Posted on 01/22/2008 5:31:07 AM PST by ReleaseTheHounds
WASHINGTON (MarketWatch) -- Acting forcefully against economic risk and financial market meltdown, the Federal Reserve cut its overnight lending rate by 75 basis points to 3.50%, the Fed announced Tuesday. It was the first time the Fed had cut interest rates between meetings since the 9/11 attacks in 2001. "The committee took this action in view of a weakening economic outlook and increasing downside risks to growth," the Federal Open Market Committee said in a statement. Downside risks to growth remain. The committee met on Monday evening.
(Excerpt) Read more at marketwatch.com ...
Pretty sure the lenders are still asking for the proctologist report at this point before lending money.
Pushing on a rope?
bumpers!!!!
Let’s get those loans rolling again! There’s still a few burger flippers who don’t have $500K homes!
I’m a little young and naive here. Can somebody please fill me in as to why we need a small group of cronies setting our interest rates? I always have thought a free market would exclude such a setup.
when they made sub-prime loans with adjustable rates (ARMs)they could be recast when the rate was about to adjust.
the banks having taken that away will now face the foreclosure of those who would have otherwise recast their loans and continued to timely pay their mortgages.
Lowering the rate is great for the banks but will do little for the borrower or those loans which are in trouble
.
You are free to charge as much or little interest that you want if you are loaning money.
Of course the government is going after the payday loans that push really high interest short term loans.
I’ll take a stab at answering your question but with major caveats that I’m far from being a Fed scholar or economist.
The Fed came into being in 1913 after one of the occasional “freeze-ups” in the banking system. I think this was when JP Morgan had to come to the rescue of the US Treasury and provide the necessary liquidity needed at the time. So the Fed was born with the charter of ensuring that there would be sufficient liquidity in our banking system but the second challenge of avoiding huge inflation.
The biggest challenge to the Fed came after the market crash in 1929. In that instance, the Fed compounded the problems following the market collapse by clamping down on the money supply and keeping interest rates high — giving rise to multiple banks failing, business investment drying up, unemployment soaring and the other problems with the Depression. In this instance, the Fed exacerbated the problem rather than help solve it.
I’ve heard some people I respect (like Steve Forbes) argue that the Fed is unnecessary, but I don’t know...
My daughter was just on Neil Cavuto’s show so I’ve sort of lost my train of thought!
That about sums it up. Oh, that and the fact that the dollar is again weakened on the world market. So weak, in fact, that price inflation on foreign goods is guaranteed! Time to buy now, or go into a no-spend mode.
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