Fed May Slash Rates by 100 bps

[future]

http://www.truveo.com/Fed-May-Slash-Rates-by-100-bps/id/1289586197
What will happen to a 10 year bond any ideas????

 

[gonegolfin]

http://www.truveo.com/Fed-May-Slash-Rates-by-100-bps/id/1289586197
What will happen to a 10 year bond any ideas????

As I have stated in other threads, the Fed basically did this two weeks ago as it has allowed the federal funds rate to trade significantly below the target. And then today the Fed announced that it would pay interest on excess reserves. This puts a floor under the federal funds rate and essentially neuters the target rate for federal funds.

Brian

 

[SevenEyedJeff]

All I know is if the FED cuts rates like that, I am taking ALL of my money out of the bank and buying metals. Why even have it in there earning such low interest? It's bad enough already.

 

[Original_Intent]

wow I heard 50

 

[Fox McCloud]

100 basis points? That's a HUGE HUGE cut.

It would also place it at 1%, the 2nd time in US history it's been at that level. I would have never dreamed Bernanke would do something that crazy....guess time will tell. That said, if he does that, I'd definitely watch what the foreigners do; if they get scared enough, they'll start dumping their massive dollar reserves, which, once they come home to roost can and will cause inflation (if not hyper-inflation).

 

[carlangaslangas]

All I know is if the FED cuts rates like that, I am taking ALL of my money out of the bank and buying metals. Why even have it in there earning such low interest? It's bad enough already.

You are absolutely right. Rates are low and inflation is high. This is the "hidden tax" that Ron Paul and others talk about. You slowly lose your purchasing value when you leave your money in the bank.

Stocks, and real estate, are becoming more attractive now. But it's hard to tell when they'll go back up.

 

[HOLLYWOOD]

As I have stated in other threads, the Fed basically did this two weeks ago as it has allowed the federal funds rate to trade significantly below the target. And then today the Fed announced that it would pay interest on excess reserves. This puts a floor under the federal funds rate and essentially neuters the target rate for federal funds.

Brian

Yes INDEED... incalculations... it's bottomed to about 1.4% on average?

Love the tons of layers of oversight touted, ALL over the wrong entity. FED

Wait until Barak Obama annoits Penny Pritzer as the next US Treasurer... you wanted change? Well the names changed, there's your change!... but the MONOPOLY GAME is still the same.

ALWAYS!

To help ease credit stresses, the Fed announced Monday it will provide as much as $900 billion in cash loans to squeezed banks. It said 28-day and 84-day cash loans being made available to banks will be boosted to $150 billion apiece. Those increases will eventually bring the amounts outstanding under the program to $600 billion.

Loans that will be made available in November to banks also will be increased to $150 billion each. That makes a total of $900 billion in credit potentially outstanding over year-end, the Fed said.

The Fed also said it will begin paying interest on commercial banks' reserves, another way to expand the central bank's resources to battle the credit crisis.

 

[Tarabell952]

Stocks, and real estate, are becoming more attractive now.

Stocks and real estate don't look too attractive to me.

 

[Pauls' Revere]

After I heard the Lehman CEO testify before congress/comittee today and state that they were shuffling millions to executives while seeking bailouts from congress I decided that on principle alone I could not and would not participate in a system as such. I have yet to see anyone dragged away in handcuffs. I immediately called my broker and withdrew all my positions and closed all accounts. When asked what was my reasoning, I told them to jump out of the nearest skyscraper. End of story....Fuck them.

 

[HOLLYWOOD]

Stocks and real estate don't look too attractive to me.

Real Estate? It's being kept ARTIFICIALLY HIGH by the realtors, housing industry, banks, and government.

ALL IN IT TO PROFIT... that's why nothing is selling. You price it right, and it WILL SELL!

Government wants it as high as possible for property taxes, fees, and capital gains (I wish!)

Housing/Realtor industry GREED profiteers more on the PARASITES that live off the buying and selling of others.

banks want to dumps worthless assets to the government with a FALSE WORTH!

IN ALL matters... WE THE PEOPLE PAY!

FED making the loans AND PAYING INTEREST, short term! Where's the FRIGIN RALLY? Too late the economy has already tanked!

 

[Nanerbeet]

Well, its like this: your credit company offers you a 0% interest rate cash advance with no transfer fees on a $10,000 loan for one year. You could basicaly "print" yourself $300 by investing that money in a 1 year CD at 3%



Now imagine you're a bank with billions in worthless paper assets. The Fed comes along and offers you a $500 billion loan at 1%. Wouldn't you invest that money in something safe so as to repair your balance sheets, say US treasury notes???



In other words THE TREASURY PAYS YOU 3.5% on money you borrowed from the Fed at 1%
(this is what Ron Paul refers to as "negative real interest")


Hope that helps.

 

[HOLLYWOOD]

Well, its like this: your credit company offers you a 0% interest rate cash advance with no transfer fees on a $10,000 loan for one year. You could basicaly "print" yourself $300 by investing that money in a 1 year CD at 3%

Now imagine you're a bank with billions in worthless paper assets. The Fed comes along and offers you a $500 billion loan at 1%. Wouldn't you invest that money in something safe so as to repair your balance sheets, say US treasury notes???

In other words THE TREASURY PAYS YOU 3.5% on money you borrowed from the Fed at 1%
(this is what Ron Paul refers to as "negative real inflation")

Hope that helps.

Again...

Where the FRIGIN RALLY? This is a "CHERRY" of a deal!

Tell's yah, there's no solution of throwing injections and deals out everywhere. RP and Schiff are right, just let things take their course... such experts at the Treasury, FED, FDIC.

BTW, the FDIC announced today, it is doubling the charge rate on banks for insurance. Preparing for all the financial storms (failures) to come shortly? You betcha!