The Fed's Next Move: Interest Rate Cut

I wish I could borrow money at 2%. Maybe I should become a banker. I'd make money just by borrowing it. Real rates are negative. Then I could trade of of the paper I borrowed for real assets, and if they lost any value, I could hit up the tax payer for my losses. Inflation will rear its head sooner than later. Add some fuel to the fire and make borrowing even cheaper. That'll solve everything.

I am adamantly against further rate cuts. Trying to make money cheap to spur endless consumer spending, vote buying and really discouraging saving is what got us to this point. This is reckless in the extreme. We have to take the medicine whether we like it or not. Soon market forces will overwhelm the Fed or any other system that tries to keep interest rates artificially low. The dollar will have to be defended and investors will have to be induced to buy the tremendous amount of debt the treasury will be putting at auction. Inflation will soar and interest rates will be very high to forestall a rebellion by lenders unwilling to lend money at such ridiculously low rates.

a rate cut would be very very stupid. The dollar needs to be strengthened, not undercut even more. This is part of what got us here in the first place, and that is a weak dollar.

Cut trade from afar long distance travel is not going to help trade why would you buy cheese from new Zealand when for half the distance you can buy from France selling goods to a country cutting coasts by only selling goods on a good trade to trade partner that you can gain big dividends on back in the 70s trade was with smaller amount of country's and America was able to cut corners but as the market is so far in distance spread out there is no way of cutting corners This is were internationally it is wrong As soon as you go to mack a change in trade every other trading partner is picking up rhetoric so they change the field before you get to them on new agreements So best to use the ports like China and trade inside other country's to small markets and ask for a Third Party trade policy Saving the grid pattern coasts As you slow over seas markets allowing all American markets to be managed in order as small country's slow down in China's markets good Booth markets ???

My abstinence from these forums didn't last as intended. China if you noticed... just announced it is going to drop interest rates 5 times to 2009. China can afford this. Reading myself that China's total debt is approx. or less then 1/3 of it's GDP ? Think about the fat China can ride on. Why though you may ask do I bring this into the picture ? The Dollar vs. the Yuan. China is about to embark on a lean machine fighting machine approach by adjusting ONLY it's currency without incurring or leveraging more debt. Fine move because they can, so long as they can keep that GDP up - pending well ? you know ? China doesn't need the good ole USA Walmart stores anymore so much, it has localities to export to. Besides, Made In China campaign objected to a Barbie Doll being made for $1 in China, post marketing $22 to Walmart shelves, the #1 sock manufacturer in China I noticed this year said - Buh Bye Walmart - we've had 15 years of exploits - Others are to follow through the Made In China initiative. I bring that up because China has said no more to western exploits, and well ? could this come at a better time ? When US consumers who are let's say - in the 95% middle class at BEST category ? relying on China imports ? Start to see the dollar shift ? I'll just say this, The USD is at what ? 1.3x to the Euro ? and the Euro is tanking We just RAN from 1.59 - 1.60 pushing all havoc. The Dollar is doing better because of the fact that other currencies are starting to reflect OTHER nation states approaches to adjusting to 'prop up the fiat Bretton Woods II or - well - anyone got a better plan formalized yet ? NO! Same as last year !'. Either way, I disagree with rate cut. Granted the Fed could ride this China hog high - hey - China ANNOUNCING 5 rate cuts to 2009 ? You betcha your bottom dollar, that tomorrow, the USD will shine on that. Add in Euro's problems ? Dollar is 'relativistically' (Remember, USD is only PART of a complex interdependent global currency model) on the upswing, way I see it ? hey hey hey - least to 2009. Dollar to Yuan might not be anyones wet dream on ideal signifier to future of the Dollar, but you have to admit - China has been coming down for some time from huffing their currency exploit fumes years on end... I somehow just don't see 8 to 10% consumer growth on a 1.6 Billion population every year. Strange China's class over 300 million making over 80k a year ? well - says something for what's in store for anyone seeking to compete in a global job market, let alone global economy. I really have had it with this isolationist protectionism plan when we ALL know we have global media share via the net, telephones ? 75 years globally, economy ? VERY evident it's all related. Yet ? Who's pushing the nationalism model still ? My god, who in their right mind would EVER lead a child into this world with the model of nationalism hand in hand with nuclear weapons technologies. Sheesh, 200 level university education will reveal in world history nationalism replaced the model of feudalism - one might ask - would something not replace nationalism ? You bet - globalism, it's here. Bretton Woods II has a life span too. Humanity has a lot to offer itself and more -I'm confident better thinking will come out of this. The Dollar is subject to the system it belong to - Bretton Woods II Above that - it is a mere token, at best ? a capitalistic model could offer citizens free market to token interchange. Period. Stock, Currency, WHATEVER. I agree with economist Louis Kelso The only right of any citizen in the world is the right to capital.

Odd, I found the FBN coverage or leaning towards China's hording of oil pre-olympics off base. I STILL contend it was the dollar, as Paulson, Abdullah - CEO's of western oil corps ALL concurred in Saudi Arabia. Point moot though. I WILL say THIS though: I find it ODD China is clearly going to be pushing the dollar up like an orange pushpop in the sun - Sure, you might not care it's corn syrup and red #5 BUT - least my childhood memories are melamine free. Odd the new FDA in the US says Melamine is ok. That's a fact jack. Sure - what ? 20 parts per million, but in Europe ? BANNED. Go figure. I suppose the regulatory agencies are a bad idea. Free food production standards. Let people just make what they make, and put it on the market. Oh wait, no, that's Free markets people promote. Right. Let people bundle bags of garbage loan products into CDO's and obfuscate until the third party says - ok, I'll just pass this bag of garbage onto the next sucker. Hmm... Free reign of violence ? That's nature. Somewhere with humanity law comes in. Where anyone has suggested regulation is the answer ? May they spend more time in prosecution law ! Silverado - Bear Stearns - (Schwartz Friday at his home in Palm beach "All is okay here, it's all speculation !") HA HA HA Nice 1.5 trillion cash in on this admin. 700 billion lost - 700 billion to cover it - chuck in a 100 billion to pay for the fund management ? or make that kickback you get 1.5 not bad for 7 years work. not bad at all Makes Savings and Loan look like a convenience store robbery. That Pakistani 7-11 attendant was probably an islamic terrorist anyway eh ?

Melamine is China's payback for subprime. Same lack of quality Same lack of prosecution Same ... as it ever was. Same as it ever was.

"we take pwofit today, let stupid merican pay in the end" "just ship this batch, they never trace it to us" ok ok - that MIGHT be more Malaysian than Chinese. But hey same model. fragmented humanity. Fragmented models of humanity usually have some co-factor of religion to compensate - and 'fix' things - whether 'getting saved' or - who knows, FBI has over 3,000 cults on file right now in the US, religious alone. Hope you're not in one of em !

I find it puzzling, some people put arbitrary hand me down pre digested models such AS nationalism before they stop and smell the bush of humanity first. That bush is after all - how we ALL got here. Man births religion Religion does not birth man Of course, hey, what lurking paradoxes might exist otherwise ? not my problem.

Circuit breakers are critical in this environment.The US$700 billion bail out will be a relatively slow process.Interest rate moves are essential because of the speed at which they impact. Zero or virtually zero interest rates will be introduced by the US Fed within 3 months so that consumers confidence is partly stabilised. This will NOT lead to an explosion in consumer demand, but rather an easing of the fear whilst precautionary savings continue to rise and expenditures are widely dampened. This will be another key mechanism to limit the extent of the recession.

How is it,you couldn't be more wrong on issues?Fed rate cuts DO NOTHING for mortgage and car loans.It doesn't help the consumer AT ALL.That's where the 10 year Treasury comes into play,which is down right now(notice that lending rate going down from 6%?).When they enact a Fed rate cut,the dollar will drop,10 year Treasury will rise(not the yield),and so will mortgage rates.It won't make borrowing for consumers easier or more attractive.It will make it worse.

Right, let's have another rate cut. That's really helped so far hasen't it. That good news for the market will last about as long as a candy bar. But hey. a little more inflation and crappier dollar is no big deal and well worth the up-tick for a couple of days.

Maybe, to head off inflation the interest rate should be increased a half point. Lowering the interest rate will make the dollar weaker and our GDP will slip for the last quarter. This isn't rocket science. It may tighten overnight lending but it will in time come back. We haven't hit the bottom yet and increasing the rate would soften the landing some. I am one of those people sitting on the sidelines and a rate cut is not going to get me in the spending mood. I will start buying as soon as stability is regained. I see the green light down the road a bit. Truth is, people have been taking advantage of easy credit for far too long, and we have abated an inevitable crash by lowering interest rates to "stimulate" spending. Spending money we don't have!

From my perspective it seems the easy money, low interest rates, and every expanding credit creation is the root cause of this meltdown. The Federal Reserve should get the blame for the BUST. But, it seems they are escaping criticism, for the most part. I for one would like to see a major investigation of The Federal Reserve. There meetings should be streamed live on Cspan and we should be able to see their books, also. No more artificial manipulation of the interest rate. Let the market determine the rate!

People in -Washington- please do not forget to share a piece of the pie (700B+) with the poors homeless coast to coast, please! As you know the only few 'available' shelters are already overcrowded since long years ago. These 'Homeless Families and Individuals' deserve a life as well, doesn't? Wish they included this point to the debate as well since always budgeting cuts spending are target to the poors communities programs, WHY?

Keynesian interventionism at its finest. Even though Bernanke claims to be a monetarist, I have my doubts. We need to raise interest rates, stop the bailouts, and allow the contraction to run its course. Sure, people will lose jobs (mine included as I work in an industry dependent on people getting cheap car loans...), credit will sieze up. But with higher interest rates, saving becomes attractive again and the need for credit expansion becomes less. Until equilibrium between short term monetary value and long term return is reached, the credit woes will continue. Injecting billions more fiat paper into the system will only exacerbate the problem. Im sure Mises is sitting in his grave somewhere saying 'I told you so...'

If an interest rate cut of 1% is going to help, why not a 2% cut? That's right take it to zero and start running the mint's printing press's around the clock. By the way when did Mr Mugabe take over the Fed?

How's that rate cut going this morning? Cut .50% and DOW futures down -180.Pure genius.

Genius it is! I am one of those "Joe six packs". I don't have a PhD in Economics but I paid attention to some of the best minds in economics, used my memory for all it's worth, and pulled some lessons from history. We honestly could get more done with monkeys at the switch. An old friend of mine said, "Common Sense, Integrity, and Good Judgment are commodities in short supply". This has never been closer to the truth than today. Rate cuts are futile, tax cuts are necessary. Congress could care less, and meanwhile the oil producing nations are laughing all the way to the banks. Our banks!

Re; the housing/mortgage market....has anyone thought, I know no one has discussed any prospect, of extending the mortagage options from 30-50-100 years? That would help the housing industry; ability to refinance at reduced costs?

Gloria, I think California started lending mortgages for 50 years,back in 2006.50 years of servitude doesn't seem to help matters.Back during the depression,home mortgage terms were typically 3-5 years.Of course,you could buy a home from Sears/Roebuck back then too. BTW,look at the dollar and 10 year treasury,after the rate cut.Dollar worth less,home mortgage interest rates going up.

Demand for fuel is less because China doesn’t demand on it any more. After Olympic which made china produced so much works and products is over……. That is why fuel no longer in demand as much as last 2years, in addition with global financial crisis…people tend to cut down expense. When houses price go up to high, with no increase in salaries… who can afford to buy…. People need food to eat but can stay in same house to pay mortgage and heat together…. That leads to houses surplus inventories.. Cutting rate maybe not a good solution, but Gas should go down more to produce more jobs to stimulate economy.

Less than 1 week after the rate cut and look at the mortgage rates,especially ARMs.Dollar going down,15,30,and ARM mortgages going UP.1 year ARM went from 5.92 last month,to 7.32 as of Oct 13th.

10 year Treasury at 4%,as of today.

Headline from today:30-year mortgage at 8-week high Biggest weekly jump in 21 years sends benchmark loan to 6.46% Dollar is up,only because it's the only haven at the moment.I expect another Fed rate cut before months end. sigh....