Wednesday, October 31, 2007

The Sub Prime Fallout Continues...Fed Cuts Interest Rates, again



Continual bailouts, the fall of the U.S. dollar, increased foreclosure rates...when will it end? The U.S. Federal Reserve hopes soon and have lowered interest rates to 4.5 % hoping to spur investment.

From the BBC,
The US Federal Reserve has voted to cut US interest rates from 4.75% to 4.5% to help revive the country's faltering housing and credit markets

The move had been widely expected by traders, who have been relentlessly selling the dollar and buying higher yielding currencies in anticipation.
.....
It follows last month's dramatic rate cut - the Fed's first in four years.
.....
The bold intervention in financial markets was designed to restore confidence in the nation's housing market, which has badly suffered from the repercussions of two years of interest rate rises between 2004 to 2006.
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They have particularly hurt those with poor credit ratings or on low incomes, who had been sold sub-prime home loans when borrowing costs were cheap. (that is exactly what homeowners did..BORROW their homes..and now it's time for the banks to reclaim them. Bad Realtors, bad lenders, bad inept policymakers)

A Congressional committee report said last week that up to two million US families - especially those considered risky lenders - could eventually lose their homes as borrowing cost rises filter through and lenders become more choosy as to who they lend to. ( not the banks, but the people. The banks have been 'bailed out' of their shady 'investments',)

Many analysts had taken the view that more rate cuts would be necessary to relieve the pain of higher borrowing costs on house buyers and consumers, which account for a critical two-thirds of US gross domestic product.
The Fed has been forced to take these cuts, yet the private equity firms and banks who created the 'problem' walks away without repercussions. Awful. Lower interest rates rock, but bailing out the 'sub primes' only continues the problem. Let them eat their losses and everything would change overnight.
Expect Greenspan to be on the press circuit, again with his "I didn't do it" tour, again. Greenspan's involvement is Paramount. His leadership allowed the 'problem' to persist. The racket continues.....

Same Players. Different Scandal.

3 comments:

David Wozney said...

Re: “... the fall of the U.S. dollar, ...

A “Federal Reserve Note” is not a U.S.A. dollar. In 1973, Public Law 93-110 defined the U.S.A. dollar as having the value of 1/42.2222 fine troy ounces of gold.

DetainThis said...

If the FedRev was abolished, like all illegal federal and pseudo-federal entities should be, we wouldn't have to be wringing our hands over all these superficial, duct-tape financial fixes. (This, of course, is where I plug Ron Paul... hehe!)

DetainThis said...

Paul and Kucinich all the way! (RE: Paul's more contentious issues, etc.) There is indeed more which unites us than there is dividing us across superficial ideological lines. I appreciate the comradery shared with intelligent and open-minded folks like you, NS.