With banks in dire need of funds, why are rates so low?

Discussion in 'Economics' started by jrcase, Nov 27, 2007.

  1. jrcase


    It seems to me that rates would be sky high with all of the competition for money out there. Add inflation to the mix and bond rates should be 8% plus. What is keeping them down?
  2. Are you talking about lending rates or savings rates?

    For lending rates, they have to have the sheep come to them..if you have high rates, the sheep will flock somewhere else, because Suze Orman tells them so. So even though everyone else may have high rates, you need to be able to wave the big flag that says look at me, lowest rates ever so borrow from meeeee! That is why people people will jump all over an ARM, because they have lower initial rates..no one ever stops to consider maybe there's a catch somewhere.....all that matters to any sheep is the interest rate, so the banks just have to make sure they can still wave the low interest rate advertising flag high. Hence they don't raise rates even though they are in distress.

    I work in lending, man, these people are idiots. I really and truly had no idea how ignorant people truly are with money until I started working in lending a few years back. It is all a psychological thing. For instance, the company I work for will ever so slowly raise interest rates on mortgages say from 6.0 to 6.375 or something over the course of like 6 weeks, then drop them to 6 again and send out promos telling everyone how they "just dropped their rate so buy now!!".

    Funnier still is that people fall for it.

    Another fun thing to see is when people will scream and argue over a .25% increase in rate on a car loan but yet they just ate like $5,000 on a trade in due to negative equity. They'll be getting like $15,000 for a car loan for a purchase, and trade in their 2-3 year old vehicle that they still owe $15,000 on and get $10,000 for the trade in, and that's A-OK with them, even though they just flushed five grand down the toilet... but then they'll turn around and argue over a .25 rate difference that will maybe make $3-4 a month difference on there payment.

    So, again, all any sheep cares about is interest, because they have been conditioned to. banks have many many other ways of making the money they need from people beside interest. They have the wonderful service and processing fees, penalties all kinds of stuff.

    Even people who make $10K-12K-20K a month at their jobs are still usually morons when it comes to money. Not to mention the ones who have their spouse spending money faster than they can make it because they don't work and have nothing better to do besides take loans and buy stuff on QVC. Those are always interesting situations.

    For savings rates, hell no one saves anyway these days, so no need to force them any higher than they need to be.
  3. Too bad no one saves money these days...the dagon is strong and ripe for saving if you choose wisely.

    suze sucks...she steered everyone into the drain!!!

  4. Surdo


    Suze does not suck, she is a diver!
  5. troo troo troo... hahahahah :D :D :eek: :D

    bite tha' rug!
  6. Does anyone remember Suzie telling people to buy QQQ (as it was called then) to get ALL the big NASDAQ stocks in 1 symbol during the peak of the NASDAQ bubble?