Wednesday, Nov 28, 2007
Federal Reserve will have to slash interest rates to 3pc
The Telegraph: Goldman says US rates must be slashed
The bank’s chief economist, Jan Hatzius, said US house prices were likely to fall 15pc from peak to trough, leaving a fifth of the country’s homeowners with $3,000bn in negative equity.
Posted by sold 2 rent 1 @ 11:07 AM (1040 views) Add Comment
13 Comments
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1. sold 2 rent 1 said...
So a predition of 15pc crash by a bank is made before any recession starts.
I think we can safely say the crash will be over 30pc
2. shipbuilder said...
This is irresponsible nonsense. What good will heading off a recession do but delay the inevitable. Everyone is culpable in this, so everyone should take their bit of the recession medecine. This is simply a whinge by the big players to preserve their big profits and fat pay packets. With debt as it is, no-one can seriously expect an upturn in consumer spending simply by reducing rates.
I've said it before, it takes a second to get into debt, but years to get out - it's a one way street and reduction of rates does not simply wipe away the debt built up.
3. dohousescrashinthewoods said...
Hmm, Goldman are going to be hit by negative equity? No, but their balance sheet may fall apart under decaying assets.
I don't think they care about the home-owners.
4. dbnazz1 said...
Goldmans, like all the other brokers, investment baks, etc enjoy bloated earnings in the good times of the economic cycle and suffer big declines in earnings during the dowturn.
Their VI here is in hoping that reduced IR's will stave off a downturn. Personally I don't think reduced IR's will make much difference -the scene is alreadt set for what is going to happen.
5. little professor said...
But Charles Plosser, head of the Philadelphia Fed, was in no mood to give ground yesterday, warning that the Fed may yet have to raise rates to keep inflation at bay."The rise in oil prices and the simultaneous increases in a broader basket of commodity prices suggest that significant inflationary pressures exist in the economy and thus the Fed must be very vigilant,” he said.
The futures markets appear to have discounted hawkish comments by a string of Fed governors as mere rhetoric, betting that the bank will capitulate with a rate cut on December 11.
6. mrmickey said...
Bernanke dropped interest rates by 1/2 a percent to help his buddies on wall street after only a modest fall in equities so who knows how much he'll drop them when stocks really start to implode, must keep those bubbles inflated at all costs.
7. denzil said...
Good Lord. I wonder how many $$ we will get for a pound if that occurs!
8. drewster said...
Nice to see Ambrose Evans-Pritchard of the Telegraph keeping up his bearish news. Sometimes it seems like him and MoneyWeek's Merryn Somerset-Webb are the only two bears in the media. Perhaps somebody at the top forgot to hand them their propaganda instructions when they first started.
9. sold 2 rent 1 said...
drewster,
"Perhaps somebody at the top forgot to hand them their propaganda instructions when they first started."
I was thinking that too.
10. inbreda said...
7. denzil said...
Good Lord. I wonder how many $$ we will get for a pound if that occurs!
Yup - enough to have a really really big bonfire.
11. harold said...
"Good Lord. I wonder how many $$ we will get for a pound if that occurs!"
Not that many, the £ is heading south too.
12. Cstanhope707 said...
The US Government is missing a trick here!! What they should do is tell the Brits that as long as they can purchase a US Property cash and have no criminal record they can get a Greencard imediately with the right of abode in the US. Then what will happen is all the BTL brigade will leave the UK in fact I would say a huge amount of Property Owners would leave....
Mind you just like Castro in Cuba Crash Gordon would not stand for the mass exodus out of the UK.
13. Growler said...
with the Euro on record highs against the others, I can only see that the USD and GBP will hugely fall with rates that low. It's so obviously short-term to allow them to dump stock, it's embarassing