):
Why run on the banks? We live in a cashless society of credit.

That's not totally true. Don't confuse your plastic card and E-Z Pass keychain or pixels on a screen with actual wealth. Credit cards can be maxed out. Savings Accounts exhausted. But good ol paper currency is still a foolproof, guaranteed way to complete a transaction, no matter how much of it you need. Besides, if (or when) banks start collapsing under the weight of their own debt and credit, those cards won't be worth the plastic they're made of. More to the point: Good luck using a Washington Mutual issued credit card to buy groceries ( a problem in and of itself) if Washington Mutual were to go under.

Quoting CasInterest (Reply 22):
Ridiculous. The tie between Wall Street and Bernake is related to the underlying strength in the Economy.

Again I ask: Where is the strength? When it now takes two people to earn same lifestyle it took one person just a generation ago, SOMETHING is amiss. You can show me the charts and graphs all you want, but in the real world, where my food and energy bills are doubling every 18 months (while my salary only goes up about 5% during the same period and my levels of consumption remain unchanged), its very easy to paint a rosy picture when the basics of living are omitted from the equation. And I suspect most will agree.

[Edited 2007-12-12 08:15:52]
 
PPVRA
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 4:02 pm

Quoting CasInterest (Reply 22):
Recession and Inflation are natural parts of the economic cycle. Inflation always follows recession just as recession always follows inflation.

Inflation is a result of variations of the money supply, which in the case of the U.S. (and most places AFAIK) is the Fed cranking the printing machines. That's certainly not natural.

[Edited 2007-12-12 08:06:34]
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
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casinterest
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 4:24 pm



Quoting PPVRA (Reply 25):
Inflation is a result of variations of the money supply, which in the case of the U.S. (and most places AFAIK) is the Fed cranking the printing machines. That's certainly not natural.

Economies got through recession and inflation, it is a natural part of the Economic cycle. It aways occurrs.
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casinterest
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 4:29 pm



Quoting Matt D (Reply 24):
That would be fantastic if we actually manufactured anything besides mediocre cars, YouTube videos, and press releases. Next?

Where do you live? Detroit?

This ecomomy produces tons of value. we have tons of Natural resources.

Quoting Matt D (Reply 24):
That's not totally true. Don't confuse your plastic card and E-Z Pass keychain or pixels on a screen with actual wealth. Credit cards can be maxed out. Savings Accounts exhausted. But good ol paper currency is still a foolproof,

The US dollar is backed by the governement. If it were to pluimmit in value, the rest of the world would have it's economy crash, The uS dollar still has plenty of investors.

Quoting Matt D (Reply 24):
You can sit there and swear up and down that your two bedroom house is worth a million dollars. But guess what? If no one willing (or able) to pay that, then it's NOT worth a million dollars.

Mine isn't worth that. We live in a capatilist society, where my house is worth what people will pay. People still have jobs and are still earning cash. In places like NC, there is not an issue with affording homes.

Quoting Matt D (Reply 24):
Again I ask: Where is the strength? When it now takes two people to earn same lifestyle it took one person just a generation ago, SOMETHING is amiss

The strength, is that when inflation occurs, people will cut back on spending causing recession/deflation of the rest of the economy. Food is going up becasue oil is going up becasus demand is going up. If people spend more on food, they will stop spending more on driving, in theory, due to it's cost causing oil to fall, and food production to fall.

It is an economic cycle, not a straight line. It is an interconnected circle where supply and demand mix.
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huskyaviation
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 4:56 pm

Quoting Matt D (Reply 21):
It's only a matter of time before you start seeing 1930's style runs on banks. The bad news is that there is not enough money out there to cover everyones deposits. Likewise, even with FDIC insurance in place covering everyone up to 100K, that too would become insolvent should it actually be needed.

This is one of the most patently absurd things I have ever read. The only way you'd get runs on banks is (1) hyper-inflation or (2) a complete and utter crash in confidence in banks which is absolutely NOWHERE to even being close to reality. The US banking system is 100% secure.

I'd be curious to know what the "take your medicine, let people suffer" folks think of this. If this were actually possible, and it isn't, would you still be calling for the gov't to stick its head in the sand?

Quoting Matt D (Reply 24):
Good luck using a Washington Mutual issued credit card to buy groceries ( a problem in and of itself) if Washington Mutual were to go under.

This is unlikely to happen in the near future.

[Edited 2007-12-12 08:58:04]
 
Pope
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 5:17 pm



Quoting CasInterest (Reply 22):
Why run on the banks? We live in a cashless society of credit.

How does that explain Northern Rock in the UK?

Quoting Matt D (Reply 24):
When it now takes two people to earn same lifestyle it took one person just a generation ago, SOMETHING is amiss.

But that's not a fair comparison. A generation ago conspicuous consumption wasn't the rule. People made decisions based on their financial situation NOT inspite of it. I know many people earning mid 6 figures who live paycheck to paycheck but drive a Porsche and live in a $1M+ house.

A generation ago, a bread winner would sacrifice to provide for his family. Now the bread winner has no problem going to Best Buy and purchasing a 56 in plasma TV on credit at 21% APR even if that means that his kids can't go to private school or that his spouse has to work in order to make ends meet.

The lack of personal responsibility is at the root of most of these problems. I know it's easier to blame the government.

I know that I earn more than just about anyone I know yet my standard of living is probably toward the bottom of my peer group. My standard of living hasn't changed significantly since college graduation over 13 years ago. I may take a slightly nicer vacation every now and then but I still live in the same $240,000 house I bought 9 years ago; I drive a little bit nicer car (upgrade from an Acura Integra to an RL) but I still know that my priorities are to (1) provide for my family (2) safeguard our short- and long-term financial future and (3) contribute to the organizations I believe in.

My wife and I have decided that our daughter will grow up best in a setting where one of us stays home. She wanted to do be the homemaker so I work. But because we don't have two incomes, we consume less. We don't have the top of the line flat screen. We don't take $50,000 vacations (as the parents of one of my daughter's classmates [a house builder] told us they did when we had dinner with them this past weekend). My wife drives a minivan not an MDX as the wife of a surgeon friend of ours does (yet pulled her kids out of private school because tution was "just too much".

Living within one's means is a matter of personal choice. If you chose wrong, then it's nobody else's responsibility to fix your mistakes.
Hypocrisy. It's the new black for liberals.
 
Matt D
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 5:33 pm



Quoting CasInterest (Reply 27):
This ecomomy produces tons of value. we have tons of Natural resources.

If resources are defined as raw materials (i.e shiploads of scrap metal) shipped overseas and sent back to us as finished products counts as "tons of value", then you are right. I suppose there are some things still made here like automobile rims and water heaters. But those are one-time purchases. The items that truly keep the economy going (textiles, electronics, toys, food wares, furniture, etc.)...ALL of it is made elsewhere. Go into any Wal-Mart. Of all the items there the onesNOT made in China, India, Bangladesh, etc, can be easily fitted into any 7-11 convenience store. With room to spare.

Quoting CasInterest (Reply 27):
The US dollar is backed by the governement. If it were to pluimmit in value, the rest of the world would have it's economy crash

Then explain to me why the dollar is getting dumped left and right and why the Euro is skyrocketing.

Quoting HuskyAviation (Reply 28):
This is one of the most patently absurd things I have ever read. The only way you'd get runs on banks is (1) hyper-inflation or (2) a complete and utter crash in confidence in banks which is absolutely NOWHERE to even being close to reality. The US banking system is 100% secure.

Typical perpetual "bull" chest-beating rhetoric. It may seem absurd TODAY (which, incidentally is about as far out as most bulls see anyway), but so did the idea of the DotCom and Housing Bubbles about a year before they actually collapsed. No one is calling the people who correctly foresaw the future there an idiot anymore. Look at the facts all around you. Why IS it a farfetched idea? With inflation already running as high as it is, why isn't a run possible? The banking system and FDIC are secure ONLY BECAUSE the majority of people are so deep in hock that they COULDN'T cause a run even if they wanted to. A pretty flimsy safety net if you ask me.

Quoting HuskyAviation (Reply 28):
This is unlikely to happen in the near future.

Fine. Insert bank name of your choice in place of WM. Tell me one good reason why it COULDN'T happen? Especially in a "free market" system where the strong survive and the weak go under. So "protect" (read: bail out) an imminent [bank] failure is tantamount to Socialism.

And tell me. Why are COMMODITIES suddenly such as gold, oil, and silver skyrocketing in value? Classic supply-and-demand, yes. But I believe that's only half the picture. The other half, which isn't being widely reported yet is that the day is soon coming where only commodities will actually be worth anything. Paper is-or will soon be-worthless.

This underscores the true absurdity of the housing bubble. If more gold, oil, etc were to be available, with a static or receding demand, prices would plummet. Yet as more and more housing was built, exactly the opposite happened: As MORE inventory became available, prices BY FAR kept going UP. Yet our population didn't increase by 200% since 2000.
 
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casinterest
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 5:45 pm



Quoting Matt D (Reply 30):

Then explain to me why the dollar is getting dumped left and right and why the Euro is skyrocketing.

Read my earlier responses.

Quoting Matt D (Reply 30):
.)...ALL of it is made elsewhere. Go into any Wal-Mart. Of all the items there the onesNOT made in China, India, Bangladesh, etc, can be easily fitted into any 7-11 convenience store. With room to spare.

All is the wrong, and failrly ignorant statement.

The US produceslservices and complex items in the US, , we import from China because it is cheap.

The US produces pharmaceutacal drugs.
The US produces Airplanes
The US produces Tourist Destinations
The US produces Cars
The US produces Agriculture.
The US produces Beer
The US produces Wine
The US produces ,,,,, more crap than you can apparently grasp.
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Pope
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 5:56 pm



Quoting CasInterest (Reply 31):
The US produces pharmaceutacal drugs.

No, we perform the R&D Domestically and then outsource the manufacturing to local facilities for non-domestic markets.

Quoting CasInterest (Reply 31):
The US produces Airplanes

The US assembles planes whose components are ever increasingly produced outside the country

Quoting CasInterest (Reply 31):
The US produces Tourist Destinations

But we make it harder and harder for tourists to come visit our country. Given the devaluation of the US$ foreign tourists should be everywhere in the US but many chose not to come to avoid the immigration hassels

Quoting CasInterest (Reply 31):
The US produces Cars

GM is barely holding on. Toyota and Honda are eating their lunch - though I do acknowledge that both of those produce the cars domestically

Quoting CasInterest (Reply 31):
The US produces Agriculture.

But we're diverting more and more land from food production to ethanol

Quoting CasInterest (Reply 31):
The US produces Beer

Not any good beers

Quoting CasInterest (Reply 31):
The US produces Wine

You can't base an economy on wine.
Hypocrisy. It's the new black for liberals.
 
Matt D
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 5:57 pm



Quoting CasInterest (Reply 31):
The US produces pharmaceutacal drugs.

...that get reverse engineered overseas then resold here at half price.

Quoting CasInterest (Reply 31):
The US produces Airplanes

...made from parts manufactured everywhere from Japan to Korea to Sweden

Quoting CasInterest (Reply 31):
The US produces Tourist Destinations

I'll give you this one. Disneyland is cheap to foreigners because the dollar is so weak.

Quoting CasInterest (Reply 31):
The US produces Cars

...that A) have to be practically given away, and B) are also constructed using foreign made parts.

Quoting CasInterest (Reply 31):
The US produces Agriculture.

Only because it's heavily subsidized. In most cases, I can buy fruit imported from Chile (6000 or so miles away) cheaper than I can buy from Fresno (250 miles away).

Quoting CasInterest (Reply 31):
The US produces Beer
The US produces Wine

Yeah...Budweiser and Napa Valley Pinot Noir. THAT'LL save the day. We'll need it to escape the woes of the rest of the world around us.

Quoting CasInterest (Reply 31):
The US produces ,,,,, more crap than you can apparently grasp.

I'm not saying the US produces NOTHING. But as I already said, the ESSENTIALS have all been sent overseas.
 
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casinterest
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 6:23 pm



Quoting Matt D (Reply 33):
I'm not saying the US produces NOTHING. But as I already said, the ESSENTIALS have all been sent overseas.

Only until it is cheaper to produce in the US.

The US still produces goods. People still have jobs.
Older than I just was ,and younger than I will soo be.
 
Matt D
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 6:42 pm



Quoting CasInterest (Reply 34):
The US still produces goods.

Explain to me what these goods are. What do we produce here that is A) essential to our day-to day well being and economy in general *AND* B) is NOT made from foreign parts?

Quoting CasInterest (Reply 34):
People still have jobs.

Tell that to the people in your mysterious manufacturing sector. Tell that to the banking industry. Tell that to the people who need three of those jobs to put food on the table. Tell that to the folks who've worked hard their entire lives and led an honest living that now have to choose between groceries and electricity. Tell that to those of us who do earn a decent living (through school/skills, or both and are, statistically earning well above the median 'average'), live within our means, save as much as possible, but chose not to partake in the housing market stupidity but can't afford a house because the prices have been ran up so much that they would take 75 years to pay off and 20 years just to save for a 20% down payment.
 
huskyaviation
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 6:55 pm



Quoting Matt D (Reply 30):
With inflation already running as high as it is, why isn't a run possible?

Inflation running high? How do you figure that? It has been consistently historically low even with oil prices up.

Quoting Matt D (Reply 30):
With inflation already running as high as it is, why isn't a run possible?

Because we have a strong Fed acting in concert with other central banks around the world to pump adequate liquidity into the banking system, which they are already showing a willingness to do by putting another $40 billion into the system to ease the credit pain.

Quoting Matt D (Reply 30):
The banking system and FDIC are secure ONLY BECAUSE the majority of people are so deep in hock that they COULDN'T cause a run even if they wanted to. A pretty flimsy safety net if you ask me.

Because the banks are regulated tightly and are required to maintain sufficient capital reserves by the regulatory regime (state regulation, FDIC, OCC, OTS). If the system can survive the economic turmoil of the late '70s and early '80s when you had very high inflation without crumbling due to a run on the banks, then this can be survived as well. The FDIC-insured accounts give the average accountholder enough confidence in the safety of his money that there is no need to make a run on the banks, and those who have much larger sums are quite likely to be smart enough to diversify their holdings. Hardly flimsy.

Quoting Matt D (Reply 30):
The other half, which isn't being widely reported yet is that the day is soon coming where only commodities will actually be worth anything. Paper is-or will soon be-worthless.

Being that you basically are saying that our oncoming economic Armageddon is going unreported and is imminent, do you have sources for this? I tend to think you're an economic Chicken Little.

Quoting Matt D (Reply 30):
Why are COMMODITIES suddenly such as gold, oil, and silver skyrocketing in value? Classic supply-and-demand, yes.

Any why is inflation not skyrocketing? Doesn't the Chinese inflation have something to do with this as well?

Quoting Matt D (Reply 30):
Tell me one good reason why it COULDN'T happen?

Of course it CAN happen--banks fail, as all other businesses do. There is a difference between a bank failure and a banking collapse. There have been other credit issuer defaults (ie, Spiegel and NextCard) and the industry coped with that. Most banks have sufficiently designed capital structures to weather economic storms.
 
Pope
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 7:18 pm



Quoting HuskyAviation (Reply 36):
Because the banks are regulated tightly and are required to maintain sufficient capital reserves by the regulatory regime (state regulation, FDIC, OCC, OTS).

But the single point of failure in that argument is that the financial statements prepared in accordance with GAAP accurately reflect the market value of the bank's assets. However, because of the near seizure in the CDO market, it's impossible to accurately determine what the bank's assets truly are worth - if for no other reason than that nobody is buying them.

This is why the fed was pushing for the super-SIV that would create another (artificial) market for these assets.

If banks properly marked to market their CDO holdings several banks would be below the FDIC capitalization requirements. Hell, Citibank by its own admission is operating at a level below its internal capitalization reserve ratios.

Right now banks are carrying CDO's at a combination of historical cost adjusted with mark to model valuation. But that's a far cry from a true market valuation.

Everyone is terrified of a true market to market implimentation because of the immediate insolvency it would cause many organizations. Ask yourself this - why did the FASB delay the full implementation of Statement of Financial Accounting Standard No. 157 in response to this crisis. SFAS #157 is entitled Fair Value Measurement.

The fed is now dumping money into the financial markets through easy credit AND a lossening of the collateral it will accept at the discount window in a desparate attempt to create a secondary market in CDO's.

Quoting HuskyAviation (Reply 36):
Any why is inflation not skyrocketing? Doesn't the Chinese inflation have something to do with this as well?

I don't know what you do for business but I will tell you that I run a chemical distribution company. EVERYTHING coming out of China is going up in price. The core inflation measurment that the fed uses and reports is dramatically understating the pent up upward price pressure that exists within the supply chain.

Why aren't consumer prices going up? I don't know but the Fed just published this article on the topic:

http://www.newyorkfed.org/newsevents/news/research/2007/rp071206.html
Hypocrisy. It's the new black for liberals.
 
andessmf
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 7:19 pm



Quoting HuskyAviation (Reply 36):
Because we have a strong Fed acting in concert with other central banks around the world to pump adequate liquidity into the banking system, which they are already showing a willingness to do by putting another $40 billion into the system to ease the credit pain.

But part of the problem WAS too much liquidity, too much money chasing too few assets. There is no justification for keeping housing prices up too high, since housing is usually a person's largest expense.

And that is what they are in a sense trying to do. By propping up current home prices, the problem doesn't get solved, it gets worse. Since bankers finally decided to tighten up their lending standards, most people will not be able to qualify for loans that the realistically had no chance of paying in the first place.

Government needs to act only to help this bubble unwind and allow house prices to come down to their historical levels.
 
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casinterest
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 7:30 pm



Quoting Matt D (Reply 35):
Explain to me what these goods are. What do we produce here that is A) essential to our day-to day well being and economy in general *AND* B) is NOT made from foreign parts?

You can still buy stuff made in the US, you just choose not too because it is cheaper to buy the chinese product.
Nothing has been 100% outsourced to China as you alude to. Some car parts are still made in the US, by different companies.

Florida still grows Oranges
Iowa still grows Corn
Nebraka and Kansas still has wheat.
The Gulf and Alaska still have Oil
Texas still has Cattle.
West Virginia still has Coal.
Pittsburg still makes steel.

Just get your head out of your butt and look around.

Quoting Matt D (Reply 35):
Tell that to the people in your mysterious manufacturing sector. Tell that to the banking industry. Tell that to the people who need three of those jobs to put food on the table. Tell that to the folks who've worked hard their entire lives and led an honest living that now have to choose between groceries and electricity. Tell that to those of us who do earn a decent living (through school/skills, or both and are, statistically earning well above the median 'average'), live within our means, save as much as possible, but chose not to partake in the housing market stupidity but can't afford a house because the prices have been ran up so much that they would take 75 years to pay off and 20 years just to save for a 20% down payment.

'

Not everyone has this problem with housing. If you can't afford a Million dollar house, maybe you should move to a region where you can afford one.

And we still have among the lowest unemployment rates in history.
Older than I just was ,and younger than I will soo be.
 
N174UA
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 8:35 pm



Quoting Pope (Reply 29):
The lack of personal responsibility is at the root of most of these problems. I know it's easier to blame the government.



Quoting Pope (Reply 29):
Living within one's means is a matter of personal choice. If you chose wrong, then it's nobody else's responsibility to fix your mistakes.

 checkmark  I couldn't agree more. Instead of teaching kids how to pass a worthless standardized test, teach them instead how to create and keep a budget, live within their means, and save for the future, rather than borrow against it.
 
Pope
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 8:59 pm



Quoting N174UA (Reply 40):
Instead of teaching kids how to pass a worthless standardized test, teach them instead how to create and keep a budget, live within their means, and save for the future, rather than borrow against it.

Today I just finished teaching an 8 week Junior Achievement class at a local high school. The HS is ranked in the top 10 h.s. in the country by US New & World Report (but the criteria they use is completely skewed). On the first day of class I asked these kids how someone makes money.

The answers (I kid you not):

Welfare
Child Support
AFDC (Aid for Families with Dependent Children)
Food Stamps
Disability Income

Not a single one of the 24 students mentioned - BY WORKING!

It speaks volumes about what kids are learning in government schools.
Hypocrisy. It's the new black for liberals.
 
andessmf
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 9:38 pm



Quoting Pope (Reply 41):
Not a single one of the 24 students mentioned - BY WORKING!

It speaks volumes about what kids are learning in government schools.

That still applies to some adults, as I am certain that you have encountered those who believe most of the rich got rich by stepping on the backs of the middle class and poor.

I still encounter the similar situation at my office. Yes, my wife and I make more money together than most, but they neglect to see the hard work and financial smarts required to get there AND STAY THERE.
 
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Aaron747
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 11:08 pm



Quoting Pope (Reply 1):
the US government is as big as a currency manipulator as China.

Perhaps so, but I think you haven't taken a look at quoted figures for the oil and agricultural subsidies the Chinese government has laid out this last year to stave off massive inflation.

Quoting CasInterest (Reply 7):
The Fed has to balance how much it cuts funds, because too much of a cut could bring on heavy inflation if the ecomomy get's going too strong to quick. Too little of a cut and the Economy goes into a recession.

Recession was needed a year ago. The Fed should be acting in the market's best interest, not playing interest rate political football. Oh wait, we're talking about the Fed!  Yeah sure

Quoting AndesSMF (Reply 13):
That this shit was allowed to happen for so long is a damn shame.

110% in agreement. And the sad thing is probably less than 20% of Americans understand what's happening...

Quoting CasInterest (Reply 14):
The banks really don't want defaults. They would rather you pay the loan somehow. This is how the Fed is helping the banks, by making it more affordable for the homowners to refinance than to default on their loan.

No shit. That's the only justification for the Fed or any other central bank's existence - to help other large banks. But we already got into it in another thread on the reasons why it's essential for banks to default on their bad loans in a functioning market economy. Keep all of those underperforming loans and watch what happens...

Quoting Matt D (Reply 21):
1. Yesterdays cut will delay, but not prevent the inevitable, which is a severe recession if not an outright depression. Maybe that's been the tactic all along: delay, delay, delay. But it cannot and will not be put off indefinitely as some hope. The longer it gets put off, the harder we will (eventually) be blindsided with it.

Delay is the only tactic these people know. None of them are interested in operating a real free market.

Quoting Matt D (Reply 21):
Only this time, you'll see a bus full of shiny suits getting dragged off to prison.

Actually, I highly doubt we'll ever see that.

Quoting Matt D (Reply 21):
Recession is treated as a dirty four-letter word. But our economy has been predicated on the premise and expectation of indefinite and perpetual growth. Obviously that is just not sustainable and even though there are many out there who would lie, cheat, and murder to stave off a recession, a recession is EXACTLY what's needed.

For all intents and purposes, the above is now treated as an article of faith in Washington. Long term, a lot of Americans are going to burn financially for it, maybe sooner than a lot of people think. Suppressing inflation and releasing massaged BLS figures to hide underperformance in the market serves who knows what purpose but certainly isn't being done in the interest of the public or the market.
If you need someone to blame / throw a rock in the air / you'll hit someone guilty
 
Pope
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RE: Fed Cuts Interest Rates Again

Wed Dec 12, 2007 11:42 pm



Quoting Aaron747 (Reply 43):
Perhaps so, but I think you haven't taken a look at quoted figures for the oil and agricultural subsidies the Chinese government has laid out this last year to stave off massive inflation.

I'm very aware of Chinese subsidies across all industries. In fact the US government doesn't generally (it made one exception recently) in pursuing counterveiling duties (CVD) under the GATT framework is that US policy opposes CVD filings on entities from non-market economies.

But do we really want to compare / sink to the lowest common denominator. China claims to be communist (why the then have first class on Air China is beyond me). However, the US is purportedly a capitalistic economy.
Hypocrisy. It's the new black for liberals.
 
andessmf
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RE: Fed Cuts Interest Rates Again

Thu Dec 13, 2007 12:23 am



Quoting Aaron747 (Reply 43):
Keep all of those underperforming loans and watch what happens...

Japan, circa 1989 to now?
 
Matt D
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RE: Fed Cuts Interest Rates Again

Thu Dec 13, 2007 12:29 am

Quoting HuskyAviation (Reply 36):
Inflation running high? How do you figure that? It has been consistently historically low even with oil prices up.

As long as you don't look at the cost of food, gas, electricity, heating oil, or fuel surcharges, then yes. I agree. Inflation is, or at least has been low.

Quoting HuskyAviation (Reply 36):
Because we have a strong Fed acting in concert with other central banks around the world to pump adequate liquidity into the banking system, which they are already showing a willingness to do by putting another $40 billion into the system to ease the credit pain.

And another 40 billion. And another. And another.

And THERE LIES THE RUB:

WHERE, for Gods sake, where does it end, and where does that money keep coming from? I asked the question earlier. And you dodged it: Does it come from the printing press? Does it come from someone who has access to some accounts in the computer simply adding a couple more zeros? Or are the taxpayers going to be asked (directly or indirectly) to foot the bill with REAL MONEY?

It's not going to come from 401K contributions. Not unless you take that money now and have ziltch to pay out later when THOSE bills come due. That's the whole point I'm trying to get across. Commodities are going up. Everyone else who is investing in paper is going to be stuck with nothing. For far too long, the rallying cry has been "charge it charge it, charge it! Let's issue IOU's! Let's get real creative with the numbers." And now that we have exhausted all options, the bills are coming due and there's going to be a lot of panic. And a lot of people losing their proverbial asses. As I also already mentioned, I just can't see another round of foreign traders and investors being stupid enough to pump still more money into our Ponzi Scheme. Not unless they demand, in return, some kind of collateral, such as the keys to 1600 Pennsylvania Ave, Washington DC.

Quoting CasInterest (Reply 39):
If you can't afford a Million dollar house, maybe you should move to a region where you can afford one.

I think, and I'm sure plenty would agree with me that we'd be happy with A house. Again. It's not a question of relocating or getting a better job so much as it is being able to afford something WHILE ALREADY EARNING A DECENT SALARY.

But that would mean making some sacrifices: No his-and-her BMW Z3's, plasma TV's in every room, dining on filet mignon 4 nights a week, and so on. I COULD, right here today, afford all of those things. But that would leave little for...say....a traditional mortgage payment after saving a minimum 15% down payment.

Quoting CasInterest (Reply 39):
You can still buy stuff made in the US, you just choose not too because it is cheaper to buy the chinese product.
Nothing has been 100% outsourced to China as you alude to. Some car parts are still made in the US, by different companies.

Bro. You have no idea what my spending habits are. So don't take too many liberties. Especially seeing that you've dodged nearly all of my questions. If I buy something made in China (or elsewhere), it's because I had NO OTHER CHOICE. But given a choice, I'll almost always buy the American version.

I never said 100% of anything was outsourced to China. Perhaps only 60% of it, with the other 40% split between India, Korea, Bangladesh, and Gondwanaland. And yes, some car parts are made here. Not many. And certainly no car anywhere can truly claim to be 100% American any more.

Quoting HuskyAviation (Reply 36):
Being that you basically are saying that our oncoming economic Armageddon is going unreported and is imminent, do you have sources for this? I tend to think you're an economic Chicken Little.

When all else fails, even when the facts are in plain view around, ask to see "a source". Ok , fair enough, I'll go dig some up for you. You certainly won't see it in many of the mainstream publications. Oh sure, Jim Jubak might occasionally run a downbeat story, but even then, it'll be spruced up as much as possible. In the media, having a bearish attitude is definitely a no-no.

Is it a conspiracy? Maybe it is.

Is the sky falling? Maybe it is. Maybe it isn't. But seriously. Who do you think I'm going to believe? You or my lying eyes and shrinking wallet?

Remember: Just because you don't WANT to believe it, doesn't mean it isn't true.

[Edited 2007-12-12 16:34:13]
 
andessmf
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RE: Fed Cuts Interest Rates Again

Thu Dec 13, 2007 1:23 am



Quoting Matt D (Reply 46):
Quoting HuskyAviation (Reply 36):
Being that you basically are saying that our oncoming economic Armageddon is going unreported and is imminent, do you have sources for this? I tend to think you're an economic Chicken Little.

When all else fails, even when the facts are in plain view around, ask to see "a source". Ok , fair enough, I'll go dig some up for you.

There are way too many sources for this, but I would begin with this one:

http://en.wikipedia.org/wiki/Bubble_%28economics%29

Economic history is littered with examples of bubbles. They all follow the same template. The only difference with this bubble has been geographical extent, as this one has been worldwide. Hence, you will not see me predict how this one will end. Though I do predict that the world will be different by the time it is thru.

One common part of a bubble is the reasoning given by many to support the rise in prices. After the pop, the reasonings come as to why the prices cannot come down that much. And some then will see a lower price and wrongly assume that the new lower price is a bargain.

Here is a good chart that shows you how prices will eventually go down till they go back to the prior fundamentals:

http://en.wikipedia.org/wiki/Image:Nasdaq_Composite_dot-com_bubble.svg

After the recent dot.com bubble debacle, I find it surprising that many cannot simply follow what happened there and apply the lessons to the current housing bubble. I even had a discussion with people today who have no doubt that prices will be back where they were in a mere 5 years.

To recap the dot.com bubble:

After almost 8 years, the NASDAQ is STILL 50% of its bubble high. YAHOO once had its stock valued at $108, its now at $25, from a low of $5.
 
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Aaron747
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RE: Fed Cuts Interest Rates Again

Thu Dec 13, 2007 1:41 am



Quoting Matt D (Reply 46):
Remember: Just because you don't WANT to believe it, doesn't mean it isn't true.

This should be the new forum mantra for all those who still have their heads in the sand. Thanks Matt.

Quoting AndesSMF (Reply 45):
Japan, circa 1989 to now?

Bingo buddy.

Quoting Matt D (Reply 46):
As long as you don't look at the cost of food, gas, electricity, heating oil, or fuel surcharges, then yes.

Is it any surprise the media repeats the falsified information coming out of the government like its gospel?

Some commentary from commodities investor Jim Rogers on the subject in 2004:

Recent figures show more than half of the numbers that go into the CPI are now "hedonically" adjusted. The term is not one I made up - the BLS uses it to describe its methodology. Because the adjustments keep things like Social Security payments and cost-of-living raises low, making it easier for the government to balance the federal budget, one can assume that the adjustments are here to stay and the 50% neighborhood is not where they will stop.

In November of 2002, the BLS reported that heating prices were down by 11.1% but the actual market numbers indicated they were up by nearly 20%. Similarly, the BLS reported "cheaper gasoline in May 2000" while the US Department of Energy reported prices were up by more than 20% in the same month. These figures are very easy to verify, yet Wall Street and the press accept the official government figures unquestioningly. But then these are the same people who said there was a bull market and a "New Economy" when in fact there was neither.

The real prices of just about everything are up and, thanks to government accounting methods, are working their way unchallenged into the economy. If you learn nothing else in life, learn not to take your investment advice, or any other advice, from the US government - or any government. Make no mistake, I have received letters from former employees of the Bureau of Labor Statistics who say that, indeed, they were always instructed to "smooth out" inflation numbers. If you or I kept our books the way the US government does, we would be thrown in jail.
If you need someone to blame / throw a rock in the air / you'll hit someone guilty
 
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casinterest
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RE: Fed Cuts Interest Rates Again

Thu Dec 13, 2007 3:24 am



Quoting Matt D (Reply 46):
WHERE, for Gods sake, where does it end, and where does that money keep coming from? I asked the question earlier. And you dodged it: Does it come from the printing press? Does it come from someone who has access to some accounts in the computer simply adding a couple more zeros? Or are the taxpayers going to be asked (directly or indirectly) to foot the bill with REAL MONEY?

Are you honestly this ignorant about how money flows into the US economy? If so, then you have no business spouting your doomsday scenerios.


The FED prints money/creates it right out of thin air, it releases it to the banks to lend. When it lends it, it does it at the Fed Discount rate. When this rate is low, banks want to borrow more money. When the rate is high , banks want less money. This is how the Fed controls the dollar. Every now and then, the Fed will add extra money to this pile of available funds. As long as people are willing to borrow the notes, they are supporting the dollar.

Quoting Matt D (Reply 46):
Commodities are going up

No kidding, they always have and always will, when considering the long term. It is a natural side effect of the natural inflation of all the economies due to the introduction of more supported money/

Quoting Matt D (Reply 46):

I think, and I'm sure plenty would agree with me that we'd be happy with A house. Again. It's not a question of relocating or getting a better job so much as it is being able to afford something WHILE ALREADY EARNING A DECENT SALARY.

But that would mean making some sacrifices: No his-and-her BMW Z3's, plasma TV's in every room, dining on filet mignon 4 nights a week, and so on. I COULD, right here today, afford all of those things. But that would leave little for...say....a traditional mortgage payment after saving a minimum 15% down payment.

Probably not, but currently in the US the average house size is twice the square footage it was in the 70's . If you could accept going back to a 900 square foot house with a carport, I am sure you could do it no problem.
Some people can do this and afford his and her plasma TV's. You just have to be smart with your finances and know the limits.

Quoting Matt D (Reply 46):
I never said 100% of anything was outsourced to China. Perhaps only 60% of it, with the other 40% split between India, Korea, Bangladesh, and Gondwanaland. And yes, some car parts are made here. Not many. And certainly no car anywhere can truly claim to be 100% American any more.

Once again your lack of grasp on what Economic Production means. We have people that produce goods and services. From the Wal Mart Greeter and Fry Cooks, masons, engineers, doctors, dog walkers, amway salesman, brokers, bankers, lawyers, doctors, teachers, farmers.

If all you care about is how the piece of crap was assembled, then yes it was assembled in China, but where was it designed and purchased?
Older than I just was ,and younger than I will soo be.

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