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Huge interest rate cut

Discussion in 'Political Discussion' started by weswelker#83, Jan 22, 2008.

  1. weswelker#83

    weswelker#83 In the Starting Line-Up

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    European indexes went green for about 10 min.
    Dax is now down-140and falling faster than I can type , If Ben had cut 25 or 50 it would have been seen as a calm sensible move.
    My bet is the 75 cut shows FEAR and the markets realize it.

    http://biz.yahoo.com/ap/080122/fed_interest_rates.html


    BAC - RAISES CREDIT CARD INTEREST!
    They want you off their balance sheet. If you have a fixed rate card with them, you shouldn't worry about it. They must allow you to repay the balance at the previously agreed upon rate. If you had a variable rate card, well...

    http://business.smh.com.au/shares-super-hit-as-credit-crisis-bites/20080116-1mdh.html


    http://www.foxbusiness.com/markets/...ves-defend-surprise-rate-hikes_389894_18.html
     
    Last edited: Jan 22, 2008
  2. BelichickFan

    BelichickFan B.O. = Fugazi PatsFans.com Supporter

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    #24 Jersey

    Regarding the stock market, as long as you're 5 years out it's a great time to buy. We may lose another 5-10%, who knows, but you can buy on sale right now. The stock market is weird - in stores when items go on sale people rush in to buy - but when the stock market goes on sale, people rush in to sell. Werid, weird, weird.
     
  3. weswelker#83

    weswelker#83 In the Starting Line-Up

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    You should read this :

    http://www.usatoday.com/money/economy/2008-01-21-japan-parallels_N.htm



    I am not predicting a Japanese style problem, but we better pick up the pace of transparency so that our banks and capital markets can begin functioning properly. To claim it can not happen here is naive. Rate cuts and some fiscal stimulus are not going to solve the problem.



    When it is all out in the open it will be plain to see that we are in far worse shape than Japan ever was.
    At least the Japanese had savings to fall back on. In the US we consider someone to be doing quite well if they aren't in debt, even if they have little of no savings.
     
    Last edited: Jan 22, 2008
  4. PressCoverage

    PressCoverage Banned

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    wait, i thought there wasn't a recession coming...

    this pretty much slams that lid shut.... even the Fed knows one is looming, if not arrived already...

    desperate measure.... putting a band-aid on a gaping wound...
     
  5. BelichickFan

    BelichickFan B.O. = Fugazi PatsFans.com Supporter

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    #24 Jersey

    The chance of a recession has increased due to this move being somewhat belated but it's still unlikely IMO.

    Regarding Japan, even if there's a "deep and long recession" this is still a solid low point for the stock market - worst case in 10 years, you buy 1/3 to the bottom and could have bought at a better time but it's still a good time to buy.
     
  6. QuiGon

    QuiGon Banned

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    Anyone but me ever notice how much the moonbats b*tch and moan at the state of the economy and then how much they b*tch and moan when someone tries to do something about it..?
     
  7. weswelker#83

    weswelker#83 In the Starting Line-Up

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    The claim that our banking system has been transparent and aggressive about taking write downs is just silly. We still have Billions buried on off balance sheet vehicles and are kidding ourselves with Billions of CDS that they claiming have mitigated risk.
    The Japanese banks might have been hiding a lot of bad loans, but at least they probably didn't have a sh_it load of Level 3 *cough* "assets".
    We will see in the next 6 months what the banks will do. They have puked 150 billion so far. Thats a big number. Lots more puking to be done. We will see over the next few quarters.

    I think the FED will force the puking through the SEC so we don't end up like Japan. The more I read the more I am thinking we might get through this quicker then previously thought. Its going to be one hell of a slaughter when it happens.
     
    Last edited: Jan 22, 2008
  8. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    Our economy is a mess. Not only have we cut interest rates, which will probably lead to more inflation, we're preparing to take another $150 billion in debt to try to ignite the economy. The dramatic steps being taken show that the likelihood of a recession is very strong.
     
  9. weswelker#83

    weswelker#83 In the Starting Line-Up

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    http://www.underconsideration.com/speakup/archives/WeAre****ed.jpg
     
  10. scott c

    scott c On the Game Day Roster

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    Here in Maine,the economy sucks even when the country is doing well.I can see from experiance that the rest of the US is starting to look like the typical Maine economy.......Brace yourselves.........:D
     
  11. PressCoverage

    PressCoverage Banned

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    meanwhile, our lawmakers -- elected to precisely end the atrocities in Iraq -- have just OK'ed $700 Billion more for Boy King's war fantasy...
     
  12. Real World

    Real World Moderator Staff Member

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    Massive knee jerking going on all over the place. As long as people are working, the downturn won't be that bad. Clearly real estate needed a correction of significancy. Home prices were terribly inflated and out of control. The risks I see is with the constant lowering of rates. IIRC, the fed has been dropping rates since the 90's. At some point, you have to raise them to both stave off inflation, and to have some room to manipulate economic conditions. We're at 3.50%, which doesn't leave much more room for maneuver. I think it's very dangerous to knee jerk here.
     
  13. weswelker#83

    weswelker#83 In the Starting Line-Up

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    The market is running on pure emotion/fear right now.
    The FED cut doesn't actually do much right now, but what it does do is ease the fear and settle emotions.
    Fear/Panic can get out of hand to a much greater degree and much faster than greed/confidence on the way up.
    So today's cut was nothing but some Prozac for Wall Street.At the speed this is currently traveling... it will be all over by November..
    Honestly.. we could be at DOW 9500 and bear market over by June. The longest of bear markets stretch only to a year and a half.. and this one is moving much quicker than most.
    The economy will be a huge issue though,.. cause we'll either have just finished it.. or be at the worst part of the bottom of it.

    Update bloomberg:
    http://www.bloomberg.com/apps/news?pid=20601087&sid=aTEHP2k_0aYo&refer=home


    Roar of the Bear
    [​IMG]

    Bear market
    http://en.wikipedia.org/wiki/Bear_market#Bear_market
     
  14. BelichickFan

    BelichickFan B.O. = Fugazi PatsFans.com Supporter

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    #24 Jersey

    As long as you're saving for 5+ years out, IT DOESN'T MATTER. The more the market goes down and the longer it stays down the better. When the market goes down you don't lose shares you just lose share price - buy more shares at a discount then wait for it to go up.

    I've "lost" money like everyone else but I have 20 years to go. I hope it stays down for a couple of years, I can buy shares at a discount then make more money down the road.
     
  15. STFarmy

    STFarmy In the Starting Line-Up

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    I agree. I think this rate lowering is kind of catering to the panicky Petes of Wall Street who were looking for a reassurance from momma Fed to make things better. This may be a bit of an asinine analogy, but antibiotics have been less effective because they have been prescribed to people over and over again through the years; at some point, lowering interest rates won't work. It may sound insensitive, but I would think (not being an economist of any sort) that pushing through this bump and grinding our teeth might be the best way to deal with it. Certainly not through silly economic "stimulus" from Bush the non-conservative. Sadly, most of his economic moves had ranged from mediocre to poor.
     
    Last edited: Jan 22, 2008
  16. weswelker#83

    weswelker#83 In the Starting Line-Up

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    If BEN had NOT cut he would have had to drain the entire slosh!
    http://blog.risk.net/2008/01/beware_of_the_slosh.html

    That would have screwed the banking system instantly. He was basically forced into it, but not by being Wall Street's slave - it was simply a matter of trying to maintain balance.
    Risk management folks.

    The Fed had to make a choice, either defend the USD or the economy, it made it's choice back in September. They have cut at every opprotunity along the way.

    The credit demand issue is very simple and it's obvious why it'd show up in corporates first because each deal is a huge deal by and large so those people aren't stupid.

    Mortgages are funny, if you really were some mortgage uber ruler or something tell me what you'd do when house prices fell?

    If it was all your money what would you do in that case?

    I'll give you a hint, you'd:

    A. Reprice for the risk of default immediately.

    B. Tighten your down payment requirements immediately.

    C. Failing all that you'd just stop making more loans.

    Now this assumes you could stop, if you're in the business of making loans you can't stop much as builders can't stop building, see the problem here?

    Without some forces to stop you you'll keep chugging right off the obvious cliff, you can't stop.

    This is essentially what's going on right now, guidelines are tightening but much more slowly than anyone in their right mind would.

    You can still get a 100% loan, in a delining market that's like giving cash out purchases and it continues on to this day.

    The losses are mounting rather than some bottle stopper being put on it, it's freaking growing.

    This will end badly, my prediction is nuclear winter arrives when the losses mount to such an extent that no one will lend on homes without 30% down, that's complete game over.

    The game ends when the suppliers of the debt say no mass, Fannie and Freddie , it's game over, done, finished.

    FHA can only do so much, the losses eventually will grow to epic proportions in it, could be years but only housing inflation will cure this.

    How do you get that with new harsher guidelines.... well you better pin rates to 3%, that would do it but then even if that works, guess what, you've just finished the paint job and you're in the corner, one raising of rates and the system implodes.
     
    Last edited: Jan 23, 2008
  17. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    That's really not good advice. If the market drops another 20% over the next two years and then climbs at 8%, and you factor in inflation of 4%/year, you'll finish in the red. I think a 10 year time frame is more appropriate. Also, this situation could prove to be a textbook example of why SS is so important. Anyone who planned retirement (and especially gave notice), has seen their retirement savings drop by up to 20% and now they must decide whether to move their investments something more conservative or take a chance. The important advantage of SS is that it's a stable amount of money.

    Also the fact that you hope the market stays down for a couple of years is typical Republican thinking. In other words, what you're saying is screw those people who are retiring now so that you can make more money. (Actually, as a Republican, I'm sure you don't want to screw them, but you're just not thinking about anyone but yourself. At least that's how it sounds.)
     
  18. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    That's sort of how the market always runs, though in better times its emotion/optimism, rather than emotion/fear.
     
  19. Real World

    Real World Moderator Staff Member

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    9500 DOW? :rofl: That's not happening anytime soon. It took 9/11 to smash the DOW, and some economic slowdown isn't going to have the same effect. People need to relax, and stop watching TV. It's really amazing how hysterical everyone's gotten in a few days. If you've got some cash put aside, there'll be some money to be made people.
     
  20. BelichickFan

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    #24 Jersey

    Well pick your timeframe, 5, 10, whatever, the stock market always beats inflation over time. And if you buy it when it's on sale (like now), you'll beat inflation by more.

    Anyone who's close to retiring shouldn't have more than 20% in stocks. I'm 40 so I'm fully invested - in 10 years I will have a different asset allocation. As should everyone.

    No, I'm giving advice on how everyone can make the best of it. Buy into a bear market, don't sell out of one - but that's only for the long term, if someone is retiring now they, again, should only have some number around 25% in stocks.
     

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