Fed Cuts Rate 3/4 of a Point

It is a very dangerous game to play with interest rates with inflation a threat. All this **** because lenders gave money to anyone with a heartbeat because credit was so easy to come by. Don't under estimate the stupidity of lenders and think they won't do the same **** they have already done to try to get out of the mess they created.
 
Which of course should have been done at least a month ago.... I still lay a LOT of the blame at the feet of federal regulators for the mortgage mess who had a hands off policy for the most part.

However this move does not effect the mortgage industry much in that the rate resets are still going to continue to take place are they not? Now I guess you could assume that lenders that already have massive concerns about bad loans on their books are going to now again loosen their lending standards and add some demand to the market in newly qualified borrowers. However, I doubt that will be the case.

When folks with 96,000 in income and 20 percent down on a $200,000 house with an 820 credit score get turned down for loans the problem is a lot more than discoutn rates. I assume this move was as much as anything to try to keep the markets from melting down this morning. I guess seeing foriegn markets moves and seeing that the dow futures were down almost 500 points before the bell had nothing to do with it....
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Hopefully it will blunt the blow, but by how much?
 
per this post last week...I thought this would have been better to do on Friday...

I didn't however expect they would go 75 bps...

Fair disclosure: I am pressing some of my shorts and covering others into this...

I feel like i am gonna be flat in my book for my IBs trading book into this afternoon trading, depending on how the day goes I might very well get long into the close today..

This is not gonna help by the way...cutting this close to the FOMC meeting next week, and this much smacks of panic....

But I am sure nobody cares ha ha
 
What's everybody's assessment of what will happen to corporate earnings over the next 6 months?

To me, the underlying driver is consumer purchasing. Will it slow down, or stay strong? Americans have been purchasing on credit, and a lot of it coming from their home equity loans. Well, that credit market has dried up, and with home prices down, the home "equity' has been tarnished.

So, will this impact earnings?
 
I was wondering yesterday if the rebates, if anything, was Congress' attempt to give the appearance of 'doing something', despite knowing you can't run a truck on a AA battery. Given the circumstances today, especially in the housing market, it's hard to see that a rate cut will help as well.

If neither action helps to a significant degree, which plan is better or not then becomes a question of which is less likely to have a rippling negative impact. From what I understand, the greater risk right now would be with a rate cut.

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euro, i'm sure you realize the market discounts future information, thus the decline in the markets is a bet that earnings growth will slow and the economy will slide.
 
Ron Insana opined this am that there are $750 trillion in outstanding credit obligations, compared to a world GDP of $50 trillion.

Is that freaking right, or close to it? If so, how can, like, this stand?
 
ah, didn't follow that you were responding to a post above, thought you were trying to make a point about current GDP and market prices, my bad. slowing earnings growth is a big deal, you don't need negative E's for P/E's to come down a lot.
 
Hoosier,
I agree but good loans have been packaged like this for a while. It took a bunch of stupid, greedy dumbasses loaning money to anyone under the sun regardless of the financial standing. That is inherently stupid and really bad business. Someone had to get the ball rolling and lenders making bad loans in an inflated real estate market served that purpose.
 
Eurohorn:

Dude, get your head out of the sand. Look at the chart that triplehorn posted in another thread that shows GDP minus mortgage equity withdrawal (MEW). Since 2001, GDP minus MEW has been practically flat. The American economy has been "growing" because people have been mortgaging the farm, and Americans have less and less equity in their homes every year.

But let's continue to print money. That will surely help the long term health of this country.
 
Franco: please educate yourself.

If GDP minus MEW is flat then that still does not equate to the definition of a recession. I am just going by the classic defintion. I never said that we might not be heading into a recession, I am just saying that we are not technically in one right now.

If you want to argue with that then let's make it a little more fun.

Water is wet.

Thoughts?
 
gdp_w_and_wo_mew_2.jpg


Recession or not, comparing pre- to post-2000 suggests that something became severely whacked in our country and the time for reckoning appears to be upon us.

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