Page Index Toggle Pages: 1 [2] 3 4 ... 7 Send TopicPrint
Hot Topic (More than 20 Replies) Economic Retardation (Read 23177 times)
b0b
GeekCrew Administrator
FTP Server
*****
Offline


The revolution will not
be televised.

Posts: 7803
Location: Battle Creek, Michigan
Joined: Oct 15th, 2005
Gender: Male
Re: Economic Retardation
Reply #15 - Mar 17th, 2008 at 12:52pm
Print Post  
Quote:
2:05 ET Dow -125.70 at 11824.66, Nasdaq -42.36 at 2170.13, S&P -31.21 at 1264.22:

[BRIEFING.COM] The major indices are trading sharply lower at midday on news that a major Wall Street collapsed and is being bought at a firesale price.

Market participants was shocked to find out that JP Morgan Chase (JPM 39.44, +2.90) was buying Bear Stearns (BSC 3.94, -26.06) for what is equivalent to $2 per share, or $240 million. This equates to a 93% discount from Friday's closing price. The Fed will providing up to $30 billion dollars in funding to back Bear's less liquid assets. Although the $2 offer seems low, the other option for Bear is bankruptcy.

Last week there were rumors that Bear was facing liquidity issues. In turn, this caused a large amount of withdrawals at Bear, which spurred the firm's collapse. Bear's stock has plummeted 87% and is down 98% from its all-time high.

Meanwhile, in an emergency meeting, the Fed cut the discount by 25 basis points to 3.25% on Sunday. The discount rate is the interest rate at which eligible banks can borrow money directly from the Fed.

In an additional move to increase liquidity, effective today, the Fed created a new lending facility that will provide financing to participants in the securitization markets, such as investment banks.

These developments have created new fears of what may be in store for other financial institutions. National City Corp. (NCC 8.80, -4.35) is down 33%, Cit Group (CIT 11.50, -3.73) has lost 24%, Lehman Brothers (LEH 28.90, -10.36) has slipped 26% and Washington Mutual (WM 9.06, -1.53) has given up 14%.

Al of the ten sectors are trending lower. Not surprisingly, financials are the main laggards with a 3.8% loss. The energy sector (-3.4%) is also showing weakness as oil slips 3.0%.


JP Morgan bought Bear Stearns for about 2% of the price they closed at on Friday afternoon, which was steeply down anyway due to the credit crisis.  The Fed offered to support up to $30bn in future losses related to the transaction.

The Fed had to violate their own rules to make the deal, since they are normally prevented from loaning money to anyone except federal banks.  That scares me a bit.

-b0b
(...cheers at lower interest rates, though!)
  

Back to top
IP Logged
 
b0b
GeekCrew Administrator
FTP Server
*****
Offline


The revolution will not
be televised.

Posts: 7803
Location: Battle Creek, Michigan
Joined: Oct 15th, 2005
Gender: Male
Re: Economic Retardation
Reply #16 - Mar 17th, 2008 at 3:57pm
Print Post  
Here are some scary charts.  The first one shows the value of the dollar...




The second chart is even scarier.  This shows the amount of capital held by US banks that isn't borrowed.  As you can see, it has gone straight off a cliff...



-b0b
(...thinks it's a great time to buy investments.)
  

Back to top
IP Logged
 
X
Post Whore
FTP Server
******
Offline


And the truth shall set
you free

Posts: 4131
Joined: Oct 16th, 2005
Gender: Male
Re: Economic Retardation
Reply #17 - Mar 17th, 2008 at 4:04pm
Print Post  
I doubt either of those charts takes into account inflation either.  The dollar is probably half of what the first chart says...if that.

X
  

In the land of the blind, the one eyed man is king. - Max Payne
Back to top
 
IP Logged
 
b0b
GeekCrew Administrator
FTP Server
*****
Offline


The revolution will not
be televised.

Posts: 7803
Location: Battle Creek, Michigan
Joined: Oct 15th, 2005
Gender: Male
Re: Economic Retardation
Reply #18 - Mar 17th, 2008 at 4:30pm
Print Post  
Oops, fixed the images in my last post.  Here's another one from the Wall Street Journal.



-b0b
(...Chicken Little!)
  

Back to top
IP Logged
 
MediaMaster
GeekCrew Administrator
FTP Server
*****
Offline


Holy Xenu!

Posts: 1884
Location: Detroit
Joined: Oct 15th, 2005
Gender: Male
Re: Economic Retardation
Reply #19 - Mar 17th, 2008 at 5:26pm
Print Post  
Dude that is major!

When the crap would all this hit the fan? The fact that US owes so much money, and US banks owe so much money cant mean that things are going to be good for much longer eh?
  

"Our Constitution is designed only for a moral and religious people. It is wholly inadequate for any other."&&&&John Adams&&
Back to top
WWW  
IP Logged
 
X
Post Whore
FTP Server
******
Offline


And the truth shall set
you free

Posts: 4131
Joined: Oct 16th, 2005
Gender: Male
Re: Economic Retardation
Reply #20 - Mar 17th, 2008 at 5:56pm
Print Post  
All China has to do is find another big consumer of their lead tainted products and then call in their markers...bam...a depression that would make the 30s look like the 20s.

X
  

In the land of the blind, the one eyed man is king. - Max Payne
Back to top
 
IP Logged
 
spanky
Post Whore
FTP Server
******
Offline



Posts: 1540
Location: Detroit-ish
Joined: Oct 23rd, 2005
Gender: Male
Re: Economic Retardation
Reply #21 - Mar 18th, 2008 at 2:13pm
Print Post  
Saw on msn that china might have to shut down a bunch of its power plants and factories to reduce the air polution there for the olympics.

Take that nonfailing economy!
  
Back to top
AIM  
IP Logged
 
b0b
GeekCrew Administrator
FTP Server
*****
Offline


The revolution will not
be televised.

Posts: 7803
Location: Battle Creek, Michigan
Joined: Oct 15th, 2005
Gender: Male
Re: Economic Retardation
Reply #22 - Mar 18th, 2008 at 3:34pm
Print Post  
Rumor has it that Beijing will shut down car traffic outside of government and Olympic-related driving for the Olympics.

Some guy on AR15.com is in Beijing right now and posted a ton of pictures of the city.  It's really quite beautiful, but the smog is absolutely unbelievable.

If I find the post again, I'll tack it here.

-b0b
(...should have bookmarked it.)
  

Back to top
IP Logged
 
b0b
GeekCrew Administrator
FTP Server
*****
Offline


The revolution will not
be televised.

Posts: 7803
Location: Battle Creek, Michigan
Joined: Oct 15th, 2005
Gender: Male
Re: Economic Retardation
Reply #23 - Mar 18th, 2008 at 3:35pm
Print Post  
Quote:
Fed Cuts Key Interest Rate by 3/4 of a Point
By EDMUND L. ANDREWS
Published: March 18, 2008

WASHINGTON — The Federal Reserve reduced its benchmark interest rate by three-quarters of a percentage point on Tuesday, to 2.25 percent, a cut that was less than investors had been hoping for even though it was one of the deepest in Fed history.

While leaving the door open for additional rate cuts, policy makers also expressed growing concern about inflation. “Uncertainty about the inflation outlook has increased,” the central bank said. “It will be necessary to continue to monitor inflation developments carefully.”

The statement highlighted the growing problem that the Fed faces, between fighting an economic downturn and heading off new inflationary pressures that have become apparent in everything from energy and food prices to the falling value of the dollar.

In a sign of the difficult choices the Fed faces, 2 of the 10 members of the policy-making Federal Open Market Committee dissented from the decision, favoring a smaller rate cut.

The two dissenters in Tuesday’s decision were Richard W. Fisher, president of the Dallas Fed, and Charles I. Plosser, president of the Philadelphia Fed, both of whom have been outspokenly hawkish about inflation issues in recent months.

The Fed’s announcement was the culmination of an extraordinary series of actions over the last two weeks to prop up financial markets and the economy with a flood of cheaper money.

The Federal Reserve has reduced its overnight lending rate, the federal funds rate, six times since September, and did so twice in January alone.

With the latest reduction, the federal funds rate is far below the rate of inflation, meaning that the “real,” or inflation-adjusted, rate is below zero. It is also well below the European Central Bank’s benchmark interest rate of 4 percent or the Bank of England’s rate of 5.25 percent.

Investors had already assumed that the central bank would reduce the cost of borrowing by at least another three-quarters of a percent on Tuesday, but mounting worries about a meltdown in financial markets and the Fed’s emergence as lender of last resort had elevated expectations even higher.

Indeed, expectations about another deep cut in interest rates were so high that the central bank was at risk of setting off a new wave of panicky selling if it had announced a reduction of less than three-quarters of a percentage point.

A lower federal funds usually leads to lower interest rates for mortgages, consumer loans and commercial borrowing.

But Fed officials had been startled and frustrated that their previous rate reductions were doing nothing to lower the long-term interest rates that are most relevant for expanding a business or buying homes or cars.

Part of the reason, analysts said, is that lower overnight interest rates have only limited relevance to the fundamental problem that is roiling the credit markets and the economy: the huge losses caused by the collapse of the housing bubble and the home loan environment that fed it.

Most analysts predict that housing prices, which have already fallen in most parts of the country, will drop much further before they hit bottom.

About eight million homeowners already owe more on their mortgage than their houses are currently worth, and foreclosure rates have soared over the last year.

The Fed’s problem is that its primary tools for stimulating growth — reductions in the cost of borrowing — do little to address the fears about bad loans. Many if not most private forecasters have concluded that the United States has probably entered a recession. The Labor Department has reported back-to-back declines in payroll employment in January and February.

And while the unemployment rate is still low at 4.8 percent, the number of private-sector jobs has declined for three months in a row — a pattern that has almost always been accompanied by a recession in recent decades.

With financial markets becoming dysfunctional, Fed officials have announced a series of steadily bigger lending programs for banks and cash-strapped Wall Street investment firms.

On Sunday, Fed officials agreed to lend up to $30 billion to JPMorgan Chase to engineer its takeover of Bear Stearns, a major Wall Street firm that was near collapse.

But Fed officials face increasingly contradictory pressures: inflation is rising even though growth has stalled.

The federal funds rate is once again edging close to zero, at which point the central bank would have to resort to entirely new strategies if it wants to keep opening its monetary spigots.

But a growing number of economists, including some Fed officials, contend that the housing bubble and bust stemmed at least in part from the central bank’s own decision to keep interest rates at rock-bottom lows from 2001 to the middle of 2004.

Meanwhile, consumer prices, even after excluding the volatile prices of food and energy, are climbing faster than the central bank’s unofficial target of less than 2 percent a year. On Tuesday, the Labor Department said the core measure of the producer price index, which excludes volatile energy and food products, jumped 0.5 percent in February, the biggest gain since November 2006.

The value of the dollar has plunged against most major currencies, a trend that pushes up the prices of imported goods and has contributed to the surging price of oil.


I was really hoping they would cut the rate by a full point.  I hate to see the dollar get trashed any more than it already has, but the rate cut is really handy for those in the housing market (like me!).

-b0b
(...hopes mortgage rates drop by at least 50 basis points next week.)
  

Back to top
IP Logged
 
MediaMaster
GeekCrew Administrator
FTP Server
*****
Offline


Holy Xenu!

Posts: 1884
Location: Detroit
Joined: Oct 15th, 2005
Gender: Male
Re: Economic Retardation
Reply #24 - Mar 18th, 2008 at 4:12pm
Print Post  
Hmm... didn't really consider that. I wasn't planning on getting a house for another 2 years but...
  

"Our Constitution is designed only for a moral and religious people. It is wholly inadequate for any other."&&&&John Adams&&
Back to top
WWW  
IP Logged
 
b0b
GeekCrew Administrator
FTP Server
*****
Offline


The revolution will not
be televised.

Posts: 7803
Location: Battle Creek, Michigan
Joined: Oct 15th, 2005
Gender: Male
Re: Economic Retardation
Reply #25 - Mar 18th, 2008 at 4:36pm
Print Post  
In all seriousness, now is the time to buy.  Assuming the economy doesn't completely crash and burn, it's very possible we'll never see a 2.25% fed funds rate again in our lifetimes.

The national average for a 15-year mortgage is 5.09%, and that's doesn't reflect the 0.25% drop from Sunday or the 0.75% drop from today.  In another week or so, I bet the 15-year mortgage rate will be around 4.5% and the 30-year rate will be around 5.10%, both of which are ridiculously low.

On top of that, you have an unbelievable amount of inventory on the housing market to choose from.  You can set up your wish list of goodies (big kitchen, multiple bathrooms, pool, etc) and find fifty house that matches your exact needs.

Of course, the best part is that houses are dirt cheap right now.  Meredith and I found a $70,000 house that we wanted to "lowball" for $60,000, but the house dropped to $60,000 before we could put a bid in.  It originally listed at $90,000!

I'm guessing housing prices will be a fair amount higher where you're at, but you still can't beat this market.  It's an incredible time to be a buyer!

-b0b
(...thinks buyer's markets rock.)
  

Back to top
IP Logged
 
b0b
GeekCrew Administrator
FTP Server
*****
Offline


The revolution will not
be televised.

Posts: 7803
Location: Battle Creek, Michigan
Joined: Oct 15th, 2005
Gender: Male
Re: Economic Retardation
Reply #26 - Jun 27th, 2008 at 12:06pm
Print Post  



WEEEEEEEEEEEEEEEEEEEEEEEEEEEEE!


-b0b
(...hold on to your hats, boys and girls!)
  

Back to top
IP Logged
 
spanky
Post Whore
FTP Server
******
Offline



Posts: 1540
Location: Detroit-ish
Joined: Oct 23rd, 2005
Gender: Male
Re: Economic Retardation
Reply #27 - Jun 27th, 2008 at 4:22pm
Print Post  
Good thing I am throwing all my money into my car.  Could have lost it otherwise!
  
Back to top
AIM  
IP Logged
 
b0b
GeekCrew Administrator
FTP Server
*****
Offline


The revolution will not
be televised.

Posts: 7803
Location: Battle Creek, Michigan
Joined: Oct 15th, 2005
Gender: Male
Re: Economic Retardation
Reply #28 - Jun 27th, 2008 at 4:59pm
Print Post  
Yanno, at the moment, that might actually not be such a bad idea.

I've lost my butt on a couple investments over the past six months, namely Thornburg Mortgage (TMA).  I bought in at $1.50 because surely they weren't going to sink any further, right?  They are trading at $0.25 today.  Ouch.


-b0b
(...should invest in a 5.9 instead.)
  

Back to top
IP Logged
 
spanky
Post Whore
FTP Server
******
Offline



Posts: 1540
Location: Detroit-ish
Joined: Oct 23rd, 2005
Gender: Male
Re: Economic Retardation
Reply #29 - Jun 27th, 2008 at 5:01pm
Print Post  
You shoud invest in a V8 car...not a jeep.  You will have more fun in the car, trust me.
  
Back to top
AIM  
IP Logged
 
Page Index Toggle Pages: 1 [2] 3 4 ... 7
Send TopicPrint