Ford chief urges Fed action (Emaciated corpses litter streets!)

http://money.cnn.com/2007/08/24/news/companies/ford_fed/index.htm?postversion=2007082406 ^ | 8-24-07

[Hydroshock]

NEW YORK (CNNMoney.com) -- Ford CEO Alan Mulally became the latest high-profile business executive to suggest that the Federal Reserve needs to cut interest rates, according to a report published Friday.

Noting that credit conditions were posing a "big headwind" to the company's turnaround plan, Mulally told the Financial Times he is concerned about the state of the larger economy.

Next victim of mortgage mess: Auto sales Video More video

Fortune's Sue Callaway reviews and compares the Audi S4 and the BMW M5. Play video

"It is a really important job to manage inflation and economic growth [but] focusing on economic growth appears to be a really important priority now," Mulally told the paper, hinting that the central bank needs to take action.

The Federal Reserve, which works to keep inflation in check and promote economic growth, has resisted calls to lower the federal funds rate from its current level of 5.25 percent.

The key interest rate, which has remained unchanged since June 2006, directly impacts consumer loan rates on everything from credit cards to auto loans.

[Iwo Jima]

Actaully,soup lines for people who caused this housing bubble is beginning to sound pretty good to me. Maybe they will learn a lesson about making obviously ridiculous loans.

[Iwo Jima]

You correct a liquidity crisis by letting stupid people who made or bought stupid loans pay the piper and even go bankrupt if need be. NOT by inflating the currency to save them from the logical consequences of their bad judgment and actions.

[Iwo Jima]

Apparently so. Every sentient being could see that the housing bubble was going to have to burst sooner or later and that when it did a whole lot of people were going to get hurt, and not just them ones who caused the problem.

Reality can only be cheated for so long.

[RockinRight]

20% unemployment is worse than inflation.

[Toddsterpatriot]

Reality can only be cheated for so long.

A goldbug talking about reality. LOL!

[RockinRight]

We may “need” it but don’t be under the delusion that it won’t cause severe, long-term damage to the economy.

Right or wrong, it will. Realtors, bankers, loan officers either out of work or severely reduced in income...followed by construction workers becoming unemployed, people who normally would sell a house now stuck and illiquid, therefore not spending money in the economy...trickle-down works both ways, bud.

Result-cheap houses, but nobody with jobs to buy them with. See Detroit for a small-scale example.

[Iwo Jima]

You do you come up with 20% unemployment? Are there really that many people involved in making or buying stupid loans?

If that's the case, then we'll just have to suffer 20% unemployment until they learn their lesson and find productive jobs. Sound like you will be one of them. Why not beat the rush and go ahead and find a real job?

[djf]

You used a very important phrase there...
“Every sentient being...”

Some are, some aren’t!!

(I wonder if that argument would work in bankruptcy proceedings, “Well, judge, I just ain’t as sentient as I used to be...”)

LOL!

[Southack]

"You correct a liquidity crisis by letting stupid people who made or bought stupid loans pay the piper and even go bankrupt if need be. NOT by inflating the currency to save them from the logical consequences of their bad judgment and actions."

That was the strategy tried in 1930. It ushered in soup lines and record national foreclosure rates that haven't been topped since.

Congrats. You've managed to parrot the Fed of 1929.

[Hydroshock]

This is going to happen either way. It is not longer possible to stop.

[RockinRight]

So I guess I should go apply at Burger King according to you, huh?

[RockinRight]

BTW...trickle down works BOTH ways. It’s not just people in real estate or finance affected, ya know...

What do you do for a living, if I may ask?

[RockinRight]

A real job?

Look bud, I make nearly six figures HONESTLY doing what I do.

Real job my ass. Go work a sweaty blue collar job for one third the money while the yoon-yun tells me who to vote for?

Or perhaps sit at a desk for paltry salary while I listen to Office-Space-like employees drone on about TPS reports?

[djf]

Chill, dude.

We’re presumed to be adults here.

[Southack]

"This is going to happen either way. It is not longer possible to stop."

Based on what, your "feelings?"

Oh sure, a lot of people are going to feel pain. The sub-primers in particular are long past saving.

But the rest of our economy can still be salvaged with a few Fed Funds cuts and cash injections.

Property tax reform in states like Florida would help, as well.

We've got record Productivity, record salaries, near record low unemployment...our economy can field this problem if it is handled today better than how the Fed fumbled the similar credit crunch in 1929.

[fatboynic]

If you were to narrow the blame on a specific group of individuals, shouldn’t you blame those that invested (bought up) all of these ‘crap’ loans?

[girlscout]

So you’re talking about the apple affect? If there’s one bad apple they must all be bad apples?

[RockinRight]

We are presumed to be yes.

But sometimes when dealing with people with the intelligence and economic knowledge of a 9 year old, one must stoop to their level.

That, and wedding expenses and newlywed financial jitters are getting to me.

[Iwo Jima]

Payback is a b!+c#, ain’t it?

The logical consequences of malinvestment on such a massive scale is going to be severe, that’s for sure. But it is not only necessary, it is unavoidable and in the long term desirable.