Fed slashes key rate .75 to 3.5%

[mrCide]

So what does this mean? and why are people calling for such drastic measures in the economy. If we go into a recession (aren't we already?) then shouldn't we come out of it naturally without media and the government screwing with it? Although I'm giving them both too much credit I think.

I'm no economics expert by any means, however.

 

[rchiu]

There are a lot of talks of economic stimulus these days. But somehow I feel like this is a cut to boost stock price, not economy. We had pretty big drop in the stock market last week, and yesterday while the market was closed, International market continue to drop big time and stock future in the US was looking terrible too. The announcement today just feel like a shot to prevent the stock market to fall too much, the timing and the large percent....

I would agree if the Fed does this for the economy, but not for the stock market, and I think .75 is a very drastic move. Inflation for the last three month were 3.54%, 4.31% and 4.08% (annualized) which is significantly higher than what we used to have at around 2.5~3%. Oil price is doing a little better these days, but such a big drop in rate may further increase inflation risk. It would be really troubling if they only do this to take care of investors, which is not a big portion of everyone that participates in the economy.

 

[Acanthus]

I love how we are clearly already in a reccession, and every single media outlet keeps churning out news like its some kind of disaster we can avert.

Clearly when you stop giving people a reasonable wage to work and dont slash prices, it's eventually going to give out.

 

[Engineer]

Originally posted by: Acanthus
I love how we are clearly already in a reccession, and every single media outlet keeps churning out news like its some kind of disaster we can avert.

Clearly when you stop giving people a reasonable wage to work and dont slash prices, it's eventually going to give out.

By technical definition, we are not in a recession. By wages (after inflation), the average person has been in a recession for over 1/2 decade.

 

[Acanthus]

Originally posted by: Engineer

Originally posted by: Acanthus
I love how we are clearly already in a reccession, and every single media outlet keeps churning out news like its some kind of disaster we can avert.

Clearly when you stop giving people a reasonable wage to work and dont slash prices, it's eventually going to give out.

By technical definition, we are not in a recession. By wages (after inflation), the average person has been in a recession for over 1/2 decade.

Thats where i was going with my post.

Sorry if it wasnt clear.

 

[Engineer]

Originally posted by: Acanthus

Originally posted by: Engineer

Originally posted by: Acanthus
I love how we are clearly already in a reccession, and every single media outlet keeps churning out news like its some kind of disaster we can avert.

Clearly when you stop giving people a reasonable wage to work and dont slash prices, it's eventually going to give out.

By technical definition, we are not in a recession. By wages (after inflation), the average person has been in a recession for over 1/2 decade.

Thats where i was going with my post.

Sorry if it wasnt clear.

and when you consider that 2/3 of the US economy is consumer spending....

Let's see....

Wages going down after inflation...check
Spending going up...check
Savings going negative....check

How to fuck it all up: Cut credit and pull the bank out from most people in the form of home equity....check

Oops.

 

[StageLeft]

Oh well, at least I'm young. Maybe by the time I'm 60 it will be just a bad dream :0

 

[Dari]

The Federal Reserve sucks. First they let the interest rate dip low enough to bring about cheap money. Once they realized what they did, they increase the rates...but only slowly. When the effects of cheap money comes to bite the economy in the ass, what do they do? Well, lower it dramatically again, of course. I think these "economists" need to be replaced by computers.

 

[1EZduzit]

Originally posted by: Engineer

Originally posted by: Acanthus

Originally posted by: Engineer

Originally posted by: Acanthus
I love how we are clearly already in a reccession, and every single media outlet keeps churning out news like its some kind of disaster we can avert.

Clearly when you stop giving people a reasonable wage to work and dont slash prices, it's eventually going to give out.

By technical definition, we are not in a recession. By wages (after inflation), the average person has been in a recession for over 1/2 decade.

Thats where i was going with my post.

Sorry if it wasnt clear.

and when you consider that 2/3 of the US economy is consumer spending....

Let's see....

Wages going down after inflation...check
Spending going up...check
Savings going negative....check

How to fuck it all up: Cut credit and pull the bank out from most people in the form of home equity....check

Oops.

Don't forget to throw some tax cuts in the mix for good measure and for the icing on the cake how about we let as many illegals in as possible.

 

[Mxylplyx]

Originally posted by: Dari
The Federal Reserve sucks. First they let the interest rate dip low enough to bring about cheap money. Once they realized what they did, they increase the rates...but only slowly. When the effects of cheap money comes to bite the economy in the ass, what do they do? Well, lower it dramatically again, of course. I think these "economists" need to be replaced by computers.

QFT. The longer these dumbasses at the fed try to stave off the chickens from coming home to roost, the more pain we have in store once they do come home. The fed rate has become political these days. Politicians demand it be cut without knowing the slightest thing about the longer term consequences.

 

[Duddy]

I totally called it last night! But I did not expect a .75 drop!

 

[Mavtek3100]

Yes, Duddy called it, I was wrong........ I thought no way in hell they think in the short term and cut it, that's what started this whole mess. Guess I was wrong........

 

[Vic]

Well... if there's a silver lining on this turd, it's that oil and other commodities are also down sharply this morning.

 

[Spook]

Originally posted by: Vic
Well... if there's a silver lining on this turd, it's that oil and other commodities are also down sharply this morning.

They were down yesterday... They are coming back up from yesterday's dips.

the more i have been watching it, the more i see CNN is a awful way to look at commodities... They allways go back to previous day totals, and calculate from there, instead of beginning at the opening bell. Monex is showing Gold up like $26, just today. CNN is like 3 hours behind.

 

[palehorse]

Originally posted by: mrCide
So what does this mean?

For those of us with perfect credit and a 30-yr mortgage, it means that it's time to re-finance baby!! WOOHOOO!

 

[ElFenix]

Originally posted by: Engineer
Savings going negative....check

meh, the way savings is commonly counted, that may not be a bad thing. savings is oftentimes merely considered the sum of deposit accounts at banks. and large amounts of money sitting in low yield savings accounts (or worse, 0 interest checking accounts), isn't exactly a great thing for the typical person. overall household net worth is a more important sum, and perhaps overall liquid or semi-liquid assets right behind.

 

[nageov3t]

means basically nothing for me /shrug

 

[Engineer]

Originally posted by: ElFenix

Originally posted by: Engineer
Savings going negative....check

meh, the way savings is commonly counted, that may not be a bad thing. savings is oftentimes merely considered the sum of deposit accounts at banks. and large amounts of money sitting in low yield savings accounts (or worse, 0 interest checking accounts), isn't exactly a great thing for the typical person. overall household net worth is a more important sum, and perhaps overall liquid or semi-liquid assets right behind.

I wonder how net worth looks now that housing has burst and the stock market has droped 15 or more %.

But I agree, if you can sell it (liquid) to pay....

One final though, non mortgage personal credit was up 11.5% year over year and hit 2.5TRILLION last year. Unlike the government deficits of which revenues have been rising faster than the debt (at least for two years), the average wage after inflation has went down. You can only spend what you have to spend....either hard cash or credit....and both are now starting to be a little more tight.

 

[randym431]

So what does this mean?

Nothing...really.... to the average person.
same-o same-o

When Citi bank has to go looking to the Chinese to bail out their ass, you know the shit is about to hit the fan.
I'd stash some cash under my mattress, just to be safe.

 

[theeedude]

I am switching to the greenbacks for my toilet paper. Fed, please print them 2-ply and soft

 

[LegendKiller]

Originally posted by: Dari
The Federal Reserve sucks. First they let the interest rate dip low enough to bring about cheap money. Once they realized what they did, they increase the rates...but only slowly. When the effects of cheap money comes to bite the economy in the ass, what do they do? Well, lower it dramatically again, of course. I think these "economists" need to be replaced by computers.

What exactly were they supposed to do? I would love to hear your wizened opinion.

 

[theeedude]

The fed should fight inflation, exclusively.

 

[LegendKiller]

Originally posted by: senseamp
The fed should fight inflation, exclusively.

Agreed that that is one mandate. However, the situation is more complicated than that, vastly more complicated.

I see quite a bit of it at work and some of it's a bit worrying.

Outside of regular debt, mortgages, CDO, auto loans, or student loans, the country operates off of a lot more debt, including trade receivables and such. Much of it's financed in the short-term commercial paper market. However, those markets are so roiled as to make most difficult to fund, which increases costs and has a trickle down effect.

The Fed also has to keep watch over the markets and they are in a massive conundrum. They can let the financial markets absolutely tank, or they can try to prevent that while still trying to control inflation.

 

[smashp]

Originally posted by: LegendKiller

Originally posted by: Dari
The Federal Reserve sucks. First they let the interest rate dip low enough to bring about cheap money. Once they realized what they did, they increase the rates...but only slowly. When the effects of cheap money comes to bite the economy in the ass, what do they do? Well, lower it dramatically again, of course. I think these "economists" need to be replaced by computers.

What exactly were they supposed to do? I would love to hear your wizened opinion.

they shoul Protect from Inflation and the Overall health of the macro-economy rather that protecting their golf-buddies portfolios

 

[Duddy]

Originally posted by: Mavtek3100
Yes, Duddy called it, I was wrong........ I thought no way in hell they think in the short term and cut it, that's what started this whole mess. Guess I was wrong........

Yeah, but my first prediction that the Dow would drop over 500 points today has yet to come to pass. So I was probably wrong on that one, but damn close.