• It has come to our attention that some users may have been "banned" when they tried to change their passwords after the site was hacked due to a glitch in the old vBulletin software. This would have occurred around the end of February and does not apply after the site was converted to Xenforo. If you believe you were affected by this, please contact a staff member or use the Contact us link at the bottom of any forum page.

FED introduces 0% to 0.25% interest rates


kellsangel

Member
Joined
Oct 24, 2008
Messages
79
This is bound to put more downward pressure on the Euro ECB rate. as it must have an effect on exchange rates particularly if there is any delay in a further ECB cut in rates.

Might we see rates fall a further 1%?

It would certainly make serviceing debt more affordable for those whose incomes are being maintained.

It is only a matter of time before inflation is let loose particularly as the Americans are taking measures to keep rates low over the longer term.
 

meriwether2

Active member
Joined
Nov 15, 2008
Messages
140
They are cutting rates, and printing money.
I assume they believe the looming deflation will cancel out the inflationary effects of this move, and/ or are trying to reverse deflation.

I assume this will lead to a weakened currency. More dollars means they are less valuable.

What are the consequences of this?
 

Partizan

Well-known member
Joined
Jan 5, 2005
Messages
7,830
They are cutting rates, and printing money.
I assume they believe the looming deflation will cancel out the inflationary effects of this move, and/ or are trying to reverse deflation.

I assume this will lead to a weakened currency. More dollars means they are less valuable.

What are the consequences of this?
A weakened dollar, i.e. €1 = $4 soon enough. IN order to cover the debts the Fed will have to print more dollars leading to inflation and stimulate the economy. The US is now effectively bankrupt and Obama will hammer the final nail in its coffin. The US will effectively try to print its way out of recession.

Its Zimbabwe style economics.
 

kellsangel

Member
Joined
Oct 24, 2008
Messages
79
The savers will be asked to help out with the debts

through the medium of inflation.

The Europeans will not tolerate inflation in the way that the Americans have signaled an acceptance of it with their long term position on interest rates.
 

wysiwyg

Well-known member
Joined
Jun 29, 2008
Messages
366
my mortgage seems to be dropping like a stone.. got a really nice letter from Halifax yesterday... it's now below what we originally started paying including the discounted starter rate.. with more interest rate falls to come next year..

I know what a tracker mortgage is.. a great thing
 

wysiwyg

Well-known member
Joined
Jun 29, 2008
Messages
366
I wonder could I go to an American bank this week and borrow enough money to pay off my mortgage... then pay off the US bank loan over 10 years, allowing the fall in the dollar against the Euro to ease the repayments ?

Global finance.. why can't we all be part of it
 

JCSkinner

Well-known member
Joined
Feb 17, 2005
Messages
1,250
Website
skinflicks.blogspot.com
I wonder could I go to an American bank this week and borrow enough money to pay off my mortgage... then pay off the US bank loan over 10 years, allowing the fall in the dollar against the Euro to ease the repayments ?

Global finance.. why can't we all be part of it
Good question. Let us know how you get on.
 

meriwether2

Active member
Joined
Nov 15, 2008
Messages
140
I wonder could I go to an American bank this week and borrow enough money to pay off my mortgage... then pay off the US bank loan over 10 years, allowing the fall in the dollar against the Euro to ease the repayments ?

Global finance.. why can't we all be part of it
I'm sure US banks are falling over themselves to mortgage or lend to fella from Tipperary.....its the new growth market.

2 hopes - and Bob is dead.
 

wysiwyg

Well-known member
Joined
Jun 29, 2008
Messages
366
Damn.. I looked up an American bank mortgage calculator.. and they were looking for 8.5% interest .. what's the deal with that ?
 

wysiwyg

Well-known member
Joined
Jun 29, 2008
Messages
366
I'm sure US banks are falling over themselves to mortgage or lend to fella from Tipperary.....its the new growth market.

2 hopes - and Bob is dead.

But I'm good for the money !!

What are you trying to say ????
 

wysiwyg

Well-known member
Joined
Jun 29, 2008
Messages
366
hold up.. I've one offering me 5.5%.. we could be in business yet

nah.. 'tis still cheaper to get a mortgage from a bank here.. how do teh Yanks pay their mortgages at all..

Oh wait
 

brio910

Member
Joined
Nov 27, 2007
Messages
13
Interesting post and an important topic.

IMHO the failure of the ECB to lower rates quickly enough is causing real damage to the economic crisis at hand.

The low interest rates of the Euro not only caused a building boom in Ireland, the current failure of the ECB to lower interest rates quickly enough now helps sustain the bust much longer.

Saw this from a resident analyst on paddypower today - gives some food for thought for the eurofans.

Implications Of The Fed Cut For The Muppet Show In The ECB

The Fed’s bold market friendly move last night again demonstrates that the ECB is miles behind the curve and events. They have been far too slow to lower rates and have been hamstrung by their inept rate hike in July. This move should ignite some hope that they may see the light at their January meeting despite recent rhetoric of a lunatic pause in the rate cutting cycle. They have said they need to wait a while to see the effects of past cuts ebb through. Trouble is lads, we don’t have this luxury.
With the Euro zooming north against the Dollar and Sterling at a disorderly rate it will impart a further disinflationary pressure on the Eurozone and hurt exports (Germany in particular).
The ECB’s own staff economic forecasts for 2009 and 2010, although only two weeks old, now look wildly out of date and overly optimistic.
Crossing the Rubicon towards quantitative easing will be far harder to achieve for the ECB than the Federal Reserve because of the very different national philosophical approaches the various member states have.
Bottom line is that the ECB have shown themselves to be inflexible and utterly unable to act proactively to the unfolding abyss into which we are now starring. Their rear view mirror school of central banking with no contingency planning has met its Waterloo.
Trader Blog | Stocks Soar As The Fed Makes Money Free | Spread Betting Blog

Do you think euro interest rates should have been lowered more and quicker?
 

kellsangel

Member
Joined
Oct 24, 2008
Messages
79
Regardless of the ECB rate we will have twlight zone interest rates

Our banks can only borrow so much money from the ECB and will have to pay high deposit rates several percent over the ECB deposit rate to attract deposits.

If the Government continues to borrow the Government guarantee will be worth less and less.

Our banks while they continue to be zombies will seek increased rates on their loans to make profit to fill the holes in their balance sheets.

Hence we will have dear credit while our competitors will have cheap credit. until we get new players in our banking market.

The high rates that will be charged by the zombies will attract them as soon as the bottom of the trough has been reached in the property market.
 

expat girl

Active member
Joined
May 26, 2007
Messages
141
with regard to the "quantitative easing" malarkey (the Fed printing money), is it possible that this might actually work?? I know printing money has been associated with such glorious examples of economic knowhow such as Weimar Germany, Zimbabwe, etc... but, if the money the Fed produces is ONLY used to "buy up" essentially worthless assets and cancel bad debts, is it possible that new money meets black hole, closes black hole, problem of bad debts miraculously disappears, new money also disappears?? presumably the tricky bit with this one is to know when to stop?

Yours slightly cluelessly!
 

Demotruk

Well-known member
Joined
Jan 23, 2008
Messages
412
with regard to the "quantitative easing" malarkey (the Fed printing money), is it possible that this might actually work?? I know printing money has been associated with such glorious examples of economic knowhow such as Weimar Germany, Zimbabwe, etc... but, if the money the Fed produces is ONLY used to "buy up" essentially worthless assets and cancel bad debts, is it possible that new money meets black hole, closes black hole, problem of bad debts miraculously disappears, new money also disappears?? presumably the tricky bit with this one is to know when to stop?

Yours slightly cluelessly!
Exactly how is the money meeting a black hole? Surely the only way for that to happen is for it to either permanently leave the economy or be destroyed?

Printing in order to pay off bad debt still leaves the money inside the economy, surely?
 

jimmyfour

Active member
Joined
Oct 10, 2007
Messages
195
Do you think euro interest rates should have been lowered more and quicker?

The ECB's objective is quite different to the US Fed, even though english-language media would have you convinced they are directly comparable.

The primary purpose of the ECB is price stability and as such protecting the value of the currency.

As you can see, the US Fed and BoE do not fear currency devaluations and price instability, as is happening right now as a result of their policies.
 

west'sawake

Well-known member
Joined
Sep 15, 2008
Messages
3,650
A panic measure that will cause even more damage to confidence because it is seen as a panic measure.


The liquidity problem has nothing to do with interest rates, money is just not available
anymore. The global money markets have dried up, because the penny has dropped, that the money supply, for way too long, exponentially exceeded the value of assets, (grossly overvalued in the first place), and the value of global goods and services.
(Which is contrary to the basic laws of monetary economics)

Money then is in now hiding, no one wants to lend and banks are desperate for deposits, offering high rates. The roots of this farcial paradox lie with Alan Greenspan who for years had money way too cheap and allowed the decetpive and complex tiem bomb of sub prime lending and financial derivatives.

Also, did anyone think for a minute about the fact that despoit rates are still much higher than Fed or the Euro central bank rates? In effect the the central banks of Europe and the U.S. have lost control. They can slash all they want, it's not goign to make much of a difference. Also at this stage the banks cannot pass it on, if they do they'll definitely go bust, not alone do they need recapitalisation but they need to hold their depositors funds.


Thus on the one had the Fed and the Euro bank lower rates, while the Govts guarantee deposits a/cs with high rates?

I think the whole system is going to collapse. Deposits cannot really be guaranteed, if money no longer has any price, then they will print too much of it.
 

rhonda15

Well-known member
Joined
Apr 22, 2008
Messages
3,544
Peter Schiff On Kudlow & Co: Target Rate To Record Low

Peter Schiff On Kudlow & Co: Target Rate To Record Low

12/16/2008 Part 1/4 Peter Schiff On Kudlow & Co: Target Rate To Record Low " You want to know what the US will do in the future, look up Argentina's past"

[ame=http://ie.youtube.com/watch?v=tw_Y3bQPm3g]YouTube - 12/16/2008 Part 1/4 Peter Schiff On Kudlow & Co: Target Rate To Record Low[/ame]

[ame=http://ie.youtube.com/watch?v=jJOpYsvbAXs]YouTube - 12/16/2008 Part 2/4 Peter Schiff On Kudlow & Co: Target Rate Cut To New Low[/ame]

[ame=http://ie.youtube.com/watch?v=WmXHeAM4Mg4]YouTube - 12/16/2008 Part 3/4 Peter Schiff On Kudlow & Co: FED & The Markets[/ame]

[ame=http://ie.youtube.com/watch?v=08teBvWOBEM]YouTube - 12/16/2008 Part 4/4 Peter Schiff On Kudlow & Co: FED & The Markets[/ame]


This guy (Schiff) has been right so far!
 
Top