Reminds me of Greenspan's book when he told the story of Paul Volcker back in the 80s when people thought he was crazy when he raised rates in a slow and sluggish economy to combat inflation. Not that we're in that level of inflation yet but the feds are starting to get painted into a corner between choosing high inflation or deep recession.
It is a bit more complicated than that buddy. You know if they raise rates, the dollar could strengthen right? Thus oil, food, imports get cheaper for us. The FED is in a box, as they say. Increasing rates killed the Real Estate market? I never heard that one before.
Why stop at 100? Make it 200 and give me the windfall I've been waiting for all my life. I'm already up 50% in my portfolio since Sept. Did I fail to mention I'm net short. Just My2¢¢
Yes he's a goof. For letting Greenspan lower rates to 1% and saying he will do it again . He 's lost all credibility I think. I mean this week was just the last nail in the coffin . He comes out promising to give all the cuts necessary and then some other Fed speaker comes and say maybe not, headline inflation counts after all. No matter what they do , market doesn' t care anymore. If they cut as much as the market expect we'll be at 3% soon. This crisis is going to take years to resolve I think that means they will runout of ammo at 3%.
I would tend to agree with AAA on this ( for perhaps the first time ever in the history of ET! ). But what is worth mentioning here is that while Bernanke is certainly BEHIND the CURVE in lowering rates, he is obviously in a very tight spot here and I think that he is smart enough to KNOW that. I believe that he is being slow to react, by design. I think that he is fully aware that the Fed Funds rate is nearly 2 full percentage points above the 2-year TNote yield and that is ANYTHING BUT an aggressive easing of monetary policy! He doesn't care about the real estate market. He just wants to keep the commercial banking sector liquid enough to "muddle" through this painful process; hence the temporary repos that get served-up in those "sexy" little auctions just below the Discount Rate for our nation's banks. He's walking a tight-rope and trying to clean-up the mess that was left from Greenspan's monetary policies. As for inflation and the dollar . . . It won't matter as our economy ( and the economies overseas of our trading partners ) decelerate. Oil and other basic materials will "pop" and go thru some pretty nasty corrections. Just look at the Monthly Copper chart for example . . . That chart looks ripe for one helluva "rollover". Have a nice 3-day weekend everybody and enjoy the football games!
Bernanke and Paulson got it wrong and that's because this is a counterparty risk crisis, not a fiscal or monetary problem. So this mess is not going to be fixed with BS money pumping. They should round up all wall st CEO's and tell them no more monkey business, from now on they should back all the papers they sell with actual dollar reserves, no BS mark-to-model, no BS "correlation" hedging etc.
When it doesn't matter then he can cut For now we have the worst consumer inflation in decades And economy is not for economy but for people, right? And people feel this inflation, something must be done Look how recession is priced into stock but oil still in 90s and when fed start cutting it was 60s so your assumption about oil correction is just assumtion. I Guess with those $2500 cars american should forget about private transportation and be prepared to use public buses till the end of the world unless US does something with rates, dollar and globalization everybody can't be rich. so if china and india rich know US must be ready for bad times
Everybody can be rich(er).Just like the world food shortage that's been postulated for centuries,we've used ceative technology to produce more.The next big idea is just around the corner.Human ingenuity is inexhaustible.The future's very bright.