Fed orders emergency rate cut to 1.5%

[Craig234]

Originally posted by: Blain
"Rate Cut"

That will get this country back on track... MORE CHEAP MONEY :shocked:

Let's just get this thing over with!
Why don't they simply pay 1.5% to banks to borrow? :roll:

USA... Superpower or a Banana republic?

Our most Banana Republic incident was the 2000 election with Bush's brother stealing the Florida and thereby the national election.

 

[Craig234]

Originally posted by: Gonad the Barbarian
So this rate is strictly for bank/fed loans then.

Hey, if you don't like it, try electing your own politicians.

 

[Fern]

I don't believe this plan and the bail-out are intended to address the same problems.

In short, the so-called "bail-out" is to help financial institutions stuck with illiquid investments in MBS/CDOs/SIVs. It will also likely result in a lessening of the damage to their financials caused by the mark-to-market rules (a new market created giving higher values to the MBS/CDOs/SIVs, thus strengthening their financials as they adjust the values back up).

This interest rate reduction looks to address the fundamental weakness in the overall economy - lack of demand. Spur demand and help offset recession etc.

Cheap money didn't get us here - easy money did combined with inflated home values.

If this rate reduction spurs demand it will more directly help the stock market than the bail-out. It may also serve to support home values from dropping worse. More demand means more jobs (or at least fewer lost). More poeple at work, fewer forclosures etc.

In a recession, lower interest rates is the typical *medicine*, not higher. Higher rates is for inflation caused by excessive demand - that's not the problem now.

Fern

 

[nergee]

How could a problem caused by too cheap credit at too low rates
be solved by lowering rates for more cheap credit?

 

[palehorse]

Jesus H. Christ, do you really expect the bailout or the rate cut to have instant beneficial effects on the global economy? REALLY?!?

Wow... just... wow.

Stay in school kids...

 

[Dissipate]

Originally posted by: palehorse
Jesus H. Christ, do you really expect the bailout or the rate cut to have instant beneficial effects on the global economy? REALLY?!?

Wow... just... wow.

Stay in school kids...

No, I don't expect it to have any beneficial effects on the global economy. Which school? That one run by the government?

 

[Special K]

Originally posted by: LegendKiller

Originally posted by: Dissipate

AP
Fed orders emergency rate cut to 1.5 percent
Wednesday October 8, 7:04 am ET
By Jeannine Aversa, AP Economics Writer
Federal Reserve Board cuts key interest rate by half percentage point, seeks to revive markets

WASHINGTON (AP) -- The Federal Reserve has ordered an emergency interest rate cut of a half a percentage point to cope with the worst financial crisis since the 1929 stock market crash.

Fed Chairman Ben Bernanke and his colleagues ratcheted down their key rate by 0.5 percent, to 1.5 percent. The action revives the central bank's rate-cutting campaign which had been halted in June out of concerns that those low rates would worsen inflation. Since then, however, economic and financial conditions have dangerously deterioriated, forcing the Fed to reverse course.

The fact that the Fed felt it could not wait until its regularly scheduled meeting late this month underscored the urgency of the situation.

Text

It is clear to me that the Fed is running out of options. The bailout plan failed to revive the markets so now it is using emergency actions to try to stave off a full scale meltdown. Could there be a sucker rally just around the corner?

Yeah, the rescue plan is going to be immediately effective.

Do you know how long it takes to set up a hedge fund? Hire the right people? Find the right investment opportunities? They need to hire hundreds, if not thousands, of people to manage this. Even if they outsourced the majority of the work it's going to still take a few months to actually be able to get a working group that can transact in the market.

Chill the fuck out sparky.

If it's going to take that long to setup, then why were they pushing so hard to get the bill passed that week? What's a few extra days spent deliberating the bill if it will take months to put into action?

The way Paulson was pushing it, you'd think it would have gone into effect immediately to prevent a total meltdown of society that would have occurred the very next day had the bailout not been passed when it was.