Fed Lowers Core Interest Rates in Emergency Meeting

[sharon sanders]

The US Federal Reserve has lowered the target rate .75 to 3.5% and has also lowered the discount rate by .75% to 4.00%.

Some reasons cited are deepening housing crisis and some softness in the labour markets.

 

[sharon sanders]

Re: Fed Lowers Core Interest Rates in Emergency Meeting

My opinion is that this cut is not enough - it is at the 10 year note and the yield curve is flat. This is not enough stimulus to affect economy.

 

[GaudiaRay]

Re: Fed Lowers Core Interest Rates in Emergency Meeting

An 18% drop in interest rates, in a single day, is "not enough"?

What percentage drop would be enough? 50% More?

IMO, to be directed to consider whether or not an interest rate decline is "enough" is the same as someone offering a bandage for a cut on one's leg when the patient is experiencing heart attack.

Do not even consider interest rate cuts as anything meaningful. It is the wrong response emanating.

Just as there has been insufficient money for pandemic prepartion, we are seeing insufficient and incompetent response from more appointed bureaucrats.

Further, to be effective this is a fiscal policy action needed. Remember all the people who are now in foreclosure and about to be in foreclosure both in the USA and around the world? All those people are causing a drop in demand and that is dropping sales and contributing to the drop in real estate prices.

There is a giant sucking sound, and it is velocity of money, and availability of money on loan. That requires major fiscal policy action.

The response in the USA is a joke response. You know who they are. Look around.

Those holding stocks are about to lose easily 40% and probably 60% of their entire savings in those stocks. That means they will be poor when they get older and retire if they have their money in IRA's and 401K's that are in the stock market.

And those same investors are soon to be bankrupted in their real estate if they have mortgages of more than 40% of the value of their properties, and most do.

And those same investors, in the rest of their balanced portfolios, are about to get slammed if in municipal bonds, corporate bonds, and soon enough, bonds priced in anything but Yen or Swiss Francs.

When level 6 shows up, at the CFR that's out there now in H5N1, it will terminate most wealth in the world, 1 2 3, lickety split.

It's ok, though, because there are about 5 people who read this blog who have taken my advice and bought gold.

Oh, and how is gold doing these days, in this daily stock market drop of 4%, down like 12% in a week?

Well, gold dropped to fill its gaps, and to squeeze out the Chinese Shanghai weak hands, and then....

oh, it went back up.

Of course, this is all my own little meager opinion. You must find your core self and make your own decisions. If you decide to sell shares, the joke here is that you are LATE. However, first loss is least loss. I do not expect for months that this price breakaway gap will get filled, and if months, you'll be the luckiest persons alive.

 

[kernel klink]

Re: Fed Lowers Core Interest Rates in Emergency Meeting

Thanks GR. I am grateful to be one of the five. I took delivery of some more K's this morning, that I bought a couple of weeks ago, and there are two more lots paid for and in the pipeline. I've increased my holding by about 20% since the beginning of January. I am glad to say that I don't own a single stock and I have no debt. I own my home and have no other real estate. I have no pension fund. I don't watch broadcast TV and rarely read newspapers, as I find they cloud my thinking. I do listen to serious radio programmes. I do pray a lot and try to listen to God and to be alert, and I spend time walking in the woods each day - at least an hour or two each day in solitude. I have enough cash to run my business for as long as is needed and enough stock for now. My taxes are paid up. My family is protected as far as is possible.

What really staggers me is the blindness of the folk over at the other place. Apparently over there any references to Sinclair etc are sent straight to "Outside the Box" - an area of the forum that for some reason I am denied access to.

GR: Be encouraged and please do keep posting. Your posts are greatly appreciated, at least by the five of us!

 

[Niko]

Re: Fed Lowers Core Interest Rates in Emergency Meeting

Thanks GR, from another one of the five! :applause:

 

[sharon sanders]

Re: Fed Lowers Core Interest Rates in Emergency Meeting

An 18% drop in interest rates, in a single day, is "not enough"?

What percentage drop would be enough? 50% More?

IMO, to be directed to consider whether or not an interest rate decline is "enough" is the same as someone offering a bandage for a cut on one's leg when the patient is experiencing heart attack.

Do not even consider interest rate cuts as anything meaningful. It is the wrong response emanating.

Just as there has been insufficient money for pandemic prepartion, we are seeing insufficient and incompetent response from more appointed bureaucrats.

Further, to be effective this is a fiscal policy action needed. Remember all the people who are now in foreclosure and about to be in foreclosure both in the USA and around the world? All those people are causing a drop in demand and that is dropping sales and contributing to the drop in real estate prices.

There is a giant sucking sound, and it is velocity of money, and availability of money on loan. That requires major fiscal policy action.

The response in the USA is a joke response. You know who they are. Look around.

Those holding stocks are about to lose easily 40% and probably 60% of their entire savings in those stocks. That means they will be poor when they get older and retire if they have their money in IRA's and 401K's that are in the stock market.

And those same investors are soon to be bankrupted in their real estate if they have mortgages of more than 40% of the value of their properties, and most do.

And those same investors, in the rest of their balanced portfolios, are about to get slammed if in municipal bonds, corporate bonds, and soon enough, bonds priced in anything but Yen or Swiss Francs.

When level 6 shows up, at the CFR that's out there now in H5N1, it will terminate most wealth in the world, 1 2 3, lickety split.

It's ok, though, because there are about 5 people who read this blog who have taken my advice and bought gold.

Oh, and how is gold doing these days, in this daily stock market drop of 4%, down like 12% in a week?

Well, gold dropped to fill its gaps, and to squeeze out the Chinese Shanghai weak hands, and then....

oh, it went back up.

Of course, this is all my own little meager opinion. You must find your core self and make your own decisions. If you decide to sell shares, the joke here is that you are LATE. However, first loss is least loss. I do not expect for months that this price breakaway gap will get filled, and if months, you'll be the luckiest persons alive.

It is not enough stimulus. It will not affect long term rates necessarily. What is needed is an immediate cut by OPEC in oil prices and China needs to buy T-Bills and dollars.

 

[JohnW]

Re: Fed Lowers Core Interest Rates in Emergency Meeting

Some how this doesn't seem like "business as usual".





Business leaders call for more crisis leadership



By Natsuko Waki and Thomas Atkins
DAVOS, Switzerland (Reuters) - Business leaders appealed for more leadership from U.S. and other central banks to head off an economic downturn on Wednesday, with some accusing policy makers of losing their grip and their nerve.
As shares in Europe fell heavily again on Wednesday on deepening fears of a slowdown, a day after an emergency U.S. interest rate cut, top executives expressed alarm as they gathered for an annual retreat in the Swiss resort of Davos.
"Central banks have lost control," said billionaire financier George Soros.
Other executives attending the opening discussions of the annual meeting of the World Economic Forum in Davos said the surprise decision by the U.S. Federal Reserve on Tuesday to cut interest rates by 75 basis points looked like a panic move.
"We have a market-friendly Fed possibly injecting a lot of liquidity in the system which will set us up for another bubble economy," said Stephen Roach, head of Asia for U.S. investment bank Morgan Stanley (MS.N: Quote, Profile, Research).
"I'm sort of worried that all they did yesterday was to hit the snooze button. (This is) excessive monetary accommodation that just takes us from bubble to bubble to bubble."
Lawrence Summers, a former U.S. treasury chief, was critical too: "It's hard to give a high grade (to central banks) for what's happened in the last six months."
But another former head of the U.S. Treasury, John Snow, was more supportive of the U.S. central bank.
"What yesterday's action shows us is the Fed is focused but they are aware of negative trends in the economy and prepared to take bold steps," he said.
More than 2,500 business and political leaders are gathering in Davos, facing what many fear could be the biggest financial crisis since World War Two.
The emergency U.S. interest rate cut on Tuesday, after two days of plummeting stock prices, set the tone for the WEF meeting where financial, industrial and political figures, including U.S. Secretary of State Condoleezza Rice, are awaited.
Policymakers accustomed to relaxed, apres-ski fireside chats will this year confront a raging banking crisis and a widely forecast recession, with policy differences between the United States and Europe at the fore.
The Fed's unilateral action on Tuesday, when it cut rates by 75 basis points, was its biggest emergency cut in two decades.
It will either put pressure on the European Central Bank to relax its view against cutting rates and coordinate a response, or admit a policy rift between Europe and the United States.
European Central Bank chief Jean-Claude Trichet, speaking in Brussels on Wednesday before departing for Davos, refused to yield to calls for European interest rate cuts, saying the ECB would stick to its target of keeping inflation low.
Worries are intensifying that fallout from the credit crisis -- which began in earnest in August when problems in the U.S. subprime mortgage sector led to a seizure in interbank lending -- will be felt in all corners of the globe.
"No economy can decouple itself from the U.S.," said Indian trade minister Kamal Nath. But he added: "I don't see the impact as that substantial in India."
Several policymakers have dropped out of the Davos event over the past week due to intense domestic demands.
U.S. Treasury Secretary Henry Paulson and British finance minister Alistair Darling have both withdrawn at short notice.
U.S. foreign policy chief Rice is set to give the opening address at Davos later in the day, focusing on what she refers to as "American realism" in the world.
Rice will also be meeting Pakistan President Pervez Musharraf -- their first face-to-face talks since the assassination last month of opposition politician Benazir Bhutto -- and separately with Afghan President Hamid Karzai.
(Additional reporting by the Davos news reporting team; editing by Sue Thomas)



http://www.reuters.com/article/ousiv/idUSL2259108720080123?sp=true