Fed cuts interest rates to "surge" economy into a Bush style recovery

[whistle]

.... what ever the hell that is! I suppose more money for speculators.

<snip>
Fed slashes interest rates to stop recession
By James Quinn, Wall Street Correspondent
Last Updated: 12:12am BST 19/09/2007

The US Federal Reserve has shocked the markets by slashing its key interest rate by half a percentage point for the first time in almost five years in a bid to kick-start economic growth.

In one of the most eagerly awaited Fed decisions in recent times, the central bank surprised the markets.

The Fed said it had made the move to "forestall adverse economic effects". Most in financial markets had been expecting just a 25 basis point cut to the main Federal Funds rate. The base rate is now at 4.75pc while the the interbank rate, also cut, is now at 5.25pc.

The decision comes after a summer of turmoil in which the crisis in the sub-prime mortgage market in the US has effectively frozen key money markets around the world, knocked equities and threatened to hit global economic growth. In the UK, the crisis spilled on to the high streets this week with the run on mortgage lender Northern Rock.

US markets immediately responded, with the Dow Jones Industrial Average surging up 260 points higher at 13,662, a positive effect which is likely to boost London's markets when they open in the morning.

The initial assessment of the impact of the decision was mixed. Alan Ruskin, RBS Greenwich Capital's chief international strategist, said: "A 50-basis-point cut in the funds rate and the discount rate is a brave opening gambit in the easing cycle from a Fed chairman that for credibility reasons was expected to err on the side of caution. The market will now have to decide on whether this is a Fed that has jumped ahead of the curve or whether the Fed has simply panicked."

<cut to end>
In addition, the committee took in to account recent data on jobs and housing, both of which have forecast a rather grim outlook for certain parts of the American economy.

The Fed also made its decision only too aware of the state of the world's financial markets, which have been in turmoil for the last eight weeks due to a substantial lack of liquidity and tightening availability of credit.

As a result the Fed itself took the earlier decision to cut the discount rate, at which banks borrow money, by 50 basis points to 5.75pc, as well as injecting a total of $38bn (£19bn) into the banking system.
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http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/18/bcnben218.xml

[ruiner4u]

1. feh...I dont agree with your subject line reasoning...

this isn't a bush style recovery surge or some weird rovian conspiracy.. this is an act of desperation to try to keep a couple million people from becomming homeless...

[Lone_Star_Dem]

2. If you can explain to me how this will keep "a couple of million of people from becoming homeless"

I really would appreciate it.

[ruiner4u]

4. it will flush alot of money to the banks who will then in turn lend the money out to people...

funny thing, people are having trouble paying bills and mortgages..

this rate cut pumps money into banks, which can in turn pump money into local economies, which can in turn let business keep their workforce, which can in turn let people draw a paycheck, which can in turn let people pay their bills and mortgages..

The last few weeks the housing market stagnated and no banks would lend to refi, which we have become WAY to accustomed to.. So a lot of people had a scary wake up call that they might lose their home..

[Lone_Star_Dem]

8. What? I really don't understand.

Are you implying that this will somehow help those who are involved in subprime mortgages in all that?

Because if you are you stopped making sense to me after your first flush.

You do understand that this isn't going to help people caught up in this whole subprime fiasco to refinance since they can't qualify due to tighter restrictions on mortgages, right?

What we have to look forward to now is higher consumer inflation thanks to this "sweet" little cut. But don't worry America, the market will be doing much better.

[whistle]

9. You suffer from monetary MBA delusional disorder, that money ONLY goes

...to speculators, not people about to lose their homes. Where is the foreclose ur protection? Not from what the Fed did today. Local banks won't get that money, hedge fund groups will. You are acting like savings and loan institutions still exist to help neighborhoods.

You are watching "It's a Wonderful Life" and living in the fantasy. That died with the failures that Greenspan engineered in 1989. That is history. The democrats must act and act now or it is game over. Congress must introduce, pass and implement the Homeowners and Bank Protection Act of 2007,

This act includes the following provisions:

1. Congress must establish a Federal agency to place the Federal and state chartered banks under protection, freezing all existing home mortgages for a period of however many months or years are required to adjust the values to fair prices, and restructure existing mortgages at appropriate interest rates. Further, this action would also write off all of the speculative debt obligations of mortgage-backed securities, derivatives, and other forms of Ponzi Schemes that have brought the banking system to the point of bankruptcy.

2. During the transitional period, all foreclosures shall be frozen, allowing American families to retain their homes. Monthly payments, the equivalent of rental payments, shall be made to designated banks, which can use the funds as collateral for normal lending practices, thus recapitalizing the banking systems. These affordable monthly payments will be factored into new mortgages, reflecting the deflating of the housing bubble, and the establishment of appropriate property valuations, and reduced fixed mortgage interest rates. This shakeout will take several years to achieve. In the interim period no homeowner shall be evicted from his or her property, and the Federal and state chartered banks shall be protected, so they can resume their traditional functions, serving local communities, and facilitating credit for investment in productive industries, agriculture, infrastructure, etc.

3. State governors shall assume the administrative responsibilities for implementing the program, including the "rental" assessments to designated banks, with the Federal government providing the necessary credits and guarantees to assure the successful transition.

The Congress of the United States must act to pass legislation embodying these three principles immediately, as emergency legislation, halting a "tsunami" of foreclosures, keeping millions of American families in their homes to avert social chaos, and protecting chartered lending banks of the United States and the states. It this does not happen within the next 30 days, the country is likely to go into an economic meltdown that will trigger a 1930s style depression or even an economic dark age which would take decades to recover from.

[whistle]

5. Well it sure won't do that, in 2001 to 2002 Greenspan cut interest rates

...a number of times and the recession never ended until BushCo mobilized for war. The number of displaced wrokers went into the millions and the U.S. has never really recovered. We need real economic measures based on an FDR New Deal for the 21th Century, not more monetary policy bullshit that make the wealthy wealthier!

Go clip your coupons. There are 20 to 30 million working class people who need real jobs, not more Wall Street Hedge Fund crap and casino style speculation on the hardship of others. Ten million families face forecloure on their homes in the next six to twelve months. They won't have access to any of that low interest money. They need work and good pay and long term jobs.

[ruiner4u]

6. Oh I agree with you...

we are fucked... I said something to the effect of this being a desperate reaction in the above post...

this is like putting a bandaid on after you cut an artery..

[InkAddict]

7. So, what about those that have been through the wringer?

Not flippers, just folks doing the right things and getting punished by BushCo's policies and obscene WOT? Some have been doing the "Hang On Kitty" routine for a long, long time as the corporatists have decimated manufacturing and IT along with many other outsourced technology-related careers. Feels a lot like we go from 1984 straight into Animal Farm - better watch out, Lord of the Flies comes next!

[whistle]

11. Read my above post #9 please

[AndyTiedye]

3. That's Why they Call Him "Helicopter Ben"

[whistle]

10. That is correct, he studied the 1930s depression and is doing everything the

...the Hover republicans failed to do, but he still is doing what republicans do. FDR created the New Deal which involved work projects and jobs and infrastructure investment projects which kept America going well into the latter half of the 20th century. It took republicans under Nixon, Ford, Reagan, Bush I and Shrub* to undo all that FDR began.

Our new democrats must restore that way of governing and directing the country back to what made it truly great for all Americans not just the top 1.5% of the slime mold money changers!

[pansypoo53219]

12. the fed SURE

has been working overtime to help georgie. before his 'election' AND since.
how CONVENIENT.

[Fading Captain]

13. If you haven't noticed inflation yet, you soon will

Holy fuck.

[KillCapitalism]

14. Yep, it's gonna get BAD.

Crude is up to $82/barrel.

$100+/barrel is just around the corner. Won't that be fun?:sarcasm: