who killed the economy?!?!

[Flipx99 5,000+ posts]

As far as housing is concerned or even the current MBS/CDO problem...do you recognize that it is a drop in the bucket of the entire derivative market?

 

[KINGDELL91 10+ year member]

our fearless leader bush

 

[faulkton 5,000+ posts]

yang wuu

 

[mcsoul 10+ year member]

The US Congress

and fuggin hippies

 

[rc10mike 10+ year member]

clipping killed the economy

 

[richierich75 10+ year member]

Actually the public has great influence. They can become net savers. They can "buy American"...(if you even can anymore). etc. For instance, if Americans started saving 40% of their income, they could cause all kinds of economic problems, as our system is based on people NOT being net savers.
The reason why the Fed left them too low too long is known as the time-consistancy problem, studied in depth by some Nobel prize winners. The problem is, you don't know it is too long until it is too late.

In the current situation, the question is how does the central bank balance the threat of inflation with an economic recovery. If you raise the rates, it lowers the threat of inflation and helps revalue the dollar; however, it does hurt those who rely on low borrowing rates to recover. That is the theory.

However, I would argue that the current borrowing rates do not reflect the low federal funds rate...they have become someone disconnected. This is mainly due to a liquidity squeeze rather than higher short term rates. Because of this disconnect, and the lower correlation between the federal funds rate and the current borrowing rates at the present time, it would be safe to raise the target to reduce the threat of inflation and help the dollar revalue. Once they rates resynchronize, we can go back to the traditional Taylor rules / constrained discretion mechanism under which we currently operate.

I never said the public doesn't have influence; I said the Fed Gov't CONTROL's it. It is hard for the public to "save 40%" of their income when gas has risen 40% this year alone; cost of energy has gone up 10-15%; food has gone up 8-12% and income has not change. "Buy American, if you even can anymore;" again Flip it seems to me you are saying is what you are reading in your text books; it does not apply to real world current situations; we can sit here and say "what if, and you could do this and they could do that," but lets deal with what IS really happening. I'm not saying what you are saying is wrong in anyway; it's just not applicable in today's current situation.

Secondly, how long are we supposed to let this continue? Do we continue to keep the low borrowing rates; while keeping the risk of higher inflation while continuing to lower the value of the dollar? When do we actually say enough and make the change? It sounds to me that you are in agreement with enough is enough all ready, raise the rates and move on. Which I agree with as well; but with that you will see prices that have skyrocketed, ie Oil/Gas/Food start to come down, very minimal but at least to some degree of impact for the benefit of society and not just those that benefit from such high prices as they currently are.

 

[Flipx99 5,000+ posts]

I never said the public doesn't have influence; I said the Fed Gov't CONTROL's it. It is hard for the public to "save 40%" of their income when gas has risen 40% this year alone; cost of energy has gone up 10-15%; food has gone up 8-12% and income has not change. "Buy American, if you even can anymore;" again Flip it seems to me you are saying is what you are reading in your text books; it does not apply to real world current situations; we can sit here and say "what if, and you could do this and they could do that," but lets deal with what IS really happening. I'm not saying what you are saying is wrong in anyway; it's just not applicable in today's current situation..

I know people who make less than $7/hr who live on their own and still save over 20%. It's not how much you make, it's how much you spend. It is applicable because Japan is a net saver. And net savings has a lot to do with exchange rates.

Secondly, how long are we supposed to let this continue? Do we continue to keep the low borrowing rates; while keeping the risk of higher inflation while continuing to lower the value of the dollar? When do we actually say enough and make the change? It sounds to me that you are in agreement with enough is enough all ready, raise the rates and move on. Which I agree with as well; but with that you will see prices that have skyrocketed, ie Oil/Gas/Food start to come down, very minimal but at least to some degree of impact for the benefit of society and not just those that benefit from such high prices as they currently are.

I did suggest they raise the rate target. As for the question of how long, etc. I am content with not knowing. People much smarter than me with access to much more data do not know either.

 

[bigbirney420 10+ year member]

I never said the public doesn't have influence; I said the Fed Gov't CONTROL's it. It is hard for the public to "save 40%" of their income when gas has risen 40% this year alone; cost of energy has gone up 10-15%; food has gone up 8-12% and income has not change. "Buy American, if you even can anymore;" again Flip it seems to me you are saying is what you are reading in your text books; it does not apply to real world current situations; we can sit here and say "what if, and you could do this and they could do that," but lets deal with what IS really happening. I'm not saying what you are saying is wrong in anyway; it's just not applicable in today's current situation.
Secondly, how long are we supposed to let this continue? Do we continue to keep the low borrowing rates; while keeping the risk of higher inflation while continuing to lower the value of the dollar? When do we actually say enough and make the change? It sounds to me that you are in agreement with enough is enough all ready, raise the rates and move on. Which I agree with as well; but with that you will see prices that have skyrocketed, ie Oil/Gas/Food start to come down, very minimal but at least to some degree of impact for the benefit of society and not just those that benefit from such high prices as they currently are.

You sir are an idiot, parents are probably idiots too.

 

[Flipx99 5,000+ posts]

You sir are an idiot, parents are probably idiots too.

He's asking a question for which there is no answer. I don't know how to explain that there is no answer, no one knows the answer...and I don't think anyone can know the answer personally.

But even if they raised the rates today, IIRC the lag is what 18 months before we can determine the effects...

 

[bigbirney420 10+ year member]

He's asking a question for which there is no answer. I don't know how to explain that there is no answer, no one knows the answer...and I don't think anyone can know the answer personally.
But even if they raised the rates today, IIRC the lag is what 18 months before we can determine the effects...

Agreed. The fed has nearly impossible job. Raise rates to hedge off inflation in the sometime near future, or keep them low and assist banks and brokerage firms in getting out of the finacial hole they are in due to the mortgage and credit crisis. If they dont take a proactive apprach right now Lehman and a few others may end up like Bear Stearns, as well as banks like Wamu. This is an argument that rages on as we speak, whether its the feds job to bail out the finacials, or let them go bankrupt and possibly ruin the rest of the economy and already low consumer confidence.

 

[mcsoul 10+ year member]

Don't forget the Cable show "Flip that house".

 

[richierich75 10+ year member]

I know people who make less than $7/hr who live on their own and still save over 20%. It's not how much you make, it's how much you spend. It is applicable because Japan is a net saver. And net savings has a lot to do with exchange rates.



I did suggest they raise the rate target. As for the question of how long, etc. I am content with not knowing. People much smarter than me with access to much more data do not know either.

You sir are an idiot, parents are probably idiots too.

He's asking a question for which there is no answer. I don't know how to explain that there is no answer, no one knows the answer...and I don't think anyone can know the answer personally.
But even if they raised the rates today, IIRC the lag is what 18 months before we can determine the effects...

I was not asking those questions directly to you to answer Flip; I know you don't know the answers - cause like you said those people smarter than you that get paid to know the answers don't even know the answers. And I was in agreement with you.

hey bigbirney - **** A DICK B!TCH!!!!

 

[richierich75 10+ year member]

Agreed. The fed has nearly impossible job. Raise rates to hedge off inflation in the sometime near future, or keep them low and assist banks and brokerage firms in getting out of the finacial hole they are in due to the mortgage and credit crisis. If they dont take a proactive apprach right now Lehman and a few others may end up like Bear Stearns, as well as banks like Wamu. This is an argument that rages on as we speak, whether its the feds job to bail out the finacials, or let them go bankrupt and possibly ruin the rest of the economy and already low consumer confidence.

so the fed's have an obligation to "bail" out the lending institutions who many of themselves were part of the preditory lending, but they do not have the obligation to "bail" out any of the victims of the preditory lending.

 

[mcsoul 10+ year member]

so the fed's have an obligation to "bail" out the lending institutions who many of themselves were part of the preditory lending, but they do not have the obligation to "bail" out any of the victims of the preditory lending.

Congress told the lenders to make money available to people Congress thought were victims of predatory lending. They carted the evil bankers before blue ribbon commissions and basically told them to make all these risky loans.

Now when it all goes south they act shocked and cart in the evil lenders again to blame them.

 

[Flipx99 5,000+ posts]

Don't forget the Cable show "Flip that house".

Believe it or not, I cited that show as a reason for the problems in the housing industry. Media and televison give regular people the impression that they, too, can make a fortune in real estate...just another driver of higher prices. My professor disagreed with me, saying that flippers only represented a fraction of the market. Even if that was true, their behavior and ideas were contagious.