Posted by guest , Oct 03, 2008 5:00PM

Exactly the opposite of what they need to do. Problem isn't that rates are too high for the economy, the problem is that the market is overlevered, and people are worried about defaults so risk premia are jacked out. What we need to do is increase rates to attract capital to the sector and delever.

Posted by guest , Oct 03, 2008 5:01PM

Domo arigato Bernanke-san.

Posted by guest , Oct 03, 2008 5:06PM

@2 for fed chairman

Posted by guest , Oct 03, 2008 5:10PM

Raise rates 200bps, guarantee CDs up to 250k, AND make them tax-free. National savings rate would go through the roof. Goodbye liquidity crisis, good-bye TED spread, hello strong dollar.

Posted by guest , Oct 03, 2008 5:11PM

6 It would not. People hate to save. Besides, its better for the economy if they continue to buy s!!t

Posted by guest , Oct 03, 2008 5:22PM

7 Those days are over.. we need a US based cash buildup of epic proportions if the dollar is to survive. If we lose control over the reserve currency and the currency of our debts we're no better than Mexico or Argentina. Repent. It's not too late Beard.

Posted by guest , Oct 03, 2008 5:25PM

wrong 7. It is better for people to tighten their belts in recessions so they can ride out the bumps. Same reason saving is important to people.

Posted by guest , Oct 03, 2008 5:26PM

wrong 7. It is better for people to tighten their belts in recessions so they can ride out the bumps. Same reason saving is important to people.

Posted by guest , Oct 03, 2008 5:32PM

I have to echo the others here... how the f*ck is dropping the rate going to help narrow the TED spread?

Posted by guest , Oct 03, 2008 5:36PM

Trying to jump start a car means it needs to be rolling before you pop the clutch.

Hood is up, emergency lights are flashing, and AAA is telling you get the fuck out of the car so he can hook it up.

Posted by guest , Oct 03, 2008 5:38PM

@7 what does the bank do with the new cash? They loan it to shmoes who can then buy other shmoes in accretive, strategic acquisitions.

Posted by guest , Oct 03, 2008 5:45PM

great! The global financial system definately needs more carry-trade countries.

Posted by guest , Oct 03, 2008 5:46PM

The fed is looser than a Tijuana whore. Their credibility is already shot.

The effective rate is already at 67bps. http://www.ny.frb.org/markets/omo/dmm/fedfundsdata.cfm

Might as well just drop to 0 and be done with it.

Bad bank loans, a carte-blanche on write downs with the new mark-to-model-accounting, negative real rates. I think I'm turning Japanese...I really think so.

Posted by guest , Oct 03, 2008 5:48PM

Isn't the plan that global banks will drop rates in unison while at the same time pumping shit loads of money into the banks so they can lend to businesses before any more damage is done, at least lesson the damage. Making it easier for banks to borrow, not necessarily Small Buss Corp to borrow. Your trade off is inflation and unemployment. Try to take control of unemployment now and worry about the inflation tomorrow being that it's a slowing economy and you wont have inflation pressure from economic growth but from monetary and fiscal stimulus.

Posted by guest , Oct 03, 2008 6:06PM

It has to be a coordinated global cut. The Bundesbank er, EU Central banks need to get past their schadenfreude, er, inflationary fears and let it all hang out so to speak.

In turn this will encourage some of the SWF to start loosening the valves. Much more promising then the debacle of the bailout was WellsFargo stepping up, now lets hope Vikram doesnt throw too much of a fit, decides to pick up National city and restores some faith to our godless financial souls.

The other possibility is to kill the bailout and other absurd associated amounts of liquidity treasury has been flooding the system with for a decade+ and allow complete lock-up and capitualtion. At some point soon after if the vig is high enough someone will be happy to make a loan. It wont be pretty but sometimes tearing off a bandaid is the best option.

As far as the TED notsogood, but we all saw this coming right?(and some commented on it)
http://www.bloomberg.com/apps/cbuilder?ticker1=.TEDSP%3AIND

-C

Posted by guest , Oct 03, 2008 6:10PM

this shit is stupid
it isn't any easier for a bank to borrow in the interbank market at 1.5% than at 2%
the problem is of credit and liquidity NOT rates

Posted by guest , Oct 03, 2008 7:24PM

@19

This time it's different. Don't ask questions just keep repeating to yourself, "this time it's different."

Ahhhhh yes... I remember it like it was yesterday *Wayne's World dream*. The almighty Internet Queen herself Mary Meeker was telling everyone how this time it's different and she needed to determine a new valuation model for Internet stocks. And while she was on a conference call one day buying gifts for her family at Amazon.com she had an epiphany. Clicks per page should be the driving variable when forecasting revenue. And so it was, growing clicks per page month over month and you get a buy rating on your stock -this bullshit made EBITDA look like it was GAAP approved-. You Mr. DotCom tell Mary your site is receiving record clicks each month and she gives you a buy rating. Mr. DotCom’s stock goes up in value and he’s handed off to the IB department to raise additional cash because he was told, “Amazon and Ebay will need to merge in order to compete against your big swinging dick.”

It really is different this time. Seriously, it really is.

DOPES

Posted by guest , Oct 04, 2008 8:45PM

drop rates?

gold = 1650

Posted by guest , Oct 06, 2008 7:20AM

These comments are idiotic. The Fed, by pumping in liquidity, has effectively already cut the target rate. Its averaging below 1.50% for the past few weeks.

a) you don't know the counter-factual, so to say lowering the funds rate hasn't helped is looking at the glass half empty. It is almost certainly true if they hadn't have cut earlier this year, we would have been looking at this meltdown much earlier.

b) further interest rate cuts and monetizing the system are the only way "out" of this. Japan has long been laughed at for the way they approached their crisis, but dropping rates to zero is the correct strategy unless you want double digit unemployment. Central Banks need to "de-incentivise" holding cash, which is a deflationary asset at this point.

Posted by guest , Oct 06, 2008 7:41AM

Arent all these comments from the same dopes who thought aig/lehman would rock on till the end of time? all of you need to go back to the mid-west and sell sears appliances like your parents do. That return of the stupid genes to the mid-west would simply be a mass migration last seen in '29.

Any mid-west chicks with a bra size above a 34C can stay though. Although if your dress size is above an 8, you should go back to selling arts & crafts supplies at wal-mart.