Fed cuts interest rates by .25%

[JS80]

i think the fear is that if bear goes down, all the other banks will seriously be hurt and more will down bc of domino effect. pricing of a lot of these assets are based on perceived value (like a pyramid scheme). if bear goes down, liquidity will dry up and half of wall st will go down.

it's just like how they pseudo bailed out LTCM. It was one stupid ass fund but it's failure had broad implications.

 

[LegendKiller]

Originally posted by: JS80
i think the fear is that if bear goes down, all the other banks will seriously be hurt and more will down bc of domino effect. pricing of a lot of these assets are based on perceived value (like a pyramid scheme). if bear goes down, liquidity will dry up and half of wall st will go down.

it's just like how they pseudo bailed out LTCM. It was one stupid ass fund but it's failure had broad implications.

If bear goes down the assets will cause marks and everybody will take a hit. However, keeping this shit around for the next decade, slowly bleeding, isn't a solution either.

Essentially by "freeing up liquidity" (aka, bailout) they are taking the debt held and letting it deflate through inflation. This is great for Wall St. and keeping the banks around. However, it's a tax on wages that aren't going to keep up. It essentially passes all of the costs onto all of society, especially the ones who had nothing to do with the problem in the first place.

 

[Pliablemoose]

I agree strongly with LegendKiller on financial Darwinism unfortunately, the Fed ain't playing ball.

 

[SSSnail]

So I guess they're not ready to consolidate banks at this time, amirite?

I will request my company to start paying me in gold instead of dollars.

 

[GoatMonkey]

Originally posted by: LegendKiller

Originally posted by: 3cho

Originally posted by: LegendKiller

Originally posted by: 3cho

Originally posted by: LegendKiller

Originally posted by: 3cho

Originally posted by: Marlin1975

Originally posted by: GoatMonkey
Why hasn't this stuff had and effect on the mortgage rates I'm looking at yet? I need to refinance before the end of the year since my 5 year arm is about to reach 5 years in January. I look at ING Direct Orange Mortgage and it has been the exact same 6.125% through both of these rate changes.

Because this is more a bailout for banks and creditors. The whole its for the people is BS. All these banks made billions during the rise on high risk loans and such. Now their numbers are off so they need help. :roll:
People like you and I will pay more for gas, household goods, food, etc... But don;t worry the managers at Bank of America will get some bonus and worse case their golden chutes will be fully funded.

i like to see people live without the current financial institutions, they have to be bailed out. sure maybe some banks made the wrong bets. but i would like to see companies fair without the goldmans, lehmans etc.

I have to disagree with you there. Bailing out people just teaches them that they can get away with stuff and not have to pay for it. Banks have failed before and will continue to do so. More will raise from their ashes and people will learn from their mistakes.

Bailing people out for their own mistakes is a bad idea.

i think they should be bailed out not for their mistakes, but for what we will lack in services if the investment banks go under. who's going to do the capital raising for the companies and offer merger advice? surely the companies themselves can do this, do road shows, issue debts, but at what costs? in the end, the costs can potentially cost a lot more than the fees they pay the banks.

the banks are essential to our economy, no matter how "immoral" they seem at times.

Not all banks will go under. The strongest will survive, the weakest will die, and the medium will get hurt. All in- the sharks will eat the chum and life will go on. Lessons will be learned that if you get too fat, you are chum.

not go under, but seriously hurt. we took a 2bn dollar write down and we didnt even participate in the subprime shit. the idea is if you are gonna bail people out, bail everyone out. the financial sector is consolidated as it is. why lose players?

They had to have participated in something along those lines. The best idea for any bank not willing to take write-down risk was to not get anywhere near holding RMBS in trading books, conduits, or on balance sheet as portfolio plays.

I don't think anybody should be bailed out. Capitalism is that the most fit will survive and thrive, not that the gubment will fuck with the monetary system to save banks. Now, if the whole system would collapse from this, then yes, save it all. However, that isn't likely.

I didn't have any of those problems. Pretty much a regular loan. My freaking credit score is over 800. I know someone is making a bunch of money on this stuff. I should be able to benefit from the low interest rates. But now this prime rate is lower than it was when I originally got my loan and I'm still going to have to pay 6.125 instead of 5.25. At least I'll get rid of the PMI this time around.

 

[Nerva]

Originally posted by: SSSnail
So I guess they're not ready to consolidate banks at this time, amirite?

I will request my company to start paying me in gold instead of dollars.

gold is at a ~16 month high, do you really want to buy at the peak?

 

[SSSnail]

Originally posted by: 3cho

Originally posted by: SSSnail
So I guess they're not ready to consolidate banks at this time, amirite?

I will request my company to start paying me in gold instead of dollars.

gold is at a ~16 month high, do you really want to buy at the peak?

No, they pay me in bullions at a fixed rate, I'll go sell them. So they can just pay me with bullions until the dollar improves.

Profits.

 

[alkemyst]

Originally posted by: 3cho

i am a banker and so is legendkiller. he probably watches the fed fund rate more closely than i do as he is more involved on the fixed income side. the fed doesnt care about the people spending money, at least not yet, this is much larger than that. a lot of companies are experiencing liquidity problems and a lower fed fund rate will get passed through to RC and TL rates. we have tons of people come to us for different debt financings, even before the cut yesterday. there seems to be somewhat of an appetite for corporate backed papers again (my bank along with a couple other sold a few bn dollars worth of corporate issued high yield debt last week alone).

the "people level" comes much much later. sure there is now more inflationary pressures, but that comes hand in hand with increased liquidity. the fed is just trying to make a market for the US dollars right now by making capital relatively more accessible.

What is your thought then on why the Fed is cutting Prime?

Also what do you mean the Fed doesn't care about people spending money?

 

[alkemyst]

Originally posted by: GoatMonkey
Why hasn't this stuff had and effect on the mortgage rates I'm looking at yet? I need to refinance before the end of the year since my 5 year arm is about to reach 5 years in January. I look at ING Direct Orange Mortgage and it has been the exact same 6.125% through both of these rate changes.

LOWERING PRIME DOESN'T AFFECT FIXED RATE MORTGAGES.

If anything is can cause them to go up.

 

[alkemyst]

Originally posted by: LegendKiller

Originally posted by: 3cho

Originally posted by: LegendKiller

Originally posted by: 3cho

Originally posted by: Marlin1975

Originally posted by: GoatMonkey
Why hasn't this stuff had and effect on the mortgage rates I'm looking at yet? I need to refinance before the end of the year since my 5 year arm is about to reach 5 years in January. I look at ING Direct Orange Mortgage and it has been the exact same 6.125% through both of these rate changes.

Because this is more a bailout for banks and creditors. The whole its for the people is BS. All these banks made billions during the rise on high risk loans and such. Now their numbers are off so they need help. :roll:
People like you and I will pay more for gas, household goods, food, etc... But don;t worry the managers at Bank of America will get some bonus and worse case their golden chutes will be fully funded.

i like to see people live without the current financial institutions, they have to be bailed out. sure maybe some banks made the wrong bets. but i would like to see companies fair without the goldmans, lehmans etc.

I have to disagree with you there. Bailing out people just teaches them that they can get away with stuff and not have to pay for it. Banks have failed before and will continue to do so. More will raise from their ashes and people will learn from their mistakes.

Bailing people out for their own mistakes is a bad idea.

i think they should be bailed out not for their mistakes, but for what we will lack in services if the investment banks go under. who's going to do the capital raising for the companies and offer merger advice? surely the companies themselves can do this, do road shows, issue debts, but at what costs? in the end, the costs can potentially cost a lot more than the fees they pay the banks.

the banks are essential to our economy, no matter how "immoral" they seem at times.

Not all banks will go under. The strongest will survive, the weakest will die, and the medium will get hurt. All in- the sharks will eat the chum and life will go on. Lessons will be learned that if you get too fat, you are chum.

This is cyclic as well...most here though are probably seeing there first go at this and it's a really bad on this time.

The good news is the trend is we always bound back higher next time.

 

[Parasitic]

Should I lock in with a 6-month CD rate of $4.50%?

 

[imported_Lothar]

Originally posted by: LegendKiller
Bailing out people just teaches them that they can get away with stuff and not have to pay for it. Banks have failed before and will continue to do so. More will raise from their ashes and people will learn from their mistakes.

Bailing people out for their own mistakes is a bad idea.

:thumbsup:

Wells Fargo and US Bank Corp will survive as they aren't involved in much of this sub prime mess.
Bank of America is a very well diversified company meaning any hits from mortgage won't affect it as much.

I wish Citigroup good luck.

 

[maddogchen]

Originally posted by: Parasitic
Should I lock in with a 6-month CD rate of $4.50%?

4.5%? are you serious? thats horrible

 

[IEC]

Boom and bust cycle FTL (or FTW if you are an informed investor doing your research )