Good Doggie
January 30th, 2008 by 
reality
Ben lowered the Fed funds and discount rates again. Now he has only 12 25 bps steps left between here and zero, having used up 5 so far this month.
As I write, the effect of the cut is 160 points on the Dow at the cost of a good whack on the US dollar - the Canadian dollar is up 1.2% on the day, for example - and an increase in the cost of fixed rate mortgages of about 0.1%. So since the US is a substantial net importer, consumer prices will go up (or distribution margins will shrink) and anyone who wants to get out of their Greenspan-recommended toxic ARM will have to pay more (and make more money to qualify). However, the net interest margins of Wall street will improve. I’m sure we’re all happy to make any necessary sacrifices to achieve that goal.
Edit: Well the 160 points didn’t exactly last. Dow closed down 37 or so.
Posted in Fixed Income, The Fed | 
January 30th, 2008 at 2:35 pm
http://www.marketwatch.com/news/story/america-land-bubbles-next-pop/story.aspx?guid=%7B60CE4669%2D6814%2D4A48%2DA555%2DBE998EC6FC58%7D&dist=TNMostRead
scary… this story is about a theory that a bubble economy has replaced the real economy. it may be correct according to this most interesting and frightening quote that sums up what we are going through:
” What’s so scary is not that the subprime bubble was happening so fast on the heels of the dot-com bubble, not that the pundits, the public and the policy makers all appeared to be ignoring it. What’s really scary is that our best and brightest leaders in Washington, Wall Street and Corporate America wanted to create a bubble! They even threw jet fuel on this raging fire with cheap money, favorable taxes and minimal oversight.
Of course the Treasury and the Fed will never admit it, but they saw the housing bubble as a healthy economic necessity in their warped ideology! In their myopic minds, the housing bubble was the messiah “saving” America from a big, bad bear/recession.”
YIKES!!!!!
January 30th, 2008 at 2:41 pm
Well he’s right about the bubbles. Problem is, the machine blew so hard this last time that it broke. Can’t blow bubbles without the credit machine. Can it be fixed? I think not. But one cannot ignore the possibility, and then there will be more bubbles.
January 30th, 2008 at 2:50 pm
The best part of the article is he points out the fact that the wealthy wall street and political elites are in bed together to the destruction of the rest of us. I think that this is the first time it has been so clearly summarized. More and more people are starting to realize the truth and blame the actual culprits but it is still not clear to enough of the populace and the oligarchs want to keep it that way.
January 30th, 2008 at 2:53 pm
Yes.
The hope is (perversely) that things will get bad enough that the population will awake from its soma stupor and take action.
January 30th, 2008 at 4:37 pm
Wake up?
No way dude, American Idol is on TV…
January 30th, 2008 at 4:50 pm
The main difference between USA and ancient Rome is that the mob ruled Rome and the nobles lived in constant fear of the masses uprising under one banner or another. They had to constantly buy them off with games, money, food, etc. When the crowd got really angry rich romans had to flee or die.
In the USA, the nobles have figured out how to manage the mob, keep them passive/asleep and steal their labor while making them debt slaves. WHAT A COUNTRY!