Will the Fed cut more than 50bp? Thousands of inquiring day traders want to know.
Exactly.
They won't drop more than 50bps. In the end Gold and Oil are telling them that no more than 50 will be tolerated.
The Fed learned their lesson with $147 oil. if not they're more stupid than I can even imagine.
the fed/Govt are clearly trying to fight deflation now using all these 4 letter programs and lowering the Fed Funds Rate.
I would not be surprised to see a bubble somewhere... hard to figure out where though.
Housing seems unlikely
Stocks is a clear possibility
Oil is clear possibility
PMs as well
commodities not far behind in likelihood.
Don Fedducio here, reporting for duty. Am I early? Huh? Whose this? Ahh, Wagoner....
What have I ever done to make you treat me so disrespectfully? If you'd come to me in friendship, then these foreigners that ruined your industry would be suffering this very day. And if by chance an honest man like yourself should make enemies, then they would become my enemies. And then they would fear you.
You know, Rik... someday - and that day may never come - I'll call upon you to do a service for me.
An hour to go and then Big Bone Benny and and band of merry makers will parade threw the streets naked throwing paper in the air yelling inflation is growth.
The Fed handing out money per BH can be referred to as "quantitative easing". The Japanese tried this too and didn't get the results they wanted. Japanese consumers didn't spend because they didn't want to; American consumers won't spend because they can't get additional credit.
"Pakistan, a key ally in the US-led "war on terror", is in talks with the International Monetary Fund to secure up to £3.2bn and has discussed with the United States a loan of £10bn to avoid defaulting on its foreign debts"
Had a depressing happy hour last night - sounds like the non-profits in DC are about to take a hit. Greatly reduced charitable contributions this year (both corporate and personal) due to the economy - going to lead some big layoffs. Anyone else have a jobs update in their industry?
Wide fluctuations in interest rates are destructive to economic growth. The fed should never have lowered below 2.5% last time, and should not have raised above 4% in the aftermath.
1% was gasloine on the fire a five years ago, and 5.25% on the heels of 1% was a crushing blow to the economy.
The Fed learned their lesson with $147 oil. if not they're more stupid than I can even imagine.
The only thing we learn from history is that we learn nothing from history.
Oh, and the Fed doesn't "care" about Joe 6packs's mundane troubles resulting from expensive gas or less access to liar loans. The Fed only cares about the people who really count --their member banks & Wall Street.
"There is widespread apprehension about the imminent, and potentially disastrous, impact on the credit risk environment of the forced liquidation of synthetic credit default obligations (CDOs). The 10:1 and 15:1 leverage ratios usually applied to synthetic CDO trades are obvious causes for concern. But beyond the synthetic CDO arena lies the shadowy world of 80:1 (and higher) leverage: speciality funds, called Credit Derivative Product companies (CDPCs), dedicated to shorting default risk on a basket of highly rated debt securities.
Three such funds, Theta Corp., Primus and Athilion, have already been the subject of recent rating downgrades; they will be forced to liquidate their positions if the rating agencies start placing an increasing number of S&P 500 index components on negative watch in forthcoming weeks. In fact, all highly leveraged sellers of CDO default risk must be preparing to face the inevitable: an across-the-board abandoning of commitments in the face of a broad-based recession. Such an event, according to a Citigroup study, "could wreck havoc on the marketplace."
Wide fluctuations in interest rates are destructive to economic growth. The fed should never have lowered below 2.5% last time, and should not have raised above 4% in the aftermath.
Mostly agree, except the part about not raising FF above 4%. When actual "inflation" (not the jury-rigged CPI) is running 8+%, anything below that is negative in real terms. Also important to keep the FF rate in perspective. Even 5.25% was not that high by historical norms:
Great link...the killer is that Reserve is blaming on their IT systems. What a load.
"Regulators have had to be patient, too. Despite all their efforts to restore liquidity and confidence in all money funds, they dont have any good options in this case other than to monitor the liquidations carefully...The staff has been actively involved in the entire process, intervening to protect all shareholders, said John Heine, a spokesman for the Securities and Exchange Commission....But it can intervene only so much. The Reserve has proprietary computer systems, so taking over the process at this point could delay the redemptions even further, current and former regulators said...The largest fund, the Primary Fund, is not eligible for the ad hoc insurance program the Treasury set up for money funds last month. The big US Government Fund seems to meet the criteria and has applied for coverage, but no announcement of its acceptance has been made...The biggest mystery is why redemptions from that government fund have not been handled more promptly, said James Cracchiolo, chief executive of Ameriprise Financial Services...Ameriprise is among those suing the Reserve Fund over the Primary Funds losses it is the company that contends management tipped off big investors . But that lawsuit does not name the US Government Fund, Mr. Cracchiolo said. This is good government paper even the government itself could take it from this fund and not lose a penny, he said. We are all very frustrated at the lack of responsiveness from that funds trustees. For heavens sake, if they cant find a white knight to take the paper, well take some of it.
Something fishy going on...maybe disgruntled insider hosed the servers before quitting.
The fed funds rate of 5.25% was high relative to the economic conditions.
The high rates on your chart are from a period of aberantly high inflation.
Its the real rate that counts, and not by looking just a few quarters. The lag effect from the rate level is very long. We are just now getting the peak effect from the 5.25% rate level. And that rate level is very destructive to the current economy.
The fed brought this crisis on by overshooting to the low side, and then overshooting to the high side.
A steady hand on the wheel would have mitigated the cyclical decline. Instead the Fed has exacerbated the cycle.
You can thank Alan Greenspan for setting this chain reaction in motion.
The fear of financial meltdown after the terrorist attacks of 9/11 motivated the artificially low rates that started the fire. There was no need to keep the rates low for so long. That is what caused the housing market to go into a severe bubble instead of the usual modest bubble. The 5.25% rate is not terribly high, but it eas higher than the economy could handle, and higher than the long-term healthy level. And the shock of going rapidly from 1% to 5% precipitated a crash.
Once the fire was started with the artificially low rates there was no escaping a crash of some sort. However, going to a high rate exacerbated the crash. Now they are panicking again and we have 1.0% again.
I am worried that the current bailout programs will be extremely expensive, and ultimately inflationary
They have to be. Pensions must be getting destroyed. With massive layoffs in China and India, plus the disruption to the commodity countries and currencies, I don't see who is left to purchase truly mind-boggling Federal debt.
o way.
sloppy seconds
tercero!
Fore!
Will the Fed cut more than 50bp? Thousands of inquiring day traders want to know.
Will the Fed cut more than 50bp? Thousands of inquiring day traders want to know.
Exactly.
They won't drop more than 50bps. In the end Gold and Oil are telling them that no more than 50 will be tolerated.
The Fed learned their lesson with $147 oil. if not they're more stupid than I can even imagine.
the fed/Govt are clearly trying to fight deflation now using all these 4 letter programs and lowering the Fed Funds Rate.
I would not be surprised to see a bubble somewhere... hard to figure out where though.
Housing seems unlikely
Stocks is a clear possibility
Oil is clear possibility
PMs as well
commodities not far behind in likelihood.
Here's to a come from behind McCain victory.
Apocalypse John
The Fed learned their lesson with $147 oil. if not they're more stupid than I can even imagine.
Yearning to Learn | 10.29.08 - 1:13 pm | #
I think you are on to something here.
No thaw?
I thought LA had record temperatures yesterday as did Burbank.
you cant have a thaw in a blizzard.
I would not be surprised to see a bubble somewhere... hard to figure out where though
In one word: Bonds
Here's to a come from behind McCain victory.
Obamageddon |
To modern republicans, you are talking gay sex here...
Obama will win, sorry to pop yet another of your bubbles.
95 d in my backyard yesterday. Northern SD county.
Ciao
MS
I'm sorry, but I'm not seeing how interest rates matter for inflation that much if the Feds are directly loaning money to everybody in sight.
The difference is how the money is distributed. Before, it was in the hands of financial speculators who were directly manipulating markets.
Now it's in the hands of... companies?
That's still inflationary, with longer time delay but it should be more persistent, too.
Don Fedducio here, reporting for duty. Am I early? Huh? Whose this? Ahh, Wagoner....
What have I ever done to make you treat me so disrespectfully? If you'd come to me in friendship, then these foreigners that ruined your industry would be suffering this very day. And if by chance an honest man like yourself should make enemies, then they would become my enemies. And then they would fear you.
You know, Rik... someday - and that day may never come - I'll call upon you to do a service for me.
An hour to go and then Big Bone Benny and and band of merry makers will parade threw the streets naked throwing paper in the air yelling inflation is growth.
In one word: Bonds
Barley | 10.29.08 - 1:17 pm | #
So how to play this?
Its bubbles all the way down.
Bubbles!! When I was a child, if we wanted bubbles, we had to fart in the tub.
Too many words.
Color coded LEDs on left, paragraph FYIs on right.
Spent 3 nights at Harrahs Tunica, learning poker.
dealers said a few weeks back was off the charts... like new years eve.
is it the SS payout increase?
Bubbles! YouTube -
The next bubble will clearly be in the "payday loan" business.
The Fed handing out money per BH can be referred to as "quantitative easing". The Japanese tried this too and didn't get the results they wanted. Japanese consumers didn't spend because they didn't want to; American consumers won't spend because they can't get additional credit.
Today is the 79th anniversary of the 1929 stock market crash.
Black Tuesday.
.
We are facing deflation.
Glad I went to cash a year ago.
However, I am worried that the current bailout programs will be extremely expensive, and ultimately inflationary.
z
So, there is 20B USDs to bailout Pakistan??
"Pakistan, a key ally in the US-led "war on terror", is in talks with the International Monetary Fund to secure up to £3.2bn and has discussed with the United States a loan of £10bn to avoid defaulting on its foreign debts"
Pakistan halts building of army HQ as bankruptcy edges closer - Telegraph
Come on the fed will cut rates cause it is helping! Every cut makes things worse
Spent 3 nights at Harrahs Tunica, learning poker.
dealers said a few weeks back was off the charts... like new years eve
Must have been an AIG conference.
Had a depressing happy hour last night - sounds like the non-profits in DC are about to take a hit. Greatly reduced charitable contributions this year (both corporate and personal) due to the economy - going to lead some big layoffs. Anyone else have a jobs update in their industry?
Artificially low interest rates caused this crisis, and now we are back to such low interest rates again.
Wide fluctuations in interest rates are destructive to economic growth. The fed should never have lowered below 2.5% last time, and should not have raised above 4% in the aftermath.
1% was gasloine on the fire a five years ago, and 5.25% on the heels of 1% was a crushing blow to the economy.
Here go again.
Zephyr - but we have learned from or mistakes
Yes we have learned but we will forget in a few weeks or so and do it again.
I guess news leaked on the size of the cut. 1% is now a given methinks.
Ciao
MS
Zephyr - Yes, but then we had loose credit standards. Not the case now
Dumb question:
What's the point of cutting the rate if banks aren't lending and customers aren't borrowing?
The high for the A2/P2 spread was 4.66 (A2/P2 = 6.09, AA nonfinancial = 1.43) on October 10.
The Fed learned their lesson with $147 oil. if not they're more stupid than I can even imagine.
The only thing we learn from history is that we learn nothing from history.
Oh, and the Fed doesn't "care" about Joe 6packs's mundane troubles resulting from expensive gas or less access to liar loans. The Fed only cares about the people who really count --their member banks & Wall Street.
Hence... ZIRP here we come!
Money market fund that "broke the buck" still has not paid millions of people their money. How can this happen??????
Reserve Fund’s Investors Still Await Their Cash - CNBC
"There is widespread apprehension about the imminent, and potentially disastrous, impact on the credit risk environment of the forced liquidation of synthetic credit default obligations (CDOs). The 10:1 and 15:1 leverage ratios usually applied to synthetic CDO trades are obvious causes for concern. But beyond the synthetic CDO arena lies the shadowy world of 80:1 (and higher) leverage: speciality funds, called Credit Derivative Product companies (CDPCs), dedicated to shorting default risk on a basket of highly rated debt securities.
Three such funds, Theta Corp., Primus and Athilion, have already been the subject of recent rating downgrades; they will be forced to liquidate their positions if the rating agencies start placing an increasing number of S&P 500 index components on negative watch in forthcoming weeks. In fact, all highly leveraged sellers of CDO default risk must be preparing to face the inevitable: an across-the-board abandoning of commitments in the face of a broad-based recession. Such an event, according to a Citigroup study, "could wreck havoc on the marketplace."
Extreme CDO Leverage to Create Another Deleveraging Storm -- Seeking Alpha
Wide fluctuations in interest rates are destructive to economic growth. The fed should never have lowered below 2.5% last time, and should not have raised above 4% in the aftermath.
Mostly agree, except the part about not raising FF above 4%. When actual "inflation" (not the jury-rigged CPI) is running 8+%, anything below that is negative in real terms. Also important to keep the FF rate in perspective. Even 5.25% was not that high by historical norms:
http://content.answers.com/main/content/wp/en/e/e2/Federal_Funds_Rate_(effective).png
GM deal looking more and more likely. GM and Chrysler clear major deal issues: sources
| Reuters
Both sides have agreed that GM Chief Executive Rick Wagoner would lead the combined automaker, the sources said.
More rewarding failure. Yargh.
Big surprise is NO rate cut. Market fall down go boom.
The Fed will cut 75bps. They want a much weaker USD.
Better, more current graph:
http://static.seekingalpha.com/uploads/2008/2/1/federal_funds_rate_1957_to_2008.png
Also, pre-Clinton CPI:
Shadow Government Statistics - Home Page
Whatev,
Great link...the killer is that Reserve is blaming on their IT systems. What a load.
"Regulators have had to be patient, too. Despite all their efforts to restore liquidity and confidence in all money funds, they dont have any good options in this case other than to monitor the liquidations carefully...The staff has been actively involved in the entire process, intervening to protect all shareholders, said John Heine, a spokesman for the Securities and Exchange Commission....But it can intervene only so much. The Reserve has proprietary computer systems, so taking over the process at this point could delay the redemptions even further, current and former regulators said...The largest fund, the Primary Fund, is not eligible for the ad hoc insurance program the Treasury set up for money funds last month. The big US Government Fund seems to meet the criteria and has applied for coverage, but no announcement of its acceptance has been made...The biggest mystery is why redemptions from that government fund have not been handled more promptly, said James Cracchiolo, chief executive of Ameriprise Financial Services...Ameriprise is among those suing the Reserve Fund over the Primary Funds losses it is the company that contends management tipped off big investors . But that lawsuit does not name the US Government Fund, Mr. Cracchiolo said. This is good government paper even the government itself could take it from this fund and not lose a penny, he said. We are all very frustrated at the lack of responsiveness from that funds trustees. For heavens sake, if they cant find a white knight to take the paper, well take some of it.
Something fishy going on...maybe disgruntled insider hosed the servers before quitting.
Anyone know what is up with MTH?
Doh! I gotta look at the front page before I post links.
guy on cnbc about rate cut..
"you don't want to end a gun fight foma cabin with unspent bullet's"
nice thought...
one better?
you don't want to die from starvation with food in the cubbard.
HARM,
The fed funds rate of 5.25% was high relative to the economic conditions.
The high rates on your chart are from a period of aberantly high inflation.
Its the real rate that counts, and not by looking just a few quarters. The lag effect from the rate level is very long. We are just now getting the peak effect from the 5.25% rate level. And that rate level is very destructive to the current economy.
The fed brought this crisis on by overshooting to the low side, and then overshooting to the high side.
A steady hand on the wheel would have mitigated the cyclical decline. Instead the Fed has exacerbated the cycle.
You can thank Alan Greenspan for setting this chain reaction in motion.
The fear of financial meltdown after the terrorist attacks of 9/11 motivated the artificially low rates that started the fire. There was no need to keep the rates low for so long. That is what caused the housing market to go into a severe bubble instead of the usual modest bubble. The 5.25% rate is not terribly high, but it eas higher than the economy could handle, and higher than the long-term healthy level. And the shock of going rapidly from 1% to 5% precipitated a crash.
Once the fire was started with the artificially low rates there was no escaping a crash of some sort. However, going to a high rate exacerbated the crash. Now they are panicking again and we have 1.0% again.
I am worried that the current bailout programs will be extremely expensive, and ultimately inflationary
They have to be. Pensions must be getting destroyed. With massive layoffs in China and India, plus the disruption to the commodity countries and currencies, I don't see who is left to purchase truly mind-boggling Federal debt.