Posted on 11/29/2007 4:29:39 PM PST by shrinkermd
U.S. Federal Reserve Chairman Ben Bernanke said the latest bout of financial-market turbulence may put additional strain on the U.S. economy, signaling he is open to additional cuts in interest rates.
In a text of remarks prepared for delivery last night in Charlotte, North Carolina, Mr. Bernanke said the housing downturn and related mortgage troubles are adding "greater than usual" uncertainty to the economic outlook. "These developments have resulted in a further tightening in financial conditions, which has the potential to impose additional restraint on activity in housing markets and in other credit-sensitive sectors," he said.
His comments echoed the statements of Fed Vice Chairman Donald Kohn on Wednesday, whose remarks led markets to conclude that Fed policy makers may cut interest rates to offset the risks posed by credit-market turbulence.
Separately, the U.S. government sharply raised its estimate of third-quarter economic growth, saying the economy expanded at an annualized pace of 4.9%, a full percentage point above the previous estimate. But that did nothing to alter perceptions that growth is grinding nearly to a halt in the current quarter.
Underscoring the spreading weakness was an increase in new claims for unemployment insurance to the highest level since February, an indication that the labor market is beginning to deteriorate
(Excerpt) Read more at online.wsj.com ...
You know we’re doomed, right?
Watch the pre-market numbers tomorrow morning. They’ll the put the controls on by noon.
Why not have the Fed simply give them away?
These clowns devaluing my paycheck make me sick.
Is this guy for real? The dollar's already dead. The cost of imported goods, including OIL is, and will continue to rise as a result of the drop in the value of the dollar. Unfortunately, that doesn't seem to be an issue to Bernanke. I guess oil's not important since energy prices are not included in the government's base inflation calculation.
” You know we’re doomed, right? “
Always expect the worst. You’ll never be disappointed.
Mrs. Clinton’s not having a good week with this news
Thank God Greenspan isn’t in charge. He’d still be increasing the rates.
I’m curious. Considering taxes and inflation, what kind of return does one have to make on investments just to “break even”? 6%? 7%? If the Fed keeps this up, there’s gonna be no way for me to keep up.
If oil as high as it is for several years, the # of alternative energy products will crush the oil industry for good. I plan to buy a Chevy Volt when it comes out just so I can stop sending $$ overseas. Sure it may cost more up front, but I can drive to and from work every day and around town w/o ever filling up and I’m not sending any $$ to the Middle East or Venezuela. With prices this high, it makes an environmental out of all of us—just the economical variety instead of the wacky globull warming variety.
The sky is falling. No but the dollar is.
He should have increased it more rapidly back in 2002-2003 after dropping it right after 9/11. Keeping it too low for too long presented cheap money - so cheap that even non-creditworthy borrowers had access.
And cheap credit is part of the reason that we have the hyped sub-prime loan mess.
The subprime mess is a matter of credit quality, not excessive monetary growth. The FDIC should have acted the minute they heard of interest only loans.
But if you look at the long bond (30 year) the interest rate is remarkably low. The Fed has no control over this. Bond buyers usually insist on 2% plus inflation. Just look at the chart: HERE.
I also note gold has slowed its climb and the stock market has become very volatile. More signs of potential deflation. Things can change quickly, but right now bond buyers are willing to buy the long bond at less than 5% on a regular basis. Sooner or later the Fed has to bring the short term rates (Fed Funds et Discount) down. So maybe Bernanke isn't such an idiot after all.
They are actually the same thing.
They're very related. When the market is flooded with low-cost (low interest rate) money, that low cost money spreads into the loan industry. Not just low-rate fixed loans with 20% down, but all sorts of loans. In the subprime market, those 16% loans become affordable 10% loans, and with a 5% teaser rate.
The FDIC should have acted the minute they heard of interest only loans.,/
They'd have had to act many, many years ago - interest-only loans are not new. What's somewhat new, at least in the last 30 years or so, is the large abundance of such loans.
Interest-only loans, in and of themselves aren't so much a problem - they have their place. But giving interest-only loans to people with poor credit has been proven to be a mistake in the past. Apparently, that lesson has to be repeated occasionally.
They are only the same thing if the regulators are not doing their jobs.
Yay! Free Money!
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