Rates cuts are coming! It's June 25, 2003

[TheDarkLord]

If your view about the dollar is corrrect - and oil being priced in dollars - then the oil price looks set to increase on that basis alone.

Pain. Pain.

But if other currencies are stable with only the dollar depreciating, then it shouldn't cause that much pain (save for Americans). Gas prices here for example have been quite stable for a while now at around 1.43 euros per liter, while it has kept increasing steadily in US.

 

[limerickman]

But if other currencies are stable with only the dollar depreciating, then it shouldn't cause that much pain (save for Americans). Gas prices here for example have been quite stable for a while now at around 1.43 euros per liter, while it has kept increasing steadily in US.

Agreed : we're insulated a little bit because the dollar is weak against the euro right now.
This means we can buy more dollars (with euros) to purchase oil.
Thank god for a strong euro!

 

[Crankyfeet]

If your view about the dollar is corrrect - and oil being priced in dollars - then the oil price looks set to increase on that basis alone.

Pain. Pain.

Well... I'm only speculating... there isn't much reason to buy dollars unless you are predicting a turnaround as Bush exits and his desire for a weak dollar hopefully goes with him. But the dollar has become very cheap.... relative to it's recent history. At some point it should find support.

 

[stilesiii]

Well... I'm only speculating... there isn't much reason to buy dollars unless you are predicting a turnaround as Bush exits and his desire for a weak dollar hopefully goes with him. But the dollar has become very cheap.... relative to it's recent history. At some point it should find support.

Ever heard of the AMERO rumors, this might explain the Bush admins desire to weaken the dollar. If the rumors are correct, don't expect Obama or McCain to change course.

As for inflation, I look at the values in the commodities market as an indicator of "actual" inflation. All commodity prices in the U.S. have sky rocketed in the past few years, oil, gold, crops. If that doesn't indicate serious real inflation, what does?

I though the greater the supply, the lesser the price. Didn't I learn in econ 101 that printing more currency lowers value and deepend inflation?

I don't understand how printing more currency, lowing rates, helps the situation. Our monetary policy can only keep the fantasy of economic strength alive for so long. We will run out of credit and soon.

If the OPEC and China dumps dollars for Euros, trouble.

 

[limerickman]

Lehmann's gone in to bankruptcy!

http://www.bloomberg.com/apps/news?pid=20601087&sid=aPTIdpST8HJ0&refer=home

Better buy some gold.
or maybe some Swiss Francs.

 

[Bro Deal]

Lehmann's gone in to bankruptcy!

http://www.bloomberg.com/apps/news?pid=20601087&sid=aPTIdpST8HJ0&refer=home

Better buy some gold.
or maybe some Swiss Francs.

I posted this over at justcycling, but Lehmann's CEO was given a $22M bonus six months ago. One wonders what kind of money he would be granted if he had done his job and not run the company into bankruptcy. I want one of these jobs. You can be completely, utterly incompetent, destroy the company, and still get a twenty-two million dollar bonus.

These guys should be in prison. They have a fiduciary responsibility to their share holders. Instead of looking out for the company, they threw caution to the wind and padded their pockets with short term gains while mortally wounding the company in the long term.

I don't buy the stupidity defense. If you are being paid tens of millions then you are implicitly accepting that you are worth that much because you know what you are doing. An incompetent in that position is no different than a drunk careening down the road in a car. You should be responsible for the damage you cause.

 

[limerickman]

I posted this over at justcycling, but Lehmann's CEO was given a $22M bonus six months ago. One wonders what kind of money he would be granted if he had done his job and not run the company into bankruptcy. I want one of these jobs. You can be completely, utterly incompetent, destroy the company, and still get a twenty-two million dollar bonus.

These guys should be in prison. They have a fiduciary responsibility to their share holders. Instead of looking out for the company, they threw caution to the wind and padded their pockets with short term gains while mortally wounding the company in the long term.

I don't buy the stupidity defense. If you are being paid tens of millions then you are implicitly accepting that you are worth that much because you know what you are doing. An incompetent in that position is no different than a drunk careening down the road in a car. You should be responsible for the damage you cause.

I agree 100%.

On a related issue, the fact that when these banks make profits, their spoils
are retained by the bank in question.
But when these bank make reckless decisions and incur huge losses - they think that the state should bail them out.

The mantra of the past 10 - 15 years was "deregulate".
Practically the entire financial services industry was deregulated to the point that some masters of the universe thought that they and their companies were invincible.
If the majority of these banks lived by the sword, then they ought to perish by that same sword.

 

[Bro Deal]

On a related issue, the fact that when these banks make profits, their spoils
are retained by the bank in question.
But when these bank make reckless decisions and incur huge losses - they think that the state should bail them out.

That is Republican capitalism: Privatize the profits, socialize the losses.

I'm losing track of the bailouts. First there was $30B for Bear Stearns. The auto companies want $50B in government backed loans. Fannie and Freddie, the losses there will be measured in the hundreds of billions; I am reading figures like $800B, way way larger than the $300B some are reporting. AIG is asking for $40B. WaMu is teetering on the edge. The Fed is esentially giving out money. They Fed is now going to accept equities as collateral for loans.

I wonder when the Citi group is scheduled to implode. I was reading that at the end of the second quarter Lehman was valuing their Alt A holdings at 67 cents on the dollar. Recently they downgraded that to 39 cents on dollar. Citi has more than $16B in similar holdings but they are currently valuing them at 80 cents on the dollar. It looks like a massive adjustment is in store for Citi, like $6+ billion if the holdings of the two companies are of similar quality.

 

[stilesiii]

That is Republican capitalism: Privatize the profits, socialize the losses.

I'm losing track of the bailouts. First there was $30B for Bear Stearns. The auto companies want $50B in government backed loans. Fannie and Freddie, the losses there will be measured in the hundreds of billions; I am reading figures like $800B, way way larger than the $300B some are reporting. AIG is asking for $40B. WaMu is teetering on the edge. The Fed is esentially giving out money. They Fed is now going to accept equities as collateral for loans.

I wonder when the Citi group is scheduled to implode. I was reading that at the end of the second quarter Lehman was valuing their Alt A holdings at 67 cents on the dollar. Recently they downgraded that to 39 cents on dollar. Citi has more than $16B in similar holdings but they are currently valuing them at 80 cents on the dollar. It looks like a massive adjustment is in store for Citi, like $6+ billion if the holdings of the two companies are of similar quality.

Unfortunately Bro, this has become American capitalism. Both sides of the aisle have joined in the credit fest. Let's face it, democrats and republicans alike have let the tax payers down on this deal. Fannie and Freddie and the irresponsible lending practices are as much a result from policies by the federal government to "encourage" home ownership for all Americans.


I don't hear any party calling for investigations. I haven't heard a call for house or senate investigations. You could believe if either party was standing on high moral ground you would see sparks flying.

We had televised hearings on roger freakin clemens, but not this?


BTW, let's not forget all the morons that purchased homes to flip after watching some infomercial, or who signed up for these idiotic loans while locking in an historically low 30/15 yr interest rate was possible. The consumers in this country have plenty of culpability too.


Bottom line, taxpayers and responsible citizens are continuously screwed by the idiots, the corrupt, and a government (both parties) whose policies attempt to remove the consequences of every irresponsible act in exchange for votes and power.

We need a party that represents the people who pay the bills!

 

[Bro Deal]

Now we are really screwed. The SEC just banned short selling of 799 financial stocks. They must be preparing for something really bad.

 

[Bro Deal]

Unfortunately Bro, this has become American capitalism. Both sides of the aisle have joined in the credit fest. Let's face it, democrats and republicans alike have let the tax payers down on this deal. Fannie and Freddie and the irresponsible lending practices are as much a result from policies by the federal government to "encourage" home ownership for all Americans.

That is the latest spin from the Republicans. I will call it the "blame the ****ers" excuse, where the Repubs place the fault on the poor and minorities. But the part the poor played in this was small. The real cause was massive and unrestrained fraud at all levels of the system, and this fraud was made possible by a lack of regulation and oversight. Sure the Dems did not do jack. They were asleep at the switch or taking campaign contributions to look the other ways. But the Repubs deliberately engineered the dismantlement of government regulation. Not just for banking, but for everything else. It has been a cornerstone of Repub philosophy since Reagan. Their blind faith in unfettered capitalism has brought us to the brink of disaster. It is outrageous that instead of admitting the flaws in their failed belief system, they are blaming brown people for the failure.

 

[limerickman]

The last few days make fascinating viewing.

FTSE/DOW were losing large values each day.

Invetsment banks which up until recently said that their balance sheets were secure suddenly could not withstand the pressure aand have either disappeared (Lehmans) or have been invited to a shotgun wedding (Merrill).

Extraordinary times.

I think that there is a lot more pain to come for many banks though.

 

[limerickman]

That is the latest spin from the Republicans. I will call it the "blame the ****ers" excuse, where the Repubs place the fault on the poor and minorities. But the part the poor played in this was small. The real cause was massive and unrestrained fraud at all levels of the system, and this fraud was made possible by a lack of regulation and oversight. Sure the Dems did not do jack. They were asleep at the switch or taking campaign contributions to look the other ways. But the Repubs deliberately engineered the dismantlement of government regulation. Not just for banking, but for everything else. It has been a cornerstone of Repub philosophy since Reagan. Their blind faith in unfettered capitalism has brought us to the brink of disaster. It is outrageous that instead of admitting the flaws in their failed belief system, they are blaming brown people for the failure.

Personally, I think Mr.Alan Greenspam is the major villian in the piece.
As the cheerleader for de-regulation and the author of "free credit" - he shares a lot of the blame.

Ably assisted by the politico's of course.

 

[Flyer]

Alan Greenspan was a tool, soon to be another goat, much like Jan Ulrich is.

Off-shore banking Hedge Fund Billionaires living in Darien Connecticut are the stealth crooks you seek. You will nevber find them Lim.

Laws, regs and accounting rules are for the little people.

Central bankers will print up more script and loer interest rates.

 

[stilesiii]

That is the latest spin from the Republicans. I will call it the "blame the ****ers" excuse, where the Repubs place the fault on the poor and minorities. But the part the poor played in this was small. The real cause was massive and unrestrained fraud at all levels of the system, and this fraud was made possible by a lack of regulation and oversight. Sure the Dems did not do jack. They were asleep at the switch or taking campaign contributions to look the other ways. But the Repubs deliberately engineered the dismantlement of government regulation. Not just for banking, but for everything else. It has been a cornerstone of Repub philosophy since Reagan. Their blind faith in unfettered capitalism has brought us to the brink of disaster. It is outrageous that instead of admitting the flaws in their failed belief system, they are blaming brown people for the failure.

Office of Federal Housing Enterprise Oversight (OFHEO)? Ever hear of it? Its sole purpose is to oversee Fannie and Freddie. What happen?

We have regulations, they are no good unenforced.

I'm not blaming "****ers", I'm saying both parties have screwed over the tax payers. I'm saying that you cannot continue to give free credit. I'm saying Greenspan was bad. I'm saying inflation will be out of control if we keep printing money every time the economy slows. I'm saying we're drunk on credit. I'm saying that every individual in America is not capable of owning a home and paying a mortgage no matter what scheme the fed comes up with. I'm saying we the people are the blame for all this. We have to change our mentality. We have to stop living beyond our means. We have to elect responsible officials. We have to demand responsible behavior. We have to understand that people will suffer when they make bad decisions/investments. We have to realize learning from mistakes requires suffering through them, and printing more money is not the answer. We have to realize that free credit caused the housing price boom. We have to realize that free credit causes prices to rise in relation to increased demand.

Why were these subprime mortgages created? Why have we abandoned 20% down requirements? Why were credit requirements lowered? Who demanded these mortgage requirements be changed and why?

Franklin Raines, Jim Johnson, Jamie Gorelik, what part did these democrat officials of the Clinton administration and fannie mae execs have to do with this crisis. How did these people get appointed to head these institutions? This article from 2005 points to problems, where was Bush and Congress? http://www.washingtonpost.com/wp-dyn/articles/A48621-2005Jan4

This "bail out" will not fix the problem, America's problem is consumption. We have created an economy based on spending the free credit to sustain growth. This is suicidal. It is also the cause of our energy crisis. We must stop consuming everything in sight. Everyone is not entitled to an SUV, a 4,000 square foot house, a i-phone and a 52 inch HD plasma.

If you can explain how giving more credit to consumers who already can't pay debts is the answer, please do.

And if you think that either party is protecting your child's future, guess again.

 

[stilesiii]

BTW Bro,

Unfettered capitalist would not be asking the government to "bailout" the idiots in the market.

It is also amusing that our problems stem from Government Sponsored Enterprises and their accounting and operating practices, and you're screaming about unfettered capitalism.

There are no GSE's in an unfettered capitalist world.

FYI

"Fannie Mae (and Freddie Mac) buy loans from mortgage originators, such as banks and non-bank mortgage firms. It repackages the loans, as mortgage backed securities, and sells them on the secondary mortgage market, with a guarantee that the interest and principal will be paid, whether or not the original borrower pays. Also, Fannie Mae may hold the purchased mortgages for its own portfolio. By purchasing the mortgages, Fannie Mae and Freddie Mac provide banks and other financial institutions with fresh money to make new loans. This gives the United States housing and credit markets flexibility and liquidity"

These GSE's and the Fed fueled the free credit orgy. Again, hardly unregulated, unfettered capitalism.

An unfettered capitalist would say let the bubble burst.

 

[stilesiii]

Personally, I think Mr.Alan Greenspam is the major villian in the piece.
As the cheerleader for de-regulation and the author of "free credit" - he shares a lot of the blame.

Ably assisted by the politico's of course.

Greenspan surely has a role in the credit orgy. Arguably inflation as well.

Bush's and Congress have not helped.

 

[Flyer]

Hedge Funds are not regulated. They operate in secret, off shore.

And in a monetary system of central banks (printing presses) no modern capitalist is safe. They can lose 100%.

Poor people can regain power under a global collapse.

Jan and Lance would have NO chance to win.

 

[limerickman]

2nd October 2008 :

ECB announces that it will leave its interest rate unchanged at 4.25%.


http://money.cnn.com/2008/10/02/new...an_central_bank_interest_rate_ap.ap/index.htm

 

[limerickman]

8th October 2008 :


http://news.bbc.co.uk/2/hi/business/7658958.stm

Six central banks - including the Bank of England - have cut their interest rates by half a percentage point.

No UK rate move had been expected until Thursday - and the step puts the interest rate at 4.5% from 5%.
The US Federal Reserve has cut rates from 2% to 1.5% and the European Central Bank (ECB) trimmed its rate from 4.25% to 3.75%.

The unprecedented step is aimed at steadying a faltering global economy and slumping stock markets.
The central banks of Canada and Sweden and Switzerland all took similar action in the co-ordinated move.
China also cut its rate, but by 0.27 percentage points.


European financial markets reacted well, pulling back some of the losses seen earlier on Wednesday.
The last time the Bank of England cut rates in a special meeting was on 18 September 2001 - when rates came down from 5% to 4.75%.
The announcement came hours after the UK government announced a package of measures aimed at rescuing the banking system which could add up to £500bn ($880bn).

The fact that the central banks have had to take such extreme measures underlines how bad market conditions have become
In the UK, some mortgage lenders immediately passed on the rate cut to borrowers - trimming their variable rates.

'Arrest the slide'

Responding to the interest rate cut, UK manufacturers' group the EEF welcomed the " bold and decisive move" it hoped would "arrest the current crisis and collapse in confidence".
"Coupled with the plan to shore up the financial system today's co-ordinated moves should help arrest the potential slide into depression," said the EEF's chief economist Steve Radley.
Chief international economist at Capital Economics, Julian Jessop, said that the rate cut would "provide at least a temporary boost to confidence".
But he added: "We fear that there is still a lot more work to do.
"The fact that the central banks have had to take such extreme measures underlines how bad market conditions have become."
He also warned that rate cuts were not a complete solution, pointing out the Fed had already cut rates from 5.25% in September last year to 2% before the latest move - action which happened "without rescuing either the financial system or the real economy."

'Taken too long'

The Bank of England's Monetary Policy Committee said that getting inflation down to the government's 2% target remained its goal.
The latest data puts inflation at 4.7%, and it is likely to rise above 5% in coming months before falling the MPC said.
But analyst Peter Warburton of Economic Perspectives said the rate cut and government intervention should have come earlier.
"It has taken far too long for the government and the Bank of England to recognise the scale of threat posed by the seizing up of the credit system," he said.

'Strong support'

The Federal Reserve said that it had acted "in light of evidence pointing to a weakening of economic activity and a reduction in inflationary pressures".
And the ECB said it had felt able to act because "inflationary pressures have started to moderate in a number of countries, partly reflecting a marked decline in energy and other commodity prices".
Although it did not cut its own rate - which is just 0.5% - the Bank of Japan expressed its "strong support" of the policy.