Wednesday, Jan 30, 2008
Gold rises, stocks rise, INFLATION rises
Bloomberg: Fed Lowers rate to 3%
Well done Ben - biggest drop, cumulative, since 1990 - DON'T PANIC MR MANNERING!!!!!!!!!!!!!!!!!!!!!!!!!
Posted by bystander @ 07:44 PM (918 views) Add Comment
13 Comments
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1. Jim said...
OK - So how much are they going to pay me to borrow money in a couple of weeks?
2. tyrellcorporation said...
Mentalists!
3. harold said...
Personally I think they're pushing on a string. What effect will this have in the long run? - Not much, apart from causing inflation. If I held $'s (as the Chinese do), I'd get rid of them quick. Expect massive intervention in gold markets in an attempt to suppress $1000/oz. Ultimately, however, the concentrated shorts in gold are going to have to buy back, at which time the price will go ballistic.
4. paul said...
They've lost the plot completely.
The New US Dollar will be next, worth ten old US dollars. Then retail prices rises will be capped by law. Then all of a sudden, the US turns into Zimbabwe, with a despotic arrogant ignorant leadership at the helm who are oblivious to the chaos outside their gated secure complexes.
Hang on ...
5. drewster said...
Cutting interest rates to 0% did nothing for Japan. The Japanese people went to the banks, borrowed shed-loads of money, but then instead of spending it on products and services they just stuck it in high-interest bank accounts abroad (New Zealand was a popular destination, see the other post on NZ's problems). The magic won't work this time, for broadly the same reasons that it didn't work in Japan.
6. Stevie Dee said...
@bystander... what you should have been observing is what happened after the DJIA spiked, and.... it finished -50 points. Two markets to look at now is the Nikkei tonight and crucially tomorrows DOW performance. If we don't see a 150-200+ rise tomorrow in the DOW, then we will see a $1000 Gold by monday, but also we will know that the tsunami is now in view.
Senator Edwards declared himself out of the running for president today. In his speech, he talked about a tent town outside New Orleans, simply amazing, and there was no hurricane.
7. trough2010 said...
The U.S. may be sliding into a liquidity trap (the point where monetary policy becomes ineffective), see http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/01/24/bcnstig124.xml The faster you cut rates the closer you get to that point, though the Fed clearly thinks that 3% offers sufficient buffer...
8. happyrenterz said...
£ is almost back to $2 why are we unhappy?
9. alan said...
I'm unhappy because the cut has PANIC written all over it. I hope Mervyn doesn't copy it.
Governments work better if they give an air of confidence to the electorate. The last week's activity by Ben appears as a Knee Jerk reaction. If I were a US citizen I would be really upset.
My personal feeling is that this action cannot lift the problem, quickly. Besides, the sub-prime, housing, CDO, monoline problems have been known for the past 3 months or longer by readers on this site.....
10. Maihem said...
@ happyrenterz, because dollars are almost worthless, 2 x nothing = nothing.
11. enuii said...
You can't force people to borrow money they can't afford to pay back and neither can you force people to spend when they don't feel comfortable about doing so.
Note also the pounds climb back against the dollar is not occurring with other currencies.
12. Brit1234 said...
I bet they will be calling for further cuts next month by the fed.
13. happyrenterz said...
I agree fear is high so no borrowing and no lending, economic shutdown. To keep IR high now is is to ensure a hard recession. Inflation is high this is backward looking. In a hard recession inflation will fall i.e. deflation, just consider the oil price which is now falling. My wish is not for the world economy to go into severe recession, I will probably lose my job, so I hope the Fed manages to soften the landing for the US.
Monoline writedowns is what has everyone spooked right now. To their credit the Fed has not tried to interfere with the (probably doomed) bail out of monoline bond insurers. Financials need a good beating but their complete failure threatens life as we know it. We want ballooning reckless debt and housing bubbles to become a thing of the past. We are getting our wish so be happy!