Posted on 08/24/2007 5:35:44 AM PDT by 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.
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"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.
(Excerpt) Read more at money.cnn.com ...
I would be looking at keeping my options open and getting my house in order.
I’m predicting the fed is going to raise rates at the next meeting. I don’t think there is any way out except to bring savers and investors back into the bond markets. And they need higher interest rates to make it worth their while.
There is so much excess capacity in this economy now imo that it is killing real profit. But as long as corporations can constantly roll over debt, and pile on more and more debt at ultra low rates, with increasingly complex bond offerings.. they never die. Thats why Ford and GM are hobbling along yet losing huge money on many of the cars they sell. It doesn’t make any sense for the health of the market.
There is overcapacity in so many places like new strip malls opening up, while others are running way below capacity. Millions of McMansions being built hours away from cities. 1920’s was the same problem, overcapacity started killing profit margins. The only way out is an absolute hammer killing off the companies which aren’t making profit. Then we can regrow again.
Indeed $500 trillion of derivatives paper, almost worthless junk without new buyers to roll it over.
We will need a new currency there is no other way to unwind the debt.
BUMP
You think there is $500 trillion worth of derivatives out there? And that they're worthless?
We will need a new currency there is no other way to unwind the debt.
Jerome, is that you?
How did I create this “housing bubble?” You have no idea the day to day operations of what I do.
Borrowers got greedy and wanted to get their MacMansions and 42” plasma tv’s.
Lenders got greedy rackin up fees and commissions and huge bonuses.
There’s plenty of culpability all the way around.
Since late 2006 137 major U.S. lenders have “imploded”
I see, inflated housing prices are not calculated into the inflation index but when real estate corrects, then we should account for it?
Fact is, the subprime bust does not affect everyone and the worst offending hedge funds should take their licks.. Oh, and I dont know who does your shopping for you, but prices are really taking off for basic comodities; try buying a coffee from Dunkn Donuts and compare prices, or a liter of coke, or get a haircut or whatever. Cripes..
We survived the internet bubble burst but we cant survive 1/2 of 1 percent of mortgage loans going bust? Thats a bunch of crapola, put forth by a bunch of scared hedge fund nmanagers. They built their bed, now they have to sleep in it..
One other thing, you prop up these bad loans and that takes money away from other business opportunites . Just because you CAN inflate the money supply doesent mean you should.
It’s not the half of one percent of bad loans creating the problem. It’s the reaction to them, and the resulting loss of liquidity.
I started in this business in Ohio. Never had more than 3% appreciation a year there. Average home is $130,000.
In Maryland, I got here AFTER the run-up-prices are now flat or slightly declining in some markets, appreciating very little in others.
Most of my clients are high net-worth, good credit, verifiable income, and if they’re not they’re special cases, not routine “put them in a loan they can’t afford” cases.
Right on, brother! It is incredible to me that people are proffering policies that only weaken the economy in the long run. Propping up bad loans with more bad loans?? Can you get nany more insane than that?
If they’re $500 trillion, they’re not worthless.
True, and we will all end up paying the price in varying degrees.
I assume this was a decision of the board of directors or at least a decision not overturned by the board. Since the stockholders put the directors in place to make such decisions on behalf of Ford, what is blatantly arrogant about it? They are only exercising a right granted to them by the stockholders. If the stockholders don't like it, they can remove the directors.
Your Dunkin donuts aren't in the same scale as a house price. A 10% house price drop matters a lot more than a 10% hike in your donut budget.
So while you and some retired senior citizens are fretting about coffee and donut prices going up, you're missing the bigger economic picture of deflation in home prices going forward.
Ergo, you are offering the wrong prescription for fixes to the future of our economy.
Oh, and by the way, shoes that I usually buy for $120 were on sale last week at Wal-Mart for $12. Not exactly a price hike!
Theres more to the economy than just the real estate market . The weakest hedge funds are going under and I could care less. Sorry to burst your bubble, but when the internet/ stock market burst in 2001, people were screaming bloody murder, but we survived. The Fed should NOT cut rates this time around since the rest of the world economy is in great shape and the US is due for a little correction. Its the healthy thing to do!
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