bottom line is they have no choice. this is my opinion only from some research Ive done recently and people I have interacted with. thought I would pass this along. blackguard
Whose to say; they're damned if they do, damned if they don't Don't cut - market continues to panic Raise - market really panics Cut - Market will rally for a few days, dollar will crumble, the chinese will take their money out of USD and we're back to square 1 again. Chances are they do nothing but say they have the situation under control.
25 years in this business and I still shake my head when I see people thinking that the Fed gives a rat's ass about the market. The Fed could care less what the Markets are doing.... You really have to learn this folks.
So please, give us the benefit of your 25 years of experience. If the fed doesn't care about the market, that would imply that the discount rate cut was NOT for the benefit of the market. So they were actually trying to harm the market eh? It all makes sense now, because after all, thats the feds job isn't it? God I wish I had your 25 years of experience to help me come to such precise and profitable conclusions.
Another loud mouth newbie, does this place ever get any better ??? Somedays I wonder why I even bother... http://stlouisfed.org/news/speeches/2006/08_31_06.html
you don't need to know, what a f* is fed going to do with rates to be profitable trader. i have less that 25 years of experience, but i can assure you-it is possible to be profitable year over the year without fed,cnbc,cramer,tv all together, economic ,finance knowledge. heck-i even don't have a basic charts. just bid/ask/last and simple 3-5th grade math. i don't even know the english language very well, while trade US markets. cut or not to cut-sick of this crap in every second post on ET
You are assuming that the FED dropped the discount rate and extended to 30 days to stop the STOCK MARKET from dropping...that is where you went off track.
The fed's job is to stabilize interest rates, so wouldn't another liquidity injection have done the trick? Why lower a discount rate on friday when the rate was not particularly off track, especially compared to monday? Bernanke stated that the "market conditions have deteriorated", not the credit market, or the interest rate conditions have deteriorated. The fed's intervention to stabilize the interest rate should affect the market, not the other way around if you follow the fed's mandate to the letter...
God, now we're even predicting unscheduled fed cuts. I suppose if the fed cuts in september you will bring up this thread and say "I told you so". If you're so certain, put your money where your mouth is and post some calls you purchased today.
The FED lowered the <u>discount rate</u> (the rate the Fed charges to make direct loans to banks) to provide liquidity to financial institutions and credit borrowers NOT to prop up the stock market (although they may have wanted that too). They were concerned that highly rated borrowers could not get credit, that is why they used the discount rate.