I'm all at sea

[sassa]

In The Australian today(18/08) Terry McCrann says-Hugely importantly,neither our RBA or the Fed has any intention of compromising good monetary policy by cutting the official rate to bail out the imprudent or the greedy.That's absolutely critical to emerging from this(sub-prime mess) healthy and ready to go.
The Fed cut the official rate and immediately the markets react very favourably in both Europe and America.
So,is this an unhealthy move that will have future implications to inflation and growth of the economy in America and impact on the world markets as a whole?

 

[numbercruncher]

Yah feds move was crap, bunch of hipocrates.

Should of increased .5pc to hasten the demise of the muppets that play with fire.

 

[Broadside]

I agree, they took the soft option and sent the message if you screw up and misprice risk we will bail you out. The fact they thought it necessary to cut, after already pumping billions into the money markets, I found a little disturbing. I would be feeling more at ease today if the Dow had just tanked 100 points and interest rates were on hold.

Maybe the doomsday talk is getting to me but I see more pain coming across nearly every asset class, especially property.

 

[doctorj]

Should of increased .5pc to hasten the demise of the muppets that play with fire.

I can't say I've read anything dumber in quite some time.

Thanks.

Not saying I agree with what the fed did at all, but the 'demise' you talk about will likely impact us all. Not in a good way either. Trading profits is one thing, financial collapse is another.

Self righteous, egotistical gloating isn't exactly endearing.

 

[numbercruncher]

I can't say I've read anything dumber in quite some time.

Thanks.

Not saying I agree with what the fed did at all, but the 'demise' you talk about will likely impact us all. Not in a good way either. Trading profits is one thing, financial collapse is another.

Self righteous, egotistical gloating isn't exactly endearing.

If companies financial collapse wavers on half a percentage point of Interest rates they shouldnt be in Business, all it does is delay the inevitable.

People loaned money in a fraudulent manner and people borrowed money in a fraudulent, time to pay the piper son.

 

[doctorj]

If companies financial collapse wavers on half a percentage point of Interest rates they shouldnt be in Business, all it does is delay the inevitable.

People loaned money in a fraudulent manner and people borrowed money in a fraudulent, time to pay the piper son.

Many business exist on small percentage margins but instead rely on large volumes. Who are you to say they shouldn't be in budiness?

 

[numbercruncher]

Many business exist on small percentage margins but instead rely on large volumes. Who are you to say they shouldn't be in budiness?

Who are you to say they should be in budiness ?

 

[wayneL]

In The Australian today(18/08) Terry McCrann says-Hugely importantly,neither our RBA or the Fed has any intention of compromising good monetary policy by cutting the official rate to bail out the imprudent or the greedy.That's absolutely critical to emerging from this(sub-prime mess) healthy and ready to go.
The Fed cut the official rate and immediately the markets react very favourably in both Europe and America.
So,is this an unhealthy move that will have future implications to inflation and growth of the economy in America and impact on the world markets as a whole?

The Fed did not cut the official rate, they cut the discount rate, big difference.

The official rate stands at 5.25%, all they have done is narrow the spread between the base and the discount rate from 1% to 0.5%. The market has generally misread the implications of this. They did this so the system does not implode.

The worst thing for all of us, whether bears or bulls, is collapse of the financial system via cascading cross defaults. If that happens, even us bears won't be able to trade.

This is actually a good, though misunderstood, decision.

I do agree that the base rate should not be cut and actually should rise, as other CBs are doing. A cut would be real dumb IMO.

Make no mistake, though this has been seen as bullish by the market, it isn't. It reveals that there are big problems somewhere, and even "the street"/"the city" boys don't know where the pustule will burst.

Be careful folks, this ain't over by a long shot.

 

[Smurf1976]

Many business exist on small percentage margins but instead rely on large volumes. Who are you to say they shouldn't be in budiness?

The argument about private responsibility for debts comes back to concern about a financial collapse. Some see debt as a personal issue, others see it as an issue for everyone when the consequence of debt affects us all. Same with Australia's massive foreign debt - it's privately owed but if it brings about a financial collapse then even those not in debt are likely to suffer.

 

[numbercruncher]

I think the people whom loaned these mortgages to people whom clearly couldnt afford them, and the people who then repackaged these mortgages as sure fire investment bonds, should be charged as the criminals they are and locked up alongside murderers and rapists. And there Business built on fraudulent practices should get to declare bankruptcy the same as any failed business.

But oh no the Fed drops rates, and the Joe Blows get to pick up the tab via Higher Inflation.

What a scam.

 

[theasxgorilla]

Not saying I agree with what the fed did at all, but the 'demise' you talk about will likely impact us all. Not in a good way either. Trading profits is one thing, financial collapse is another.

Exactly Doc. Unfortunately some can't see beyond their trading profits or their own bitterness.

 

[sassa]

I agree, they took the soft option and sent the message if you screw up and misprice risk we will bail you out. The fact they thought it necessary to cut, after already pumping billions into the money markets, I found a little disturbing. I would be feeling more at ease today if the Dow had just tanked 100 points and interest rates were on hold.

Maybe the doomsday talk is getting to me but I see more pain coming across nearly every asset class, especially property.

The doomsday talk seems to have disappeared if you log on to Bloomberg .com and listen to the economists and analysts they interview.Then again,perhaps they don't want people who have a different view like yours being interviewed.

 

[doctorj]

Who are you to say they should be in budiness ?

While we're highlighting each other's typographical errors, I thought I'd take the liberty of pointing out a few of yours:

If companies financial collapse wavers on half a percentage point of Interest rates they shouldnt be in Business, all it does is delay the inevitable.

People loaned money in a fraudulent manner and people borrowed money in a fraudulent, time to pay the piper son.

Or, more correctly:
If a company’s financial collapse waivers on half a percentage point of interest rates they shouldn’t be in business. all it does is delay the inevitable.

People lent money in a fraudulent manner and people borrowed money in a fraudulent manner; time to pay the piper son.

 

[numbercruncher]

Wayne

Does dropping the discount rate mean that that drop is not allowed to be passed onto consumers ?

 

[numbercruncher]

While we're highlighting each other's typographical errors, I thought I'd take the liberty of pointing out a few of yours:


Or, more correctly:
If a company’s financial collapse waivers on half a percentage point of interest rates they shouldn’t be in business. all it does is delay the inevitable.

People lent money in a fraudulent manner and people borrowed money in a fraudulent manner; time to pay the piper son.

No my errors are in Grammer and spelling, yours was a typo.

I was having a laugh, your being petty, perhaps we should cease to communicate, might be better for all forum users.

May peace be with you.

 

[wayneL]

Wayne

Does dropping the discount rate mean that that drop is not aloud to be passed onto consumers ?

Correct, as far as I understand it. It is just to maintain liquidity in the interbank system.

Disclaimer: Am not an expert, but this is my understanding of how it was explained to me.

 

[sassa]

The Fed did not cut the official rate, they cut the discount rate, big difference.

The official rate stands at 5.25%, all they have done is narrow the spread between the base and the discount rate from 1% to 0.5%. The market has generally misread the implications of this. They did this so the system does not implode.

Do I read between the lines that someone knows that some of the bigger banks are exposed to this mess and are yet to report?

 

[wayneL]

Do I read between the lines that someone knows that some of the bigger banks are exposed to this mess and are yet to report?

Yes that's what I was alluding to before. There is talk of trouble in a major institution that has yet to surface as news. I've heard this from several sources now from both London and New York.

Disclaimer: It is only rumour at this stage, but the Feds actions on Friday morning seem to give the rumour legs.

 

[numbercruncher]

Yes Countrywide, the states largest lender is tettering close to the edge i understand, tapping through a massive emergency Credit line ....

Not to mention that they are not even half way through the Interest rate resets on these dodgy mortgages, i think i read that next month is one of the Peak months for resets (aka people walking away from there homes/mortgages)

Theres no way this has blown over yet im sure of it.

(CBS4) DENVER Countrywide borrowed $11.5 billion Thursday from a group of 40 banks to fund loans, in a move that shows just how deep the lending crisis has become. Rumors that one of the country's largest mortgage lending companies might declare bankruptcy was not helping stocks on Wall Street Wednesday.

http://cbs4denver.com/local/local_story_228085511.html

 

[sassa]

Theres no way this has blown over yet im sure of it.

But everything I read on this crisis points to everything being rosy."The Feds have their hands on the problem and are ready to act with a cut in the rate to ensure the economy stays on track."
How much liquidity can you pump into the market and still have rate cut/cuts with a massive current account deficit?