1. Welcome! Please take a few seconds to create your free account to post threads, make some friends, remove a few ads while surfing and much more. ClutchFans has been bringing fans together to talk Houston Sports since 1996. Join us!

Bernanke Gone Wild: Another 1/2% Cut

Discussion in 'BBS Hangout: Debate & Discussion' started by weslinder, Jan 30, 2008.

  1. bigtexxx

    bigtexxx Contributing Member

    Joined:
    Jun 12, 2002
    Messages:
    26,924
    Likes Received:
    2,264
    good grief. GDP is the best metric to use. What do you suggest instead, site views to DailyKos?
     
  2. lpbman

    lpbman Member

    Joined:
    Dec 12, 2001
    Messages:
    4,148
    Likes Received:
    680
    I'd suggest that you can't point to the GDP as anything more than a clue about what the economy is doing. It's probably the best clue even... but it's just a piece of the puzzle. You often declare GDP=Economy.

    It's not. That's all.
     
  3. rhadamanthus

    rhadamanthus Contributing Member

    Joined:
    Nov 20, 2002
    Messages:
    14,304
    Likes Received:
    596
    Please understand that bigtexxx only pretends to know what he is talking about.

    Better to just shake your head and move on.
     
  4. bigtexxx

    bigtexxx Contributing Member

    Joined:
    Jun 12, 2002
    Messages:
    26,924
    Likes Received:
    2,264
    What metric do you use as the best guage of the overall economy? Do tell
     
  5. rhadamanthus

    rhadamanthus Contributing Member

    Joined:
    Nov 20, 2002
    Messages:
    14,304
    Likes Received:
    596
    Your mom's prices.



    ;) :p
     
  6. robbie380

    robbie380 ლ(▀̿Ĺ̯▀̿ ̿ლ)
    Supporting Member

    Joined:
    Aug 16, 2002
    Messages:
    23,246
    Likes Received:
    9,590
    it looks like we are already pricing in 2.5% fed fund by april. i think it is up to 90+% now.
     
  7. rrj_gamz

    rrj_gamz Contributing Member

    Joined:
    Aug 15, 2002
    Messages:
    15,595
    Likes Received:
    197
    Lucky for me, the $1 is still strong when used at McDonalds...
     
  8. lpbman

    lpbman Member

    Joined:
    Dec 12, 2001
    Messages:
    4,148
    Likes Received:
    680
    It's a mosaic.
     
  9. No Worries

    No Worries Contributing Member

    Joined:
    Jun 30, 1999
    Messages:
    29,995
    Likes Received:
    16,871
    ... of which many are now conveniently located in Wal-Marts.
     
  10. Invisible Fan

    Invisible Fan Contributing Member

    Joined:
    Dec 5, 2001
    Messages:
    43,243
    Likes Received:
    25,278
    That's where I drop off my paycheck. It's perfect!
     
  11. glynch

    glynch Contributing Member

    Joined:
    Dec 1, 2000
    Messages:
    17,781
    Likes Received:
    3,392

    Only when used on the $ menu. Otherwise you can spend amazingly about as much as you would at a low priced restaurant. ;)
     
  12. Refman

    Refman Contributing Member

    Joined:
    Mar 31, 2002
    Messages:
    13,674
    Likes Received:
    312
    It is scary to me how much people on this board know about McDonald's. :D
     
  13. Mr. Clutch

    Mr. Clutch Contributing Member

    Joined:
    Nov 8, 2002
    Messages:
    46,550
    Likes Received:
    6,131
    GREAT! Maybe Bernanke will succeed in creating a new bubble.
     
  14. DonkeyMagic

    DonkeyMagic Contributing Member
    Supporting Member

    Joined:
    May 22, 2006
    Messages:
    21,537
    Likes Received:
    3,376

    my thoughts exactly. create another artificial sense of "growth" and prosperity so next time it falls even further.

    Since when did normal economic downturns become so horrible that a little correction creates panic to rush and "fix" it?
     
  15. Refman

    Refman Contributing Member

    Joined:
    Mar 31, 2002
    Messages:
    13,674
    Likes Received:
    312
    Because it is coming at a time where it will make a bad situation in the real estate market even worse. Really what makes this different can be summarized in two points.

    1. The price of real estate is already taking a hit. If there is a recession right now, more people will not be able to keep up with their ARM notes, and some will not be able to keep up their fixed rate mortgages. More foreclosures will make a bad real estate market worse and will result in more short sales and further problems in the banking industry. This will shake consumer confidence even further. It becomes a problem that compounds upon itself.

    2. The price of fuel and (as a result) food are spiralling upward. A recession right now will make many families be unable to maintain themselves.

    In short, with the external forces already in motion, a recession at this point would result in a cluster****.
     
  16. rhester

    rhester Contributing Member

    Joined:
    Jun 14, 2001
    Messages:
    6,600
    Likes Received:
    104
    Economic fundementals cannot be tricked by another rate cut.
    Eventually there will be a correction and the longer it is postponed the harder it will fall because it is a debt correction.

    First of all home prices are going to go down regardless because people are not going to be able to keep buying overpriced homes. Without buyers the prices will drop.

    Second, if the price of fuel and food are spiralling upward then it is a recession plain and simple. Cheap credit/debt is the root cause of all inflation, it is a credit bubble that pushes the money supply to the point of a devaluation of the dollar.

    Third the reason consumer confidence is shaken is because reality is setting in, the reality that most consumers are overburdened with debt, have very little personal savings and prices are pressured upwards.

    This tightening in the economy will come. The only question is how hard it comes.

    They might as well lower rates to 0% like Japan did in the 90's because the fate of the dollar rests with how much more credit bubbles can be produced to make a short term infusion of liquidity for consumers.

    As the consumer slows down on the debt binge the economy will tighen up even further prompting more pressure on companies to lower costs.

    At some point either everyone has to stop borrowing or you just can't pay the bills.

    So lowering rates does nothing to solve anything except make the problem worse... more people borrow (hopefully) when rates go lower.

    It's like lending the drunk another $100.00 to go buy wine- it's doubtful he is going to be able to pay it back but at least he can buy more wine- he'll feel better about the situation and the liquor store won't have to lay anyone off.
     
  17. Refman

    Refman Contributing Member

    Joined:
    Mar 31, 2002
    Messages:
    13,674
    Likes Received:
    312
    Not entirely true. There are many economic forces at work that have little or nothing to do with debtload. The price of fuel is (I believe) higher than normal now because of unrest in the Middle East (which should subside some after the Iraq war is over). Once the price of fuel normalizes some, then the stretch on people's budget will be less. Also, what I have noticed over and over in my practice is that while people who were liad off a couple of years ago have gone back to work, it is at a wage that is significantly lower than what they were making before. You add these two things together, and it is a recipe for disaster.

    A recession is a contraction of economic activity. Prices of goods and services can either go up or down in a recession. When prices go up during a recession, stagflation occurs. The two do not necessarily have to coexist.

    Human beings generally have as much debt as they can service. If you make $30,000 a year, you make financial commitments accordingly (hopefully with some savings). Since many people have their savings set up through payroll deduction into a 401k, their entire check becomes disposable income. When the price of fuel more than doubles over a 2 1/2 year period, it is a significant change in budget dynamics even for the most cautious persons.

    Sure...that's part of it. Those prople with ARMs that are actually tied to the prime rate will not escalate if rates have decreased. In fact, they may even have their payments drop in the short term. Once the other odd things in the economy subside, rates can go back up, and ARMs will adjust to what they really should be.

    I think that you are overstating the role of consumer debt in this equation. As a consumer bankruptcy attorney, I can tell you that the vast majority of my clients that are in foreclosure have very little unsecured debt. Those that do have significant unsecured debt have a large percentage of it in the form of medical bills.
     
  18. Mr. Clutch

    Mr. Clutch Contributing Member

    Joined:
    Nov 8, 2002
    Messages:
    46,550
    Likes Received:
    6,131
    We are going to start seeing defaults on auto loans and credit cards in the upcoming year. American consumers really stretched themselves to the hilt.

    They did so partly because their home values were rising so fast. Now home prices are correcting and no amount of rate cuts will reverse that. Housing demand will be weak- no more suprime customers bidding up the value of your house.

    There will be another round writedowns at the banks as the bond insurers go under because they have nowhere near the amount of cash to insure banks on these defaults.

    Oh, and rate cuts help fuel inflation.
     
  19. rhester

    rhester Contributing Member

    Joined:
    Jun 14, 2001
    Messages:
    6,600
    Likes Received:
    104
    Secured or unsecured? Debt is debt. I am sure that those with mostly secured debt are finding it difficult to turn their securities into liquidity.

    I definately want to keep you as a resource. It's not like I feel all that safe in todays economic climate.

    Thanks for the good information.
     
  20. chow_yun_fat

    chow_yun_fat Contributing Member

    Joined:
    May 19, 2002
    Messages:
    4,115
    Likes Received:
    47
    how long do you think the rates will drop? i want to refinance some loans but i'm waiting for it to drop a little lower.
     

Share This Page

  • About ClutchFans

    Since 1996, ClutchFans has been loud and proud covering the Houston Rockets, helping set an industry standard for team fan sites. The forums have been a home for Houston sports fans as well as basketball fanatics around the globe.

  • Support ClutchFans!

    If you find that ClutchFans is a valuable resource for you, please consider becoming a Supporting Member. Supporting Members can upload photos and attachments directly to their posts, customize their user title and more. Gold Supporters see zero ads!


    Upgrade Now