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Old 12-16-2008, 02:41 PM
 
Location: Central CT, sometimes NH.
3,606 posts, read 5,338,938 times
Reputation: 3816

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The message was wrong. The Fed should telegraph come and get your low rates now because we will start a regular schedule of 1/4 point increases starting ????

What urgency is there to do anything if they just admit that they have no faith in the economy improving or anyone buying a house, car, or other major purchase? What incentive is there for any businesses to try and work a restructure if they feel they will get a better deal down the road or they might be able to pick up somebody in worse shape on the cheap if they continue to wait?

If the bottom was telegraphed people who could would move off the dime and start making their moves. If not, why rush?
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Old 12-16-2008, 02:42 PM
 
Location: Los Angeles Area
3,306 posts, read 3,561,515 times
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The FED was just making official what was already happening....What is surprising is that the equity markets cared about this at all....rates were already effectively zero.
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Old 12-16-2008, 02:44 PM
 
Location: Great State of Texas
86,068 posts, read 74,832,001 times
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Quote:
Originally Posted by Humanoid View Post
The FED was just making official what was already happening....What is surprising is that the equity markets cared about this at all....rates were already effectively zero.
And actually went into negative territory in trading.
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Old 12-16-2008, 02:47 PM
 
19,123 posts, read 20,697,215 times
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I don't understand how rates can go "negative" You borrow a loan and the government "pays" you for borrowing? Doesn't make any sense..
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Old 12-16-2008, 02:54 PM
 
8,980 posts, read 7,922,849 times
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The Fed issued a statement that they were going to look at the purchase of long-term treasuries. They're jawboning rates down imo before they actually act or are forced to act. They're already buying government-backed mortgage securities since investors have been dumping them since the middle of the year.
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Old 12-16-2008, 03:04 PM
 
Location: Great State of Texas
86,068 posts, read 74,832,001 times
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Quote:
Originally Posted by evilnewbie View Post
I don't understand how rates can go "negative" You borrow a loan and the government "pays" you for borrowing? Doesn't make any sense..
The negative yield happened in trading. Many people were buying treasuries driving the price up and the yield down.
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Old 12-16-2008, 03:06 PM
 
Location: Great State of Texas
86,068 posts, read 74,832,001 times
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Quote:
Originally Posted by lchoro View Post
The Fed issued a statement that they were going to look at the purchase of long-term treasuries. They're jawboning rates down imo before they actually act or are forced to act. They're already buying government-backed mortgage securities since investors have been dumping them since the middle of the year.
Bernake already said the Fed would do that about 2 weeks ago I think.
The left hand prints the money and gives it to the right hand.

Bernake also talked about the Fed issuing it's own debt in direct competition with the Treasury but he needs approval from Congress to do that I believe.
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Old 12-16-2008, 06:34 PM
 
8,980 posts, read 7,922,849 times
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Bernanke did some of the same things after 9/11. He threatened to buy longer-term treasuries. He told investors he would keep the discount window rates rock bottom for a long time and thus invited them to frontrun the Fed in buying the longer maturity treasuries to force down rates with the explicit assurance he would have their back.
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Old 12-16-2008, 09:43 PM
 
18,353 posts, read 16,333,820 times
Reputation: 7154
Quote:
Originally Posted by texan2yankee View Post
Let's see if we are prepared? Everyone has taken a beating in their real estate portfolio, stock portfolio, job situations are tentative, unemployment climbing, credit is tight and not easing AT ALL due to interest rate drops, lack of credibility in rating agencies (Madoff et al), commercial real estate shoe still to drop, etc. Yeah, everything is just peachy because the market has rallied a few points. Woop, woop! I don't know about the rest of the country but NYC is zombie land these days.

Besides, wasn't this tried in Japan in the 90s? It turned out GREAT for them, NOT.

Hi texan2yankee,

The lesson not learned from Japan for the average Joe will really cost us(The banksters already know). Japan was ripped off in public works and speculators. Japanese saved and worked themselves to death and their government spent and speculators borrowed. This was cheered by the export economy. What did it matter that Japanese saved?
However there is a lesson to be learned. At 170 GDP Japan has a large public debt. However this public debt , which is what a Yen is, is passed around with no interest to a bank. If instead of the average Japanese being scammed they gave tax rebates and credits to every house hold they would have been in fiscal paradise. Our money supply is around 55 Trillion in public and private debt. Since 10 Trillion is public it means our economy must pay the interest on 45 Trillion to banks. At 60 % GDP our relatively low public debt means we pay much more rent to banks for our money than any Japanese. Why do we have a society that would rather pay interest to banks than use all public debt as our currency? Because we haven't the slightest clue what our money is. I wish we had a national debt of 55 Trillion and no commercial debt.
What are the odds of the Average American thinking we should multiply our public debt by more than five and end fractional reserve banking? Not good. We have been brain washed beyond all hope. Americans complain that our governments prints too much money but not a peep about banks that printed 45 trillion of it and to top it off, its at interest.
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Old 12-16-2008, 10:05 PM
 
268 posts, read 741,889 times
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Quote:
Originally Posted by HappyTexan View Post
Actually it's not just about housing anymore J Arp. Everything is falling in value..a deflationary spiral. They are now trying to save the US economy.
It's way beyond real estate now.

Yep...it's starting.

All they can do now is ...print

And if you can keep your job...be prepared to get a lower wage to keep it.

Deflationary spirals are uncontrolable.
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