And it drops again.

[LES]

http://www.msnbc.msn.com/id/22916066/?GT1=10755

Stimulating. Isn't it?

[NOTNSS]

Yeah Ben called me the other day and asked if he should drop them a 1/4 point or a 1/2, I told him not to be a pussy and drop them 1/2

[Stormwalker]

Man, they're gonna run out of tools pretty soon.


Next up...... negative interest rates. The government pays you to borrow money and spend it!!

[Southern]

2nd time in 9 days.

[LES]

Man, they're gonna run out of tools pretty soon.


Next up...... negative interest rates. The government pays you to borrow money and spend it!!

[KickAssFlash]

This isn't by default a good thing.

The federal reserve is facing a nightmare situation: high inflation during a period of economic slowdown in the economy. I imagine Ben Bernanke is disregarding the headline inflation and focusing on core inflation which is around 2.4%. Negative irregularities are identified as anything above 2%. Not as bad as the 4.1% headline inflation rate. So his bet is on stimulating the economy before core inflation rises to completely unsustainable levels...in which case we would experience the 1970's all over again.

On a side note, I'd like to point something out. In the recent past, interest rates were at an all time low, and long term mortgage rates followed suit. Most people should have taken out long-term fixed rate mortgages or refinanced, but many took out adjustable rate mortgages or did not refinance. As rates went up, people finally realized they could not afford their mortgage payments...this is one of the primary sources of the sub-prime crisis. So if rates decrease to those levels again, I would highly recommend this course of action.

However, like I have already stated...with inflation on the rise (look at 4th quarter headline inflation in '07...5.6%!), I doubt the fed will continue cutting rates. Otherwise we will experience stagnation...something we need to avoid at all costs.

[Stormwalker]

I should have listened to Nick those years ago and bought into gold.

[1BADRZ28]

Who cares, all we care about is getting our cars faster.

[Scotty07]

This isn't by default a good thing.

The federal reserve is facing a nightmare situation: high inflation during a period of economic slowdown in the economy. I imagine Ben Bernanke is disregarding the headline inflation and focusing on core inflation which is around 2.4%. Negative irregularities are identified as anything above 2%. Not as bad as the 4.1% headline inflation rate. So his bet is on stimulating the economy before core inflation rises to completely unsustainable levels...in which case we would experience the 1970's all over again.

On a side note, I'd like to point something out. In the recent past, interest rates were at an all time low, and long term mortgage rates followed suit. Most people should have taken out long-term fixed rate mortgages or refinanced, but many took out adjustable rate mortgages or did not refinance. As rates went up, people finally realized they could not afford their mortgage payments...this is one of the primary sources of the sub-prime crisis. So if rates decrease to those levels again, I would highly recommend this course of action.

However, like I have already stated...with inflation on the rise (look at 4th quarter headline inflation in '07...5.6%!), I doubt the fed will continue cutting rates. Otherwise we will experience stagnation...something we need to avoid at all costs.

The Fed cutting this rate has little to do with mortgages (those are tied into bond rates). This rate effects more so things like car loans.

However, you will probably see a slight decrease in mortgage interest rates as has been happening recently. One thing you don't see is adjustable rate mortgages being much more attractive than a fixed rate. Since lending institutions are going away from those ARM's and combine that with tightening lending rules and I doubt you will ever see a sub-prime crisis again like we currently have. The days of basically giving mortgages away are done.

[KickAssFlash]

The Fed cutting this rate has little to do with mortgages (those are tied into bond rates). This rate effects more so things like car loans.

However, you will probably see a slight decrease in mortgage interest rates as has been happening recently. One thing you don't see is adjustable rate mortgages being much more attractive than a fixed rate. Since lending institutions are going away from those ARM's and combine that with tightening lending rules and I doubt you will ever see a sub-prime crisis again like we currently have. The days of basically giving mortgages away are done.

Correct, not directly. But they are correlated, which is why they will on average trend in a similar fashion. We are discussing this on TCS, so lets keep this as devoid of theory as possible

You will also find the economy cyclical. Stringent lending practices will be indefinitely adopted in the short term. However, if a period of economic growth as we experienced in the 90's occurs, they will become much more lenient again.

[Scotty07]

Correct, not directly. But they are correlated, which is why they will on average trend in a similar fashion. We are discussing this on TCS, so lets keep this as devoid of theory as possible



You will also find the economy cyclical. Stringent lending practices will be definitely be adopted indefinitely in the short term. However, if a period of economic growth as we experienced in the 90's occurs, they will become much more lenient again.

Good point on number 1

As for number 2, I am not so sure about that only because I don't think this country has seen anything close to the current mortgage / housing crisis before. It will be a long time in forgetting if ever.