Dropping the Fed Funds rate to 2.00% has done nothing, except cause inflation. Great job Fed. But at least the banks have a rising yield cure so they will profit off the backs of average Americans. Banks win you loose! thanks to your Federal Reserve. http://www.bloomberg.com/apps/news?pid=20601109&sid=aAjM9j4K4v4U&refer=home
Maybe the 'Average American' would prefer standing in a line to get their money out as half the banks become illiquid?
Keeping the short term rates low viz, under the natural rate of interest, is the normal political solution leading to the boom bust cycle. Now the currency market predicts Europe will tank, so our dollar rallies? But for how long? Let me know. Any ideas?
I have been in the market for a nice foreclosed condo in my area, and I noticed this too. Rates at 2% but many banks [especially here in Tampa] have held THEIR rates at 6-7% Yeah, that may be historically low still, but I know of WAY too many people who have been trying to refi to lower rates to prevent from going into foreclosure, yet the banks are not budging on lowering their rate? What they hell, right? Tampa is usually in the top 5 when it comes to foreclosure statistics. You'd think the banks down here would know that and adapt according, especially with the good ole helping hand that FED and the American people have given them...but alas...
well what your seeing now is the risk premium coming back into rates, before during the boom it was artificially low as it was sold and spread about many counterparties. rates should raise even more now that fannie is not going to accept anymore alt-a loans. Also doesn't help that 2007 vintages are pretty bad also. As for buying foreclosure here in tampa, i was told that US Bank was dumping a big discounts at auction but that was about 1-2 months ago when i was going to a few auctions at the courthouse.
Yawn. I guess you'd rather have everyone stand in line trying to get their money out of all the banks that have become illiquid, ala 1930's Great Depression. How many more banks would be going under this Spring, this Summer, this Year had it not been for the FED exchanging their bad collateral for Treasury Securities so as to allow the banks to remain liquid? Care to answer that one for me, Genius? And once all of the Banks have closed their doors shut, where do you think that CAPITAL FORMATION will ever come from in order to facilitate business investment, trade, job growth, and a growing economy? Care to answer that question too? My guess is that you won't be able to, because you can't. You have got to be one of the dumbest people on this website . . . Leave it to you to argue for a DEPRESSION with massive unemployment instead of an uptick in inflation. All you do is talk about inflation, blah, blah, blah, even though the CRB Index saw the greatest percentage drop in 28 years last month. Obviously, Bernanke & Company felt that an uptick in inflation was worth the risk and a realistic trade in order to keep the Economy from heading into a full-fledged 1930's style DEPRESSION. Try going back to school and taking a basic Econ 101A class. It might help you make some sense on here someday.
I would disagree with that. We just avoided a depression. A recovery from rate reductions takes a long time. Liquidity injections take time, typically measured in years. A recovery from a depression is typically measured in decades.