Posted on 08/30/2007 10:28:05 AM PDT by Hydroshock
Federal Reserve Chairman Ben Bernanke is under intense pressure to signal a rate cut when he takes center stage Friday at a gathering of central bankers in Jackson Hole, Wyoming. Dennis Cook / AP Federal Reserve Chairman Ben Bernanke --------------------------------------------------------------------------------
In recent days, CEOs, investors and politicians have been clamoring for the Fed chief to move quickly to ease the current credit crunch and keep the economy from sliding into a recession. Although the Fed helped calm the markets on Aug. 17 with a surprise cut in the discount rate, the call now is for a cut in the more important fed funds rate, which has been stuck at 5.25% for more than a year.
"Clearly, the risk of the economy overall going into a recession is heightened right now," complained Ara Hovnanian, the chief executive of homebuilder Hovnanian Enterprises in an interview on CNBC Thursday. "The credit market disarray is real. Clearly a rate cut would be helpful to the overall economy right now."
It's against the backdrop that Bernanke will deliver one of the most closely watched speeches of his chairmanship on Friday.
(Excerpt) Read more at cnbc.com ...
...unless you’ve been stupid or careless in how you go about purchasing property.
Isn’t that the whole problem? Too many have been stupid?
Is it really a ‘problem’?
Not for me, or anyone that I know.
I'll have to try that sometime.
I did have the experience where one of them called me a communist once. LOL.
Plenty of reasons to cut rates. You obviously haven’t been seeing the disarray in the mortgage markets. The Fed needs to cut rates to give investors some reason to think normalcy will return. The Fed has been fiddling while the mortgage market is on fire.
or one humongous one : )
And have you noticed when you bring up a gloom and doom ‘prediction post’ from a year or two ago
I’ll have to try that sometime.
It takes a while, but I’ve had quite a bit of fun with the internet financial ‘experts’ doing so over the years.
Some of em were downright hilarious, after the fact.
What was also funny was how these kooks try to explain away the huge errors.
Plenty of reasons to cut rates. You obviously haven’t been seeing the disarray in the mortgage markets. The Fed needs to cut rates to give investors some reason to think normalcy will return. The Fed has been fiddling while the mortgage market is on fire.
Actually I’m keenly aware of this, and I want the rates cut, primarily because I’m a small biz owner, not because of my mortgage or to purchase property.
As for the Fed ‘fiddling’ I think Bernake will move much quicker than Greenspan, who’s delay in lowering rates after 9/11 still angers me to this day.
>> The Fed needs to cut rates to give investors some reason to think normalcy will return
Really? Investors?
...or Speculators?
And what is “normalcy” to you? Steady growth (but not too hot)? Or a hypermaniac “buying and flipping” climate, where there is always a greater fool to be suckered, provided that the Fed keeps the cheap-money heroin flowing?
I think Ben (like Greenspan) has been waiting far too long to cut rates. They wait until a crisis comes instead of seeing what is obviously going on. If Countrywide were to go down, the mortgage market would go down also which would take 20% of the economy down for a good while. Countrywide is still way deep in these Alt-A loans. I have several buddies who are in executive managment there. It isn’t pretty and the CEO Mozilio took plenty off the top at its highs.
You want cmiller for this, not me.
“He need to do about 8-10 of them.”
That’s what caused the current problems.
Raise it don’t lower it.
If Countrywide were to go down, the mortgage market would go down also which would take 20% of the economy down for a good while.
I’m hearing similiar comments from here as well, from multiple sources.
Well SOMEBODY somewhere bought a house with a mortgage full of embedded options.
Well SOMEBODY somewhere bought a house with a mortgage full of embedded options.
Yep. But the fact remains the overwhelming majority did not.
You can cut the rates to zero, problem is if the mortgage owed is larger than the market value of the home.
Yep
Why? To appease the idiots who created this mess in the first place and risk inflation? No way. Let them reap what they’ve sown.
The thing that gets me is half the time the financial wizards say “Well, the subprime market is only one quarter of a fiftieth of a percent of the total economy so there’s no problem...”
Then, with their next breath, they are uttering “We’re drowning here! Give us a rate cut! The sky is falling and we can’t get up”
A rate cut would be like throwing a bucket of gas on a fire trying to put it out...
>> You can cut the rates to zero, problem is if the mortgage owed is larger than the market value of the home.
Technically true.
But, let’s be honest: those clamoring for lower rates are hoping and expecting that lower rates => easier refinancing => more home sales => continually rising prices.
Nevermind that the speculative excess party must end /someday/. Many in the mortgage/real estate/homebuilding just don’t want it to end YET. Not that they’ll be any more prepared if the Fed throws them a ratecut bone and they start partying all over again.
Doesn't matter what happened in the real world. Investors and creditors suddenly didn't like the paper called "sub prime" mortgages. When that happens nobody wants to bid on it. Ever owned a hundred million of something that you don't know the value of and nobody wants to buy it anyway?
So any investor or fund holding this stuff or anything remotely like it saw his principle dive. Plus, this crap had been leveraged. When those repo loans came due do you think the lenders wanted to renew them? Heck no.
Why? To appease the idiots who created this mess in the first place and risk inflation? No way. Let them reap what they’ve sown.
cutting the rate affects far more than those with ARMS.
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