| Author |
 Topic  |
|
fiatboy
Administrator
912 Posts |
 Posted - 03/16/2008 : 20:37:56
|
The Fed cut rates by a quarter of a point tonight. Full story here.
You must be logged in to see this link.
|
"Bart, it's not about how many stocks you have, it's about how much copper wire you can get out of the building." --- Homer Simpson |
|
|
horgad
1000+ Penny Miser Member
USA
1641 Posts |
Posted - 03/16/2008 : 20:49:14
|
The biggest part of that article to me is:
"The central bank also approved the financing of JPMorgan Chase & Co.'s purchase of Bear Stearns Cos., including support for as much as $30 billion of Bear's assets."
What that amounts to, if I am reading it right, is simply a government bailout of a major financial institution. The government is loaning money to JPMorgan at terms that no one else would give so that JPMorgan will buy a company that nobody wants to touch with a ten foot pole. Heck even I would buy a sh*t hole like Bear Stearns if the government would front me the money.  |
 |
|
|
Ant
Penny Hoarding Member
USA
894 Posts |
Posted - 03/16/2008 : 21:10:22
|
It's interesting that JP Morgan is the bank which is bailing out Bear Stearns, because before the creation of the Federal Reserve in 1913, J.P. Morgan's firm was the "lender of last resort" for troubled banks.
The more things change, the more they stay the same, hrmm. |
Lovely dimes, the liveliest coin, the one that really jingles. --Truman Capote
Coins are the metallic footprints of the history of nations. --William H. Woodin |
|
|
|
fiatboy
Administrator
912 Posts |
Posted - 03/16/2008 : 22:59:44
|
The dollar index isn't taking it too well. It's "recovered" from its earlier lows tonight and is now at 70.96.  |
"Bart, it's not about how many stocks you have, it's about how much copper wire you can get out of the building." --- Homer Simpson |
|
|
|
Nickelless
Administrator
USA
5580 Posts |
|
|
Know Common Cents
Penny Pincher Member
195 Posts |
Posted - 03/16/2008 : 23:39:34
|
The Fed will eventually raise interest rates, but not for the forseeable future. In addition to the Discount Rate being dropped by 25 basis points tonight, the Fed is also expected to lower interest rates by another 50-100 basis points (one half to one full percent) at their meeting this week. That'll send the Euro/Dollar exchange rate to as high as 1 Euro to $1.60 US. (It's only about 1.5 cents away from that now.) The Fed has decided to suffer the consequences of inflation and a crashing dollar in favor of bailing out the subprime casualties.
If your cable system offers Bloomberg or CNBC-Asia (Squawk Box) in the overnight hours, spend some time watching those broadcasts from Asia, Australia and the Middle East. Not a rosy picture here as the global market selloffs accelerate. Talk is that Fed rates could again return to the low rate of 1% to stimulate the economy into recovery. To your battle stations, Men. The depth charges are exploding all around us. |
Here in Wisconsin, we have some of the highest property and gasoline taxes in the US. We're squeezed so much, I have to make my daughter wear penny boxes for shoes. At least she has an endless supply. |
|
|
|
Nickelless
Administrator
USA
5580 Posts |
|
|
wheeler_dealer
Penny Collector Member
USA
402 Posts |
Posted - 03/17/2008 : 00:06:28
|
JPMorgan the governments bank, buying troubled Bear Stearns company for 240 million (Pennies on the dollar). Then getting the government to back 30 BILLION of the Paper promises with taxpayers $.
Government Big Dogs bailing out their buddies, and right on time. Any old timers remember the Big Savings and Loan bailout of the 80's wasn't it. Sound familiar. Can you say new low for the dollar. Is everyone ready for the S... to hit the fan. It will be coming.
PREDICTION (Oh Crystal ball don't fail me now)
1. Monday the stock market will drop between 200-300 points minimum
2. Gold will climb to minimum of 1050.
3. silver will increase close to another dollar possibly 21.00 by end of day.
4. metals will see a strong day - confused by both recession fears and inflation.
5. After Ben "helicopter" Bernanke screws up the economy and Federal Reserve he will be replaced at the end of his first term.
I'm probably not qualified enough to make these predictions, so take them with a grain of salt and
have a good laugh at my expense if I'm wrong.
|
|
|
|
HoardCopperByTheTon
Administrator
USA
6807 Posts |
Posted - 03/17/2008 : 00:14:07
|
I wish I didn't believe you.. but I can't say that.
I think you might be light on Silver by 50 cents though.. $21.50 is my prediction. |
If your percentages are low.. just sort more. If your percentages are high.. just sort more.
Now selling Copper pennies. 1.6x plus shipping. Limited amounts available. |
|
|
|
wheeler_dealer
Penny Collector Member
USA
402 Posts |
Posted - 03/17/2008 : 00:35:28
|
It must have been the blood shot eyes I meant to predict silver at closer to $22.00.
I could add more however I have to save some for the paying customers.
Hoard nice to see I'm not the only one on at this hour. My wife just came out and told me that she really thinks something is wrong with me for being on the computer this late. She is the one who told me to find a hobby. (I think this is better than the alternative but she wouldn't stand for that, and this costs a lot less. |
|
|
|
No82s
Penny Pincher Member
USA
198 Posts |
Posted - 03/17/2008 : 03:09:32
|
| Just remember. The lower the discount rate goes, the cheaper the worthless money gets. Buy something tangible. Cheap credit isn't bad. |
The difference between an optimist and a pessimist is that the pessimist is better informed. |
|
|
|
Nickelless
Administrator
USA
5580 Posts |
|
|
wheeler_dealer
Penny Collector Member
USA
402 Posts |
Posted - 03/17/2008 : 07:27:32
|
Nickelless,
The mortgage game may change a bit. Even with Federal rate cuts the trickle down may not happen so easily. You will still probably be able to get your mortgage, however with the bankers being burned almost daily you may need to put up more good faith $$$ and the rates may not really drop that much. The federal funds rate is what banks loan $ to each other at, not necessarily to the general public. Bankers smell inflation and uncertainty and need to protect their capital and loan portfolios with sound loans. Not cheap ones. Good luck with your loan for the house. |
|
|
|
wheeler_dealer
Penny Collector Member
USA
402 Posts |
Posted - 03/17/2008 : 07:33:34
|
HCBTT,
Awake and the head is clearer. I was thinking silver had closed Friday at $21.00. Not $20.00 I will stick with my prediction of $21.00 close by end of today. Anything higher will mean real trouble and loss of confidence. The next F R Meeting tomorrow will be the decider if they drop rates at that meeting more than .50 than all bets are off and this week will be one wild ride for PM's.
|
|
|
|
horgad
1000+ Penny Miser Member
USA
1641 Posts |
Posted - 03/17/2008 : 07:38:49
|
quote:
Originally posted by wheeler_dealer
Nickelless,
The mortgage game may change a bit. Even with Federal rate cuts the trickle down may not happen so easily. You will still probably be able to get your mortgage, however with the bankers being burned almost daily you may need to put up more good faith $$$ and the rates may not really drop that much. The federal funds rate is what banks loan $ to each other at, not necessarily to the general public. Bankers smell inflation and uncertainty and need to protect their capital and loan portfolios with sound loans. Not cheap ones. Good luck with your loan for the house.
That is what is called pushing on a string or leading a horse to water. The Fed's are trying to get the bankers to loosen up by lowering rates, but they can't force them to take take a drink. Thus the Feds are getting forced to look for more creative ways to inflate us all to prosperity. 
By the way, if I understand the deal correctly, Bear Stearns stock holders are going to get pretty much wiped out. The Stock was in the 60s on last Wednesday and the deal is for $2.00 a share. So almost a 97% hit. Bear Stearns is big into employee ownership and employees are said to own 1/3 of the shares. So another group of people is going to be hurt by the current mess we are in, but I doubt they will be the last... |
Edited by - horgad on 03/17/2008 08:12:02 |
|
|
|
wheeler_dealer
Penny Collector Member
USA
402 Posts |
Posted - 03/17/2008 : 08:44:36
|
Does ENRON, Worldcom, Adelphia, ring a bell. The printing presses will be running full time.
Maybe someone could see who sells the Government ink, paper or printing presses the stock of these companies should rise higher as their profits from the gov't orders increase.
|
|
|
|
horgad
1000+ Penny Miser Member
USA
1641 Posts |
Posted - 03/17/2008 : 09:28:28
|
Bear Stearns is currently down 87% today at $3.72 a share. If gold, silver, or copper ever goes down 87% in a day, I will eat my hat. Do people still say that?  |
|
|
|
fiatboy
Administrator
912 Posts |
Posted - 03/17/2008 : 13:34:31
|
quote:
...I will eat my hat. Do people still say that?
I've said it before, but isn't it a saying from the Great Depression? |
"Bart, it's not about how many stocks you have, it's about how much copper wire you can get out of the building." --- Homer Simpson |
|
|
|
horgad
1000+ Penny Miser Member
USA
1641 Posts |
Posted - 03/17/2008 : 13:42:08
|
quote:
Originally posted by fiatboy
quote:
...I will eat my hat. Do people still say that?
I've said it before, but isn't it a saying from the Great Depression?
I am not sure where it comes from, but I am sure that somebody should make this guy eat his hat...
You must be logged in to see this link.
By the way, where do I sign up to get paid as much as him to say brilliant things like that on TV?
|
Edited by - horgad on 03/17/2008 13:44:04 |
|
|
|
n/a
deleted
4 Posts |
Posted - 03/17/2008 : 14:25:50
|
| JPMorgan is one of the banks that owns the Federal Reserve. |
|
|
|
mickeyman
Penny Pincher Member
Canada
243 Posts |
Posted - 03/17/2008 : 15:02:52
|
quote:
Originally posted by Nickelless
What's the lowest that the Fed's discount rate has ever been? The lowest I readily recall was 1.0 percent. And would there ever be circumstances under which the Fed would drop the rate to 0.0 percent, other than to stave off a total meltdown?
At very low interest rates, the Fed gets "traction" even by lowering the interest rates by minute fractions of a percent. So if the interest rate is 0.1% and they lower the rate to 0.05%, they get the same impact on bonds as they do lowering the interest rate from 0.5% to 0.25%. So there is no limit. They could drop the interest rate from 0.0001% to 0.00005% and still get a good kick. So there will be no 0% interest rates, but they can get arbitrarily close. Of course, at those rates, the USD index will probably be around 0.01. |
Not all who wander are lost. |
|
|
|
Nickelless
Administrator
USA
5580 Posts |
|
|
Cody8404
Penny Hoarding Member
USA
602 Posts |
Posted - 03/17/2008 : 17:54:43
|
The FED is the governing board for the banks, but it is owned by the banks.
Congress has set it up so that the Banks, of Whom JP Morgan is the King, tell the FED what it is going to do. The FED belongs to the banks and will do everything that it can to keep the banks making money.
If the FED ever says that something is good for the people, the savers or the consumers then you know that it is better for the banks.
Just remember your history lesson. THe stock market crashed in 1929, but the banks failing didn't peak until 1933.
|
Awake, O kings of the earth! Come ye, O, come ye, with your gold and your silver, to the help of my people, to the house of the daughters of Zion, to the help of the people of the God of this Land even Jesus Christ. |
|
|
|
Cody8404
Penny Hoarding Member
USA
602 Posts |
Posted - 03/17/2008 : 17:55:48
|
| Wait till after the FED meets Tuesday. That is when it will get really in interesting. |
Awake, O kings of the earth! Come ye, O, come ye, with your gold and your silver, to the help of my people, to the house of the daughters of Zion, to the help of the people of the God of this Land even Jesus Christ. |
|
|
|
HoardCopperByTheTon
Administrator
USA
6807 Posts |
Posted - 03/17/2008 : 19:28:58
|
| Looks like we were both off today wheeler_dealer.. but give it a few days. |
If your percentages are low.. just sort more. If your percentages are high.. just sort more.
Now selling Copper pennies. 1.6x plus shipping. Limited amounts available. |
|
|
|
swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 03/17/2008 : 22:09:03
|
quote:
Originally posted by Cody8404
The FED is the governing board for the banks, but it is owned by the banks.
Congress has set it up so that the Banks, of Whom JP Morgan is the King, tell the FED what it is going to do. The FED belongs to the banks and will do everything that it can to keep the banks making money.
If the FED ever says that something is good for the people, the savers or the consumers then you know that it is better for the banks.
Just remember your history lesson. THe stock market crashed in 1929, but the banks failing didn't peak until 1933.
The fed is owned by the US Treasury. The member banks get a 6% return on their invested capital (no actual profit). All earnings are given back to the U.S. Government.
The Federal Reserve only manages money supply which is done via interest rates. They issue debt (aka federal reserve notes) for U.S. Treasuries. They make money via the fact those treasuries earn interest and those FRN don't cost them any.
The problem with inflation comes directly from the U.S. government over spending. If the government ran balance budgets, then money supply would be limited to U.S. treasuries (money already spent) unless they started buying other assets like ABS or MBS (which they would). You could actually make the money supply no growth like the gold standard if government's were responsible.
They are basically trading treasuries for MBS right now to let the banks have liquidity through the credit lines. The banks (other than JPM's Bear Stearn related assets) are still on the hook for defaults.
The problem is treasuries are basically look at as cash. Most money market funds own a lot of treasuries and those investors view that as cash. So the money supply is really a lot bigger than just FRNs. So the fed is increase the money supply without actually put more M1 or FRNs into the system.
The Fed only cares about keeping the banking system in tact and the economy growing. Ben has said he isn't worried about inflation. Which means he will inflate like the devil to protect the banking system/economy.
The question is can he do it? If he can, then can he do it without destroying the dollar?
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
|
|
|
Topic |
|
Emergency Sunday Night Fed Rate Cut
Forum Locked
