The FOMC slashed interest rates again today to 1.0% hoping to shore up consumer confidence and prop up a sagging economy.
Did Fed Chief Ben Bernanke and his peers right by cutting rates?
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NO --- Inflation (food, gas, utilities) is still out of control. low interest rates by Greenspan is what got us into this mess, along with a democatic controlled Fannie and Freddie. Lower interest rates these past few months have not been reflected in lower mortgage rates. The fed needs to stay out of this mess and let the free market fix itself.
It was absolutley the right move to bail out the banking industry. Bernanke correctly decided to intervene because history shows that that hoover did not and that precipated the worst depression we've yet experienced and it didn't have to happen. Had Hoover chose to act, there is a very good chance that it would have been a short term recession. JC
Hmmmm. I know it won't help me. I was upside down on my mortgage after getting duped by an unscupulous mortgage broker, and had to face the music and sell my home for less than it was financed for, and walked away with unsecured notes on the deficiencies. I don't get why those facing the same dilema now will be bailed out by the govmint. I paid, and continue to the pay the price for my stupidity. Now all the others that made knucklehead decisions like I did get a break? Doesn't seem quite right to me. What about taking responsibility for one's actions and facing the consequences. I think that's what we should all do. What say you?
The FOMC are arguably in a more dangerous position - having made the cut any need for further emergency action will push rates towards 0% - mimicing the position the Japanese government had to take in the early 1990s leading to several years of stockmarket stagnation, despite large pump-priming infrastructure projects.
That said, it was a brave move, though another internationally coordinated rate change may have been preferable versus a unilateral move risks pushing the FOMC into shallow waters, with less room for manoeuvre.
I feel that this might help a little in the short run, but in the long run, it will cause to a rise in inflation, which is already rather large, which in turn will cause the market to sink even lower due to higher inflation, but what do I know, allI know is that we will see won't we.
When are they going to let the market respond to all the other changes they keep throwing at it! This rate cut was not appropriate and they will never be able to determine whether it has a positive or negative effect.
No. We need to raise the interest rate. I thought the problem is that thwere is too much credit. We are all borrowint too much, we need to stop. we all need to live within our incomes and not borrow to pay later. It is now later. we need to stop. The governments need to stop the spending and stop the borrowing. Stop stop stop stop stop stop stop stop stop stop stop stop stop stop stop.
We need to stop borrowing for at least ten years. We just now need to manage the current borowing that is outstanding. Pay it off. Make these current investments pay off. Use curent income to meet day to day operating cost. this includes all. eat less if you cannot afford to eat a lot. stoping going to the movies. just stop borrowing and useless spending.
Only if the last 200 basis points worth of federal funds rate reductions translates directly into mortgage rate reductions. If the mortgage rates are reduced to 4% or 5% for a predetermined 6 month period, refinances would create relief for existing homeowners and entice first time buyers and investors into the market to absorb foreclosures. Reduced mortgage payments for those still in their homes would lead to more consumptions. Enabling consumers to spend money is the best way to get the economy going again. If there is no money being spent by consumers, more and more jobs will be lost. It needs to start with a temporary and defined period of low mortgage rates.
They only made the right choice if they force banks to match this rate reduction on their mortgage rates. A mortgage rate cut to 4% or 5%, for a fixed period of time (say 6 months), would lead to a slew of refinances and will reward those who have been battling to keep current on payments. In addition, investors and first time buyers will see more affordabiltiy and the glut in supply would be greatly corrected over the six month period. The refinancing alone would cause consumer confidence to rise and holiday spending might be partially saved due to the increase in commerce. All of this could lead to a more positive economic outlook and won't cost us another $700 Billion. It can't really hurt us as long as it is for a finite period of time.
No! The last thing we need now is a fed rate cut. Yes, the market likes it in the short term, but long term this will simply prove inflationary. The Fed is so set on stopping deflation they have taken their eye off the ball. The problem is going to be inflation. Every move they make from the bail out to interest rates are inflationary. It may be in a month or maybe several months down the road, but we're going to pay for the reckless behavior of the fed and our "Brilliant" leaders in Washington. God help us.
As mortgage banker by trade the Fed made the correct move today the next move must be to force the Fannie and Freddie along with the banks that are taking the Fed money to pass it along to the consumer's at low rate's. Based on my 10 years of mortgage lending todays 30 year fixed rate should be approx. 5% if not lower and yet we (the lenders and the consumers) we are well above 6.5% for a 30 year fixed loan. These big banks, Fannie and Freddie must lower the lending rate in order to spurr along the economy. The Fed should make it a rule; if you take tax payer money you must lend it and not hord the money for reserves because they goofed and made a mess of there own financies.
Why don't they just give the freakin money away? Sometimes the hardest thing to do is nothing at all. The Fed is letting Wall Street make the rules. Wall Street needs to pay for their own sins. I have lost over $300,000 in retirement assets, that is the risk I took.....PERSONAL RESPONSIBILITY!!! I got greedy and paid the price.
No. The Fed did not do the right thing.
The "liquidity" the Fed has been pumping into the market will eventually find it's way into consumer prices unless Fed policy changes, and it's doubtful it will. The political winds simply won't allow it. True inflation is much higher. Asset prices are deflating after a decade, or more, of poor policy decision by the Fed that encouraged asset inflation including real estate.
The Fed is trying to change a normal free market collapse of the bubble the Fed itself created. It's trying to cure a disease with the same medication that caused it. It won't work. The Fed needs to back off before it makes the inevitable even worse.
The dollar is inhaling it's last breath. Whether it exhales quickly or slowly won't matter. The end result will be massive inflation, perhaps hyperinflation, caused by the very agency that is supposedly commissioned to protect against it.
No business owner or operator with any sense is going to borrow money to expand his company until he or she knows who the next President will be. If it's Obama, businesses will not expand, only Government will. Businesses will fear the negative consequences for themselves and their customers when Obama raises taxes. If Sen. McCain wins, business owners will consider expansions and need to borrow and thereby stimulate the economy and creat jobs. Businesses won't borrow at any price to expand when the incentive for success is removed by taxation. Only businesses in trouble will attempt to borrow now and if their profits are taxed away, they will not be able to recover and the rate cut will be of little benefit.
Let's see, we got here by keeping rates artificially low, and encouraging people to accumulate excess debt, so we respond by driving rates even lower, right? Right! Moronic, short-sighted, dangerous, and, oh, how about desperate?
Hello,
I don't think so. Here's why. That interest rate cut will benefit some people, but not most people. The government can jump over the moon, but you will not change this situation until you start thinking about all these unemployed. The situation was already bad, but now companies are cutting expenses by cutting people. All these people worked and contributed to society buying cars, houses, boats, etc. Now, all those are not going to put anything in the economy. Big companies don't seem to care about people...I mean really care. Until they see that people are not replaceable, they will never be the company they could be. Here's an example, and then I'm through. I'm testing an electronic part, the tester says it passes. But, with my experience I'm able to notice a defect that tester missed. I alert it to engineering, and they add a couple of lines of code to check that area.
So, where is the part going. It's going to be used at NAS, it will power the radar system, and its crucial that this radar remains on. What would have happened the NAS system had that defective board in it?
Roy, NC
Here we go again. Easy money created this mess in the first place, and it's going to start the cycle all over again. When access to money is free and interest income is non-existent, there is very little cost in borrowing and risky leveraging, and no incentive to save. How quickly we forget. And no one should let Greenspan off the hook. He engineered this mess, and now his boy and their Wall Street buddies are at it again with borrowed dollars we'll never be able to pay back. No, we'll just start printing money so fast it'll make your head spin. But, I've got to admit, they are not going to let the banks fail. Instead, we're going to use the dollar to make the Mexican peso look like stable currency. I wonder how the vending machines will work when it costs $100 to buy a Coke? Since nobody will be able to afford one, we'll never know...
I would rather see a interest rate reduction than a freakin 700b bailout, so both, no its wrong. Sometimes there just has to be painful corrections we have been overdue for close to 25 years for a severe correction, let it happen, let it happen, let it happen. Throwing money at it only delays, we dont have enough to keep it propped up and THEN there wont be the funds to do the right thing.
Obviously Wall Street wasn't impressed. They tinker with the numbers all day long, then scamper like rats to sell off just before the bell to gather whatever crumbs they can scavenge.
The traders have been humbled and appear to have lost whatever cahoonas they may have had pre-crunch.
This will trickle down to individual savings accounts. Wouldn't it be great to give some incentive to save instead of spend? Jimmy Carter - where are you when we need you j/k
I really don't think it will make much of a difference. Whether the interest rate is 2% or 0% if people are unable to get financed what will it matter.
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John
NO --- Inflation (food, gas, utilities) is still out of control. low interest rates by Greenspan is what got us into this mess, along with a democatic controlled Fannie and Freddie. Lower interest rates these past few months have not been reflected in lower mortgage rates. The fed needs to stay out of this mess and let the free market fix itself.
laffs last
Bush is just pushing the massive inflation into next year. Right into Obamas lap. Welcome to the oval office Barry.
John
It was absolutley the right move to bail out the banking industry. Bernanke correctly decided to intervene because history shows that that hoover did not and that precipated the worst depression we've yet experienced and it didn't have to happen. Had Hoover chose to act, there is a very good chance that it would have been a short term recession. JC
Robert
Hmmmm. I know it won't help me. I was upside down on my mortgage after getting duped by an unscupulous mortgage broker, and had to face the music and sell my home for less than it was financed for, and walked away with unsecured notes on the deficiencies. I don't get why those facing the same dilema now will be bailed out by the govmint. I paid, and continue to the pay the price for my stupidity. Now all the others that made knucklehead decisions like I did get a break? Doesn't seem quite right to me. What about taking responsibility for one's actions and facing the consequences. I think that's what we should all do. What say you?
Jeffrey Bradford
The FOMC are arguably in a more dangerous position - having made the cut any need for further emergency action will push rates towards 0% - mimicing the position the Japanese government had to take in the early 1990s leading to several years of stockmarket stagnation, despite large pump-priming infrastructure projects. That said, it was a brave move, though another internationally coordinated rate change may have been preferable versus a unilateral move risks pushing the FOMC into shallow waters, with less room for manoeuvre.
warren beals
I feel that this might help a little in the short run, but in the long run, it will cause to a rise in inflation, which is already rather large, which in turn will cause the market to sink even lower due to higher inflation, but what do I know, allI know is that we will see won't we.
beohbe
When are they going to let the market respond to all the other changes they keep throwing at it! This rate cut was not appropriate and they will never be able to determine whether it has a positive or negative effect.
Al
No. We need to raise the interest rate. I thought the problem is that thwere is too much credit. We are all borrowint too much, we need to stop. we all need to live within our incomes and not borrow to pay later. It is now later. we need to stop. The governments need to stop the spending and stop the borrowing. Stop stop stop stop stop stop stop stop stop stop stop stop stop stop stop. We need to stop borrowing for at least ten years. We just now need to manage the current borowing that is outstanding. Pay it off. Make these current investments pay off. Use curent income to meet day to day operating cost. this includes all. eat less if you cannot afford to eat a lot. stoping going to the movies. just stop borrowing and useless spending.
GW
Only if the last 200 basis points worth of federal funds rate reductions translates directly into mortgage rate reductions. If the mortgage rates are reduced to 4% or 5% for a predetermined 6 month period, refinances would create relief for existing homeowners and entice first time buyers and investors into the market to absorb foreclosures. Reduced mortgage payments for those still in their homes would lead to more consumptions. Enabling consumers to spend money is the best way to get the economy going again. If there is no money being spent by consumers, more and more jobs will be lost. It needs to start with a temporary and defined period of low mortgage rates.
mntboy
Nope! Just more interferance from the "Feds" allowing the Free Market to function.
GW
They only made the right choice if they force banks to match this rate reduction on their mortgage rates. A mortgage rate cut to 4% or 5%, for a fixed period of time (say 6 months), would lead to a slew of refinances and will reward those who have been battling to keep current on payments. In addition, investors and first time buyers will see more affordabiltiy and the glut in supply would be greatly corrected over the six month period. The refinancing alone would cause consumer confidence to rise and holiday spending might be partially saved due to the increase in commerce. All of this could lead to a more positive economic outlook and won't cost us another $700 Billion. It can't really hurt us as long as it is for a finite period of time.
Duane
No! The last thing we need now is a fed rate cut. Yes, the market likes it in the short term, but long term this will simply prove inflationary. The Fed is so set on stopping deflation they have taken their eye off the ball. The problem is going to be inflation. Every move they make from the bail out to interest rates are inflationary. It may be in a month or maybe several months down the road, but we're going to pay for the reckless behavior of the fed and our "Brilliant" leaders in Washington. God help us.
dave Kestler
As mortgage banker by trade the Fed made the correct move today the next move must be to force the Fannie and Freddie along with the banks that are taking the Fed money to pass it along to the consumer's at low rate's. Based on my 10 years of mortgage lending todays 30 year fixed rate should be approx. 5% if not lower and yet we (the lenders and the consumers) we are well above 6.5% for a 30 year fixed loan. These big banks, Fannie and Freddie must lower the lending rate in order to spurr along the economy. The Fed should make it a rule; if you take tax payer money you must lend it and not hord the money for reserves because they goofed and made a mess of there own financies.
Jim Reynolds
YES WE NEED ALL THE HELP POSSIBLE RIGHT NOW, IT CAN ALWAYS BE INCREASED IF NEEDED. J
mntboy
Nope! Anything the Feds are involed with concerning the "Free Market" will mess the "Free Markets" functioning ability.
Terri
Why don't they just give the freakin money away? Sometimes the hardest thing to do is nothing at all. The Fed is letting Wall Street make the rules. Wall Street needs to pay for their own sins. I have lost over $300,000 in retirement assets, that is the risk I took.....PERSONAL RESPONSIBILITY!!! I got greedy and paid the price.
Nathan
No. The Fed did not do the right thing. The "liquidity" the Fed has been pumping into the market will eventually find it's way into consumer prices unless Fed policy changes, and it's doubtful it will. The political winds simply won't allow it. True inflation is much higher. Asset prices are deflating after a decade, or more, of poor policy decision by the Fed that encouraged asset inflation including real estate. The Fed is trying to change a normal free market collapse of the bubble the Fed itself created. It's trying to cure a disease with the same medication that caused it. It won't work. The Fed needs to back off before it makes the inevitable even worse. The dollar is inhaling it's last breath. Whether it exhales quickly or slowly won't matter. The end result will be massive inflation, perhaps hyperinflation, caused by the very agency that is supposedly commissioned to protect against it.
Frank
No business owner or operator with any sense is going to borrow money to expand his company until he or she knows who the next President will be. If it's Obama, businesses will not expand, only Government will. Businesses will fear the negative consequences for themselves and their customers when Obama raises taxes. If Sen. McCain wins, business owners will consider expansions and need to borrow and thereby stimulate the economy and creat jobs. Businesses won't borrow at any price to expand when the incentive for success is removed by taxation. Only businesses in trouble will attempt to borrow now and if their profits are taxed away, they will not be able to recover and the rate cut will be of little benefit.
TJF
Let's see, we got here by keeping rates artificially low, and encouraging people to accumulate excess debt, so we respond by driving rates even lower, right? Right! Moronic, short-sighted, dangerous, and, oh, how about desperate?
Roy
Hello, I don't think so. Here's why. That interest rate cut will benefit some people, but not most people. The government can jump over the moon, but you will not change this situation until you start thinking about all these unemployed. The situation was already bad, but now companies are cutting expenses by cutting people. All these people worked and contributed to society buying cars, houses, boats, etc. Now, all those are not going to put anything in the economy. Big companies don't seem to care about people...I mean really care. Until they see that people are not replaceable, they will never be the company they could be. Here's an example, and then I'm through. I'm testing an electronic part, the tester says it passes. But, with my experience I'm able to notice a defect that tester missed. I alert it to engineering, and they add a couple of lines of code to check that area. So, where is the part going. It's going to be used at NAS, it will power the radar system, and its crucial that this radar remains on. What would have happened the NAS system had that defective board in it? Roy, NC
Bill
Here we go again. Easy money created this mess in the first place, and it's going to start the cycle all over again. When access to money is free and interest income is non-existent, there is very little cost in borrowing and risky leveraging, and no incentive to save. How quickly we forget. And no one should let Greenspan off the hook. He engineered this mess, and now his boy and their Wall Street buddies are at it again with borrowed dollars we'll never be able to pay back. No, we'll just start printing money so fast it'll make your head spin. But, I've got to admit, they are not going to let the banks fail. Instead, we're going to use the dollar to make the Mexican peso look like stable currency. I wonder how the vending machines will work when it costs $100 to buy a Coke? Since nobody will be able to afford one, we'll never know...
nate willis
I would rather see a interest rate reduction than a freakin 700b bailout, so both, no its wrong. Sometimes there just has to be painful corrections we have been overdue for close to 25 years for a severe correction, let it happen, let it happen, let it happen. Throwing money at it only delays, we dont have enough to keep it propped up and THEN there wont be the funds to do the right thing.
Robert J
Obviously Wall Street wasn't impressed. They tinker with the numbers all day long, then scamper like rats to sell off just before the bell to gather whatever crumbs they can scavenge. The traders have been humbled and appear to have lost whatever cahoonas they may have had pre-crunch.
CharlieBravo
This will trickle down to individual savings accounts. Wouldn't it be great to give some incentive to save instead of spend? Jimmy Carter - where are you when we need you j/k
Ed
I really don't think it will make much of a difference. Whether the interest rate is 2% or 0% if people are unable to get financed what will it matter.