Tonight's prize for economic illiteracy. It's amazing how regularly this crap gets churned out around here. Three-month bills, to quote Bloomberg, "climbed this week, sending three-month bill yields below 3 percent for the first time since August, as concern over banks' willingness to lend drove investors to the relative safety of U.S. government debt." Anyone who thinks a 3-month bill rate below 3 and a Fed Funds rate at 4.5 requires a rise in rates is, um, how shall I put this diplomatically, a person who should not be investing in anything more adventurous than a one year CD. The Fed had no business raising rates over 4.5 in this cycle, or any cycle since the mid Nineties. As has happened with ridiculous regularity over this timeframe, every time they've done so, they've had to face a crisis, whether the Asian/Mexican/Russian defaults and LTCM, the bursting of the dot-com bubble, or this. As for the usual nonsense about inflation, the market is in the business of thinking about the future, not the past.
50bps for sure but, they may do more; say 75-100bps. If you think there going to raise rates; you shouldn't be trading. It's not what u think they SHOULD do. It's what they will do. Too many egoistical eggheads here think they know better than central bankers on where rates should go. It's not about politics, it's about markets and the markets have spoken.
I hope they will not cut the fricking rate. The dollar will get even more cheaper. GREAT WAY TO LOWER THIS COUNTRY'S STANDARD OF LIVING. Thanks FED, thank you very much.
Maybe first, America can learn where Oklahoma is on the map? Nearly 3/4's of American's don't know. Can't blame all of America's stupidity on one man.
If he cuts ffr more than 25 pbs, not mentioning deeper cut, be sure to see EUR/USD breaking 1.50! IMHO, he should leave rates the way they're now!
I took the 50 BP :eek: on the dismal October senior loan officer survey and studies I've seen that say they'll cut at any rate level regardless of inflation or anything else. The credit crunch isn't getting better on either Main Street or Wall Street. Look at this terrifying passage from AG's book on the last bad crunch: "Nothing we did at the Fed seemed to work. Weâd begun easing interest rates well before the recession hit, but the economy had stopped responding. Even though we lowered the fed funds rate no fewer than twenty-three times in the three-year period between July 1989 and July 1992, the recovery was one of the most sluggish on record.â How can they ease off with a tsunami building?
Could the renewed problems in the credit markets be do to the year end pressure in the one month and three month libor and that once the year comes to an end, libor will come down and the credit crisis will ease? If so that could take away the need for the fed to ease. Even though they will cut 25..... just a thought.....