Fed's Loan Rescue Sparks Big Stock Rally

Just stay out of the big boys talk you greedtard sputterbutt.
You have proven you do not know what you are talking about. I am not an expert but I have been far more correct than you have.
 
usged you couldn't buy your way into a college class. this shit is way over your cut and paste knowledge head by miles.
 
uscitizen said:
You need to figure in other factors SF, like my post on the defecit widening. do I need to find one on the falling dollar too ? I liked how the finiancial types empahsised that todays stock rally was the biggest in years. Heck we almost gained back 2 weeks of losses ? will it last though is the question.
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What "financial types"???? Because those with actual financial backgrounds on both Bloomberg and CNBC said repeatedly throughout the day that it might be good to sell into this rally, because it is not sustainable for the reasons I mentioned above. The rally won't last unless the banks start lending money.

Side note... I would be willing to bet I have thought of far more factors that effect the economy than you have.

I addressed the falling dollar in my previous post (yes, I know, it came after you posted this)
 
Topspin said:
what's inevitable is usmoron continuing to show us he can barely read moveon.org and hasn't a clue on his own. He does have mullette cypress chearing him on. Once he opens his mouth a little more he's likely to prove equally ignorant.:clink:
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toppy....

1) He is trying and he does have a decent grasp on some of the problems that lie before us.

2) He is keeping this cival and discussing the issue. Do try to do the same... or do us a favor and go play somewhere else.
 
Superfreak said:
and what do you think would increase the value of the dollar and lower inflationary pressures?

1) reduce fiat money in the system

2) raise short term interest rates

3) eliminate subsidies on ethanol and the use of grain to produce ethanol.
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Hmm and how would we go about that. We have replaced about 4% of our imported oil with ethanol by the last thing I read. so dropping ethanol subsidies would do what ?
Bankrupt farmers ? casue more oil imports ?

How do we go about reducing fiat money in the system ? and what would be the side effects ?

Raise short term interest rates would really help the mortgage and building industries now wouldn't it ?

One thing for sure getting out of the hole will be painful no matter the route.
 
uscitizen said:
Hmm and how would we go about that. We have replaced about 4% of our imported oil with ethanol by the last thing I read. so dropping ethanol subsidies would do what ?
Bankrupt farmers ? casue more oil imports ?

How do we go about reducing fiat money in the system ? and what would be the side effects ?

Raise short term interest rates would really help the mortgage and building industries now wouldn't it ?

One thing for sure getting out of the hole will be painful no matter the route.
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Ok... lots of questions.... good ones....

If you raise short term rates and decrease the amount of fiat currency, you raise the value of the dollar. This in turn is deflationary for oil. Driving the price down. It should be more than enough to offset our increasing oil consumption by that 4%.

Having the farmers sell the grain for food or ethanol does not make a difference to the farmers other than to see grain prices come back down to more realistic levels. I don't know of any farmers that produce ethanol. They sell the grain to those that do.

Side note... I did suggest they stop using the grain for ethanol manufacturing. If they use the cellulite ethanol production method instead, it is possible that the farmers could actually offset the decline in grain prices with revenue from the stalks etc... (this is not to say we could do this immediately... but in the future it is a possibility)

We go about reducting fiat money in the reverse of what you saw today. They simply take money out of the system by offering less at the auctions. The side effect would be that the banking system would be on its own.... survive or fail. This is supposedly what they will do once they give a short term foothold to the financial sector. Their hope is that inflation does not get out of control between now and then.

Yes, raising short term interest rates would make it more challenging on the lenders as it would tighten spreads. But we are talking about the good of the economy vs. the good of one sector. Economy wins. Again, they will try to give a short term foothold to the sector and then reverse course later this year to fight inflation.
 
Superfreak said:
Ok... lots of questions.... good ones....

If you raise short term rates and decrease the amount of fiat currency, you raise the value of the dollar. This in turn is deflationary for oil. Driving the price down. It should be more than enough to offset our increasing oil consumption by that 4%.

--- Hmm perhaps, I am not knowledegable enough to say for sure...it will impact it some though if not offset by something else.

Having the farmers sell the grain for food or ethanol does not make a difference to the farmers other than to see grain prices come back down to more realistic levels. I don't know of any farmers that produce ethanol. They sell the grain to those that do.
----Yes but they make more money and their inputs are going thru the roofs. Fertilizer up by 30% in one year. Fuel up by how much ? Feedstocks are up by 25% or more too over a year ago. And if the interest rates go up. And a side effect of your first item if the dollar goes up ag exports drop...

Side note... I did suggest they stop using the grain for ethanol manufacturing. If they use the cellulite ethanol production method instead, it is possible that the farmers could actually offset the decline in grain prices with revenue from the stalks etc... (this is not to say we could do this immediately... but in the future it is a possibility)
-----I agree moving to another form of ethanol production is a good thing. Corn is food for animal and people.

We go about reducting fiat money in the reverse of what you saw today. They simply take money out of the system by offering less at the auctions. The side effect would be that the banking system would be on its own.... survive or fail. This is supposedly what they will do once they give a short term foothold to the financial sector. Their hope is that inflation does not get out of control between now and then.
--- I hope that is their long term plan. But personally doubt it. The finiancial industry has too much control in our govt.

Yes, raising short term interest rates would make it more challenging on the lenders as it would tighten spreads. But we are talking about the good of the economy vs. the good of one sector. Economy wins. Again, they will try to give a short term foothold to the sector and then reverse course later this year to fight inflation.
---- I agree but doubt that it will happen for the same reason I gave on your last statement.
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I understand you necessary optimism considering your business. I just do not share your optimism, but wish I could and hope very seriously I am wrong and you are right.

We are in a more complex situation than we have been before and I am not sure the old rationalle will work in this one. Too many bad factors at the same time.
 
Good discussion SF, I am going to bed now though. Have a big work day coming up tomorrow. A couple of nationwide projects to try and keep straight.
 
uscitizen said:
I understand you necessary optimism considering your business. I just do not share your optimism, but wish I could and hope very seriously I am wrong and you are right.

We are in a more complex situation than we have been before and I am not sure the old rationalle will work in this one. Too many bad factors at the same time.
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Ok... again, you make some good observations....

1) The second biggest factor driving the price of oil right now (demand is number one) is the decline in the dollar. Drive up the dollar, it will bring oil back down to the $80 range ... more than enough of an offset for increasing consumption by 4%.

2) Fertilizer costs are indeed up... and I am not familiar enough with what is in them to know what is causing the increases.... but fertilizer is used to produce the grain regardless of what the grain ends up being used for. I do agree that their sale price of grain will go down. But they will not likely go under because of it.

3) The financial sector is certainly garnering the attention right now. But even the financial sector understands that they have a limited amount of time to right the ship. If inflation goes nuts.... they lose too. They know the Fed will sacrifice them if it comes down to them or the economy as a whole. They have too. Could the Fed wait too long? Sure. But the pressure is already mounting for them to pay attention to the escalating inflation.

4) Actually, I can make money either way for my clients. There are numerous ways to invest to take advantage of a decline in the markets, for a recession, even for a depression should that ever happen.
 
Superfreak said:
Like most moves by the government, it depends....

The Fed can pump an eternal supply of money into the system (which they seem intent on doing) and it can still potentially do no good.

The problem that got us into this mess was banks and other lenders making loans to those that would not have qualified prior to 1992. Now the lenders have increased their credit lending standards (many back to those pre-1992 levels).

Thus, the only way this helps the situation is if the banks turn around and loan that money back out to the public (individual and corp).

My guess is the Fed drops the Fed Funds rate by another 50-75bps next week and thus steepens the yield curve further. That will in turn make the numbers more favorable to the banks to start generating loans.

The problem with all of this is it is an extremely inflationary move to pump more and more currency into the system and to be lowering rates.

This will continue to pressure commodity prices higher... oil, grain, etc...

This recession will likely be over by the end of the summer at the latest. Then the Fed must address inflation (the sooner they get going the better) by raising rates.
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Thanks SF, that is helpful to my understanding this :clink:
 
uscitizen said:
Fed's Loan Rescue Sparks Big Stock Rally

Tuesday March 11, 7:56 PM EDT

WASHINGTON (AP) — Staring at spreading financial dangers, the Federal Reserve announced a rescue package Tuesday that would pour as much as $200 billion into banks and investment houses and allow them to put up risky home-loan packages as collateral.
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The Federal Reserve announced it would allow squeezed financial institutions — including big investment houses and banks — to borrow up to $200 billion in super-safe Treasury securities by using some of their more risky investments as collateral.

The Fed announced the creation of a new Term Securities Lending Facility (TSLF) to provide financial institutions with 28-day loans of Treasury securities, rather than overnight loans. The institutions would pledge other securities — including federal agency residential-mortgage-backed securities, such as those of mortgage giants Fannie Mae and Freddie Mac — as collateral for the loans. Fed officials said it's the first time they'll be accepting mortgage-backed securities through this type of lending program.

http://finance.myway.com/jsp/nw/nwd...ap&src=601&news_id=ap-d8vbhpog0&date=20080311
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borrow or give?

corporate welfare at its finest

i am in the process of trying to get a home loan (with good to excellent credit) at a rate of over 6% (the loan is for 27% of our home's value) - i wonder when, if ever, the corporate welfare will trickle down to the citizens
 
DonQuixote said:
borrow or give?

corporate welfare at its finest

i am in the process of trying to get a home loan (with good to excellent credit) at a rate of over 6% (the loan is for 27% of our home's value) - i wonder when, if ever, the corporate welfare will trickle down to the citizens
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um.... the money wasn't given to the banks.... it is available to them to borrow. Meaning they have to turn around and loan the money out to consumers/corps if they want to make money on the loans they take from the Fed. If the banks take the money and loan it out, it will be primarily to bail out the consumers that took on more loan than they could afford.

You, and everyone else with good credit, are going to pay the price for that. Long term rates will likely be kept steady while short term rates drop. This will give the banks a wider spread to work with and give them the capital that will be necessary to help bail out these idiots that borrowed too much. Once again, the responsible pay for the irresponsible.

Note: and this is more to those like the Gumbys than to you directly.... this does not mean there wasn't any fraudulent loans.
 
If your going to do a bail out this makes more sense than just keep dropping the interest rate because banks are using low rates not to borrow but to relieve debt.

To Cypress: Of course this is not Free Market, you should love these plans they are liberal Keynesian free lunch plans.
 
Topspin said:
cypress and usged don't have a remedial economics class between them.
It will cause inflation, it will hurt the dollar. But you can only let the banking system sink so low before risking a much worse situation.
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What garbage. All the yammering idiots. (That's not meant as a shot at you, Toppy.)

Can anyone tell me, by percentage of the total market, how many houses have a mortgage on them?

Of these, how many (%) are a sub-prime loan?

How many sub-primes (%) are in default?


It's the tail wagging the dog, and another chance for the Government to give money to cronies.


Side note: An unintended consequence will be that the quality of housing, in general, will increase.
 
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Jan 2007 The economy is great.
Nov 2007 The economy is great.
Jan 2008 We will not have a recession.
Mar 2008 Have a bit of a slowdown but no recession.
Jun 2008 we have a sluggish economy but the rebate checks will fix everything
Nov 2008 we have a recession because you elected a Democrat.
 
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