Fed and ECB announce half point cut in interest rates

CNN ^

[TigerLikesRooster]

World's leading economies -- led by U.S. Federal Reserve and European Central Bank -- announce half point cut in interest rates.

[TigerLikesRooster]

From the ticker

[NRG1973]

Past interest rate cuts have only mollified the market for a few days at the most. I wonder how long this rate cut will mollify the markets?

[DB]

So easy money is the solution to an easy money problem?

[NRG1973]

So easy money is the solution to an easy money problem? The sad thing about the interest rate cuts is their affect on retirees and savers who have a lot of their money in CD's and money markets. They are paying twice for this scandal...once with the $700 billion bailout and twice with the reduced interst rate on their life savings. What a mess!!!

[Notary Sojac]

Yep, and a big dose of heroin shot right into the vena cava is good for curing a junkie, too.

[Notary Sojac]

Savers are the enemy of the "new economy".

Only borrowers and spenders are good for America.

Please get with the program, Citizen!

[ConservativeGreek]

wonder how long this rate cut will mollify the markets?

Global Rate cut will be welcomed. Should have a solid rise
today.

[snowsislander]

I would be unsurprised to see outright buys of preferred stock as a recapitalization mechanism.

I would also be unsurprised if we eventually see negative interest rates in order to pump up the banks.

[Perdogg]

premarket DJIA as of 7:53 +125

[savedbygrace]

Negative interest rates? Has that ever happened? How would that work?

Serious questions, because I’ve never heard of this.

[ovrtaxt]

They pay us to borrow money I guess. Whatever... now it’s just getting stupid.

[NRG1973]

Global Rate cut will be welcomed. Should have a solid rise today.

[M203M4]

It all goes back to the Keynes doctrine - saving is evil, it is more "efficient" for people to spend their money ASAP, borrow more ASAP (as much as they can secure), and then rely on the government to cover their butts later. And their math is sound (except that the plan is structured such that eventually the whole thing has to collapse unless enormous population growth can be sustained - "we are all dead in the long run" is the wittiest of their rebuttals, so at least they recognize this obvious deficiency, but don't care). It is actually worse than the concept of using a sequence of ever newer credit cards to pay off previous credit cards - because here, the credit limit keeps skyrocketing automatically. Everyone can see on paper that the idea could work "forever" given a few asinine assumptions.

$10k from your own savings is no better than $10k of largess from the government. Paying for your food and lodging during retirement yourself from prior savings is no better than having the government provide them via enormous social programs. Actually, in both cases, the government-sponsored alternative is viewed as being superior, because the hazard of "excessive savings" (money not best put to work) can be avoided.

It is sick, and has been taught in most economics departments as the orthodoxy for decades. The most glaring deficiency in the analysis, to me, is that things like freedom, government tyranny, and other "externalities" are tossed overboard as nuisances. I'm much more fond of the Chicago school (where the end result of the analysis is at least compatible with liberty), and with the Austrian school (where liberty, tyranny, and other concepts are treated at the onset as more than inconvenient abstractions). Free markets went out of style with mainstream economists decades ago - we are the bitter clingers.

[NRG1973]

Global Rate cut will be welcomed. Should have a solid rise today.

But what about tomorrow? And the next day? And the day after that? Thats the problem with these rate cuts...they don't seem to have a lasting affect.

[palmer]

Past interest rate cuts have only mollified the market for a few days at the most. I wonder how long this rate cut will mollify the markets?

The real problem is all they will prove with this is that they are impotent. That will cause much bigger declines than if they had left rates alone.

[quack]

I guess it gives the short sellers(back in play today) a bit of a boost.They can short stocks again,rate cut makes stock go higher,only to fall again,shorts make money on the downside.Great idea if your TRYING to kill what's left of the market.The stock market dropping so much is the only thing it had ,to fend off short sellers.

At least it'll give me a good chance to unload my crap.

[palmer]

Global Rate cut will be welcomed. Should have a solid rise today.

Sorry, the bank insolvency crisis (Europe melting down financially) will not be affected on iota by a rate cut. The credit bubble deleveraging is well beyond this measure now.

[ovrtaxt]

“we are all dead in the long run”, the immortal wods of Maynard Keynes. I didn’t know this until recently, but apparently he was a homosexual pedophile or some such. The psychology of a man liek that is interesting- no kids, no connection to the future- in fact, perhaps a subconscious aggression toward the future.

His ideas are an economic time bomb with a looooooong fuse. It’s getting short now though.

[palmer]

Negative interest rates? Has that ever happened? How would that work?

Inflation. But that won't happen. Bernanke said long ago he would manipulate longer terms rates down once short term got to zero. It's a mistake, especially now, but that's what he said he would do.

[palmer]

At least it'll give me a good chance to unload my crap.

yep.

[reaganaut1]

“Negative interest rates? Has that ever happened? How would that work?”

They can slightly negative if people are willing to pay a small fee to the government to keep their money. For example they could buy $1million face value of T-bills for $1.001 million. You can Google “negative interest rates japan”. However, nominal rates cannot get seriously negative because people can just stuff money in mattresses and safe-deposit boxes and “earn” 0%.

Of course *real* (after inflation) interest rates can be quite negative, as they are now with Fed Funds at 1.5%.

[tobyhill]

At least they did it before our markets opened. Buy, buy, buy. Energy and financial shares will skyrocket.

[RSmithOpt]

Sure, DB, we all already knew that....Ahhh...the feds are panicking....the dark liquidity pools have a huge amount of cash and they are sitting on it. Why? The hedge funds and derivatives economy has reversed.

What the numbers nationally if you can find them on states' fairs, retail, etc.

CA is leading the way with their $15 billion budget crisis.

This is just the tip of the iceberg....in the meantime...let's keep giving handouts to all the illegals.

[RSmithOpt]

So true in your take on the 'always borrowing is good' mentality.

I have to agree with you. Gooobermints cannot control natural disasters, financial markets manipulations, corruption greed, deceit, and 'those 2 neighbors starting' a war.

Therefore, sitting on some savings, living within one's on means is practical....too bad the idiots in Congress and Wall St. can't comprehend those virtues.

[ConservativeGreek]

they don’t seem to have a lasting affect.

They don’t because they’re only a small part of the overall investing formula.

[southlake_hoosier]

well, they did a good job of crushing an up day on Wall Street. The futures were up about 178 points until this announcement. Now they are only 40 points up and heading down.

[Moonman62]

When banks aren’t lending to each other and LIBOR is going up, then money isn’t easy. Also, higher spreads mean that lower interest rates weren’t making it down to consumers and businesses either.

[Freedom'sWorthIt]

Good. Should have been done a week ago. And should be more.

[Freedom'sWorthIt]

Then the President goes to Congress and announces together with the enemies there - so they can get some credit - a massive tax cut for businesses, individuals, effective immediately.

THIS WEEK!

[montag813]

The Fed is so stupid. Band aid on an aneurysm.

[TigerLikesRooster]

Ping!

[murphE]

Gasoline on the fire.

[RSmithOpt]

re #31....DOW down -198...yeah way to move dudes.

[teletech]

At 8AM Dow Futures were DOWN -193. So where’s the beef in this rate cut? Guess it ain’t goona work or it will make things even worse.

[teletech]

Then the President goes to Congress and announces together with the enemies there - so they can get some credit - a massive tax cut for businesses, individuals, effective immediately.

THIS WEEK!

Will this spur banks to lend again and end the credit crisis?

[TigerLikesRooster]

Now comes the phase in which whatever Fed/gov does is viewed as yet another indication of looming catastrophe. $700bn, a sign of catastrophe; rate cut, another sign of catastrophe; do nothing, probably a sign of total capitulation.

This could be Warp 9 crash alright.

[Pride in the USA]

ping and see post #4 for now it will affect you and I.

[RockinRight]

Saving is great, when one has a job and the means to save...I think that’s the concern here.

No solution will make everyone happy. Leave it alone, and you face companies not making payroll due to freezing of short-term credit (which the rate cut may only mitigate slightly)...

Unemployed people don’t save ANYTHING!

[teletech]

Now comes the phase in which whatever Fed/gov does is viewed as yet another indication of looming catastrophe. $700bn, a sign of catastrophe; rate cut, another sign of catastrophe; do nothing, probably a sign of total capitulation. This could be Warp 9 crash alright.

The Fed has thrown everything at this but the kitchen sink and, so far, it hasn't stopped the slide. I know there is an answer even now and I hope they find it and soon!

[RockinRight]

That’s never been what I’ve been taught.

I’ve been better lately but admit that most of my 20s (I’m 31 now) I spent too much and saved too little. However, I think I learned the lesson early enough to right the ship.

However, today, I, like many Americans, am more concerned about my ability to remain employed at the moment than whether I earn 3% or 6% on a CD.

[RockinRight]

Heck, lots of illegals are leaving from what I see...perhaps one perverse benefit of a slowing economy.

[TomGuy]

DOW is up 37.

We’re saved.

Happy days are here again.

More bailout! More pork for Congress.

We’re in the money, we’re in the money.

[Toddsterpatriot]

But that won't happen. Bernanke said long ago he would manipulate longer terms rates down once short term got to zero.

Yes, to fight deflation, that's what he'd do.

Glad you finally got that straight.

[RSmithOpt]

Not really....those remaining are hoping for amnesty and have gameful employment now, well, not the 300 detained from the chicken plant yesterday.

Still, ICE is not deporting 98% of the illegals caught, nor documenting biometrically those known to be illegal, nor building a secured southern border.

BTW, there's no way with a good wall/ fence that 100% of the illegal / drug traffic would be stopped...but, we could surely make a huge dent in it.

It's still smoke and mirrors during the old dog and pony show from the feds w/ respect tho illegal immigration.

[TomGuy]

Heck, lots of illegals are leaving from what I see...perhaps one perverse benefit of a slowing economy.

Many of those 'leaving illegals' helped cause part of the problem.

Several months ago there were a couple of articles that didn't get much traction. They were talking about some real estate scams.

One real estate scam was this:

Illegals got 100%+ home loans. Some of the overage was around 25%. A while after many of the illegals got that hand full of cash, they they defaulted and fled south of the border. That left the mortgage companies holding over-priced loans. Then housing prices plummeted. So, those loans were on homes were even much, much less than the original loan amount.

Guess who gets to make up the difference?

[Zeppelin]

yeah, WaMu/JP Morgan/Chase was offering a 5.00% APY 12 or 13 month CD for the past few weeks. I opened one last week, and the offer was still up yesterday. I was going to do another next week but when I heard about the rate cut this morning, I was pretty sure they wouldn’t be offering 5.00 any more. Logged in and, sure enough, they’ve cut it to 2.93%...yowch!

[TomGuy]

It's still smoke and mirrors during the old dog and pony show from the feds w/ respect tho illegal immigration.

Many of us saw it coming. Many in high places (Washington and Wall Street, for example) had their heads in the sand or up their derrieres.

==

July 18, 2005
BusinessWeek

Embracing Illegals
Companies are getting hooked on the buying power of 11 million undocumented immigrants

http://www.businessweek.com/magazine/content/05_29/b3943001_mz001.htm

“The result is a hot new market in the making. With hundreds of thousands of illegal alien households earning enough to qualify for $95,000 mortgages, according to the National Association of Hispanic Real Estate Professionals, ITIN and conventional mortgages taken out by illegals could be worth as much as $60 billion over the next five years. That's pushing big banks such as JPMorgan Chase & Co. (JPM ) to examine the market and upping pressure on mortgage buyers Fannie Mae (FNM ) and Freddie Mac (FRE ) to create a secondary market for ITIN loans.”

[Note: This was 2005 data.]

[JDoutrider]

bttt

[flattorney]

This news release should have read......

The Federal Reserve reduced its benchmark rate to 1.5 percent in a coordinated move to further shaft retired individuals, living off fixed income portfolios, and assure a Obuma presidential win.

FYI, About 4:00 a.m. this morning the DJIA Futures where down 330 points. The DJIA opened down 180 points, now it’s up 140.

[palmer]

Glad you finally got that straight.

Me too! So where's this deflation everyone keeps talking about?