Tuesday, August 08, 2006

Tuesday Economic Roundtable

From the Federal Reserve:

FOMC statement

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.

Economic growth has moderated from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices.

Readings on core inflation have been elevated in recent months, and the high levels of resource utilization and of the prices of energy and other commodities have the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting contained inflation expectations and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.

Nonetheless, the Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Jack Guynn; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Kevin M. Warsh; and Janet L. Yellen. Voting against was Jeffrey M. Lacker, who preferred an increase of 25 basis points in the federal funds rate target at this meeting.


The Federal Open Market Committee (FOMC) meets this afternoon, the policy statement is expected at 2:15pm EST.

From Bloomberg:

Fed Officials Gather as Growth, Prices Send Conflicting Signals

Federal Reserve policy makers walk into their meeting today facing conflicting economic risks as they consider pausing after 17 straight interest-rate increases.

Chairman Ben S. Bernanke and his colleagues on the Federal Open Market Committee must choose between extending the two-year tightening and exacerbating an economic slowdown or risk falling behind as prices climb.

Economists at most of Wall Street's biggest firms expect the Fed to keep its rate at 5.25 percent, while Goldman Sachs Group Inc. and Mizuho Securities USA Inc. are among a minority anticipating a quarter-point increase. In the event policy makers do take a breather, the statement after the meeting will likely flag they still have more work in front of them.

``Inflation is above where they would like it to be and accelerating,'' said Stephen Stanley, chief economist at RBS Greenwich Capital Markets, in Greenwich, Connecticut. ``There will be a very clear signal in the statement that a pause does not mean they are done and risks on inflation remain on the upside.''
...
The Fed may take out some insurance against the prospect of a wrong forecast and burnish Bernanke's inflation-fighting credentials by opting for tighter credit today, said Glenn Haberbush, an economist at Mizuho. The firm is one of the five primary dealers predicting a surprise increase.

``Bernanke is very much viewed as having a dovish policy inclination,'' said Haberbush, who is based in New York. ``If he goes to 5.5 percent, it almost makes for a better scenario. It will allow Bernanke to shed some of those dovish feathers and move to a more moderate policy inclination.''

65 Comments:

Blogger jayb said...

This article is from my citibank account online website. Thought it interesting since it's the first time I've read someone mentioning "stagflation."


Stagflation is returning to haunt the economy


HEMPSTEAD, N.Y. (MarketWatch) -- The rising cost of money may be slowing the economy, but the amount of liquidity that remains continues to fuel inflation. This means that stagflation is making a comeback.

First coined by the late British Chancellor of the Exchequer, Iain Macleod, stagflation refers to the vicious combination of rising prices and falling output -- which the U.S. economy is experiencing now.

The 12-month change in consumer prices has jumped from less that 1% four years ago to 4.3% today, while economic growth slowed sharply in the second quarter and appears to be receding even further during the third.

Those who look at interest rates alone think they know why. Monetary policy by this measure has tightened a lot since the middle of 2004. That's when the Federal Reserve began raising its key overnight lending rate, the federal funds rate, from 1% , a 45-year low, to the level where it rests today. See related story.

There is little doubt that the higher level of interest rates is taking its toll. Employment growth in the past four months is 34% below the average of the previous 12 while the jobless rate last month jumped 0.2 points to a five-month high. The number of jobs in residential construction is down by 37,000 in the past five months compared with a gain of 200,000 in 2005, while financial real estate employment is off by 3,000.

Housing in general is suffering through its worst decline since the bad old days of Regulation Q. That's when the banks were prohibited from paying more than a certain interest rate for deposits. Once market rates exceeded this level, savers withdrew their funds from the banks and put them into higher-yielding Treasuries, instead. As their deposits shrank, the banks lent less and housing, which depends mainly on borrowed money, would fall.

At the same time, however, inflation is clearly picking up. While there may be many visible reasons for prices to rise -- soaring energy prices, rising labor costs and a falling dollar are just three that are extant today -- in the final analysis inflation is always a monetary phenomenon. In other words, no matter what happens to individual prices, the general price level can't rise unless there is excess liquidity present in the financial system. See my column of July 25.

And guess what? Rather than shrinking, as the plethora of interest rate hikes would suggest, the money supply's growth rate has actually accelerated during the past two years. The Fed's M2 measure is 5% larger today than it was 12 months ago. Two years ago, when monetary policy was supposedly at its loosest, M2 was up little more than 3%.

This may seem odd until you remember that the price of money, like anything else, reflects both supply and demand. If demand is very strong, the Fed can engineer an increase in the price of money (interest rates) and still create lots of money at the same time. This surfeit of liquidity is what's allowing inflation to accelerate even as higher interest rates are slowing the economy down.

Stagflation did not come from outer space. It's a product of monetary policy -- just like it was in the 1970s.

8/08/2006 06:58:00 AM  
Anonymous Anonymous said...

Countrywide Credit largest mortgage lenders calls for "HARD LANDING" housing.

BOOOOOOOOYAAAAAAAA

Bob

8/08/2006 07:12:00 AM  
Blogger RentinginNJ said...

I’m betting on a pause today accompanied by language suggesting that it’s only a pause to allow more time to digest the impact of previous rate hikes. The statement will suggest that the Fed is still concerned about inflation and will tighten policy if necessary to maintain price stability. However, the economy seems to be slowing, which should act to contain inflation.

Do I agree with this approach? No, but it’s what I think is going to happen.

Question. What happens with the bond market in the event of a pause? Will bond traders see a bigger inflation risk (and sell) or a bigger recession risk (and buy)?

8/08/2006 07:15:00 AM  
Anonymous Anth said...

Market is already rallying with expectations of a pause, so the experts are betting on it.

I've seen a lot of language around Bernanke "having some balls" would raise.

Personally, I agree with the "its only one pause, he can raise next time" notion, but I don't think he'll pause. I think there are a few more rungs on the ladder before the fed rate normalizes.

8/08/2006 07:22:00 AM  
Blogger grim said...

The market seems too complacent, too sure the Fed is going to pause. A contrarian indicator? I'm really not sure. On the bright side, we'll have our answer in 6 hours.

grim

8/08/2006 07:26:00 AM  
Blogger grim said...

The last piece of data before the FOMC meeting was released at 8:30 this morning.

U.S. Q2 productivity up 1.1%, unit labor costs up 4.2%

Productivity of the U.S. non-farm business sector rose at a 1.1% annual rate in the second quarter, the Labor Department estimated Tuesday. Unit labor costs - a key gauge of inflationary pressures - rose 4.2% annualized - the most since the fourth quarter of 2004. Both measures were above expectations. Economists were expecting productivity to rise 0.9% in the second quarter. They forecast unit labor costs to rise 3.5%. In the first quarter, productivity was revised to a 4.3% increase from 3.7% previously. First quarter unit labor costs rose 2.5% rather than the 1.6% increase originally reported. On a year-on-year basis, productivity is up 2.4%. Unit labor costs were up 3.2% year-on-year, the fastest pace since the fourth quarter of 2000.

8/08/2006 07:46:00 AM  
Anonymous Anonymous said...

Good day all,

I hope the fed doesn't pause. I don't think they will. I don't think Ben is that yellow, I think he got so beat up about the "helicopter ben speech" that his crediability is on the line here. The dollar and inflation is the most important thing right now. because with out it, there goes the foreigners propping us up.

Its better to "risk" a recession and have a bursting of the housing bubble than have the dollar fall to dangerous lows. In my opinion...

Come on, what is a recession these days anyway? Ohh...joe six pack only shoves one big mac instead of two into his fat face.

If the fed does pause, at least we now know what kind of fed we have to deal with over the years.

SAS

PS-Obesity is an epidemic in this country killing thousands a day, forget the god damn bird flu. Are you a bird? Do you have the same cell receptors as a bird? No, you do not, so don't worry about it. Instead, get off the debt wagon and on the treadmill.

8/08/2006 10:08:00 AM  
Anonymous Anonymous said...

When are people going to figure out that inflation has nothing to do with what the Fed does? Inflation is completely a product of the govt increasing the money supply faster than GDP is increasing. Nothing more, nothing less. What the Fed is doing is raising rates so we can keep finding idiots to continue to finance our debt. They are only related inasmuch at the govt has incentive to generate inflation as they are a huge net debtor.

8/08/2006 10:10:00 AM  
Anonymous Anonymous said...

SAS,

Look at the lunch crowd at the fat food joints.

BOOOOOOOOOOYAAAAAAAAA

Bob

8/08/2006 10:15:00 AM  
Blogger chicagofinance said...

The Fed's mandate is price stability, not appeasing the masses.

8/08/2006 10:22:00 AM  
Anonymous Anonymous said...

Hers's one for ya bubbleheads.

http://patrick.net/wp/

BABABABA


BOOOOOOOOOOOYAAAAAAAAAA

Bob

8/08/2006 10:23:00 AM  
Anonymous Anonymous said...

anon 8/08/2006 11:10:02 AM,

I understand what you are saying?? I think I do anyways. So, lets level the playing field a little here, and elaborate a little so I get completley what you are saying.

The govt gets money by three ways:
tax, borrow, or print.

The federal reserve is neither federal nor do they have any reserves. They are a private banking cartel. Matter of fact, you will find the federal reserve in the yellow pages, right next to Fed Ex.

The feds control the printing presses (i know there will be debate about this one, but lets just assume its true because in my mind its true).

ok, with these points in mind, please continue. I think you brought up a valid point, but you need to tease it more and bring it to light.

;)

SAS

8/08/2006 10:24:00 AM  
Blogger chaoticchild said...

Instead, get off the debt wagon and on the treadmill.

LOL

CC

8/08/2006 10:28:00 AM  
Anonymous Anonymous said...

Anyone else think its a coincidence that earlier this year the govt announced that it was going to stop publishing M3 (ie, money supply) numbers? I think they're afraid their farce is being figured out....

8/08/2006 10:39:00 AM  
Anonymous Anonymous said...

Anonymous said...

What the Fed is doing is raising rates so we can keep finding idiots to continue to finance our debt.

Not true. If this was the case why do we have an inverted yield curve??

The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight. It is simply the overnight bank to bank rate. Look to the 10 year not the FFR to see who is financing our debt. If you want to see what the market is saying about inflation look to the floors of the Chi Bot. It is very confusing right now. Are they telling us we are heading into a recession (long end yielding less than short end) or is there something more at play as compared to simple fundamentals, i.e. deals with China and Opec to buy excessively to finance us to attempt to keep this whole thing from cracking. Just a thought!!!!

BC Bob

8/08/2006 10:41:00 AM  
Anonymous Anonymous said...

Anyone else think its a coincidence that earlier this year the govt announced that it was going to stop publishing M3 (ie, money supply) numbers? I think they're afraid their farce is being figured out....


I am right there with you. I have felt the same all along.

BC Bob

8/08/2006 10:48:00 AM  
Anonymous Anonymous said...

"Not true. If this was the case why do we have an inverted yield curve??"

Because the only rate that the Fed controls is the short term rate. A quick raise there will invert the curve, but it will ultimately work its way down. At the end of the day, treasuries are trading much cheaper than they were a year ago, and it is almost entirely because of 18 straight tightenings.

8/08/2006 10:49:00 AM  
Anonymous Anonymous said...

BC Bob,

I think that anon fellow was on to something, but I think he may have chose the wrong words to explain himself, which may lead one to a different interpretation. Perhaps he will clarify later?

SAS

8/08/2006 10:50:00 AM  
Anonymous Anonymous said...

Oh - one more thing - one of the reasons they gave to eliminate M3 is to "save money". LOL - seriously - when was the last time you heard a govt agency willingly cutting to save money?

FlatSix

8/08/2006 10:58:00 AM  
Anonymous Anonymous said...

At the end of the day, treasuries are trading much cheaper than they were a year ago, and it is almost entirely because of 18 straight tightenings.

8/08/2006 11:49:32 AM

This may play a role but not necessarily the case. If this was true why are inverted yield curves rare???

The fed is saying one thing, the long end something else. If the long end agreed with the fed these rates would be higher. An investor in the long end needs to be compensated for undertaking the additional risk (time). It is apparent the long end does not see this risk. Again, there is a possibility something else is causing this rather than normal fundamentals

BC Bob

8/08/2006 11:36:00 AM  
Blogger grim said...

Some light reading for this evening:

FOMC Communications and the Predictability of Near-Term Policy Decisions

I guess I should warn you, if I turn out to be particularly clear, you’ve probably misunderstood what I’ve said.
-Alan Greenspan

grim

8/08/2006 12:15:00 PM  
Anonymous Anonymous said...

"This may play a role but not necessarily the case. If this was true why are inverted yield curves rare???"

Rare? The thing has been inverted for years at a time, including right now (as the Fed is raising rates and lifting up the short end).

8/08/2006 12:20:00 PM  
Blogger jayb said...

"The federal reserve is neither federal nor do they have any reserves. They are a private banking cartel."

Doesn't the Fed produce tens of billions in excess money each year that it turns over to the Treasury? And if they are private, who owns them?

I'm still confused about this inverted curve. It's all speculation isn't it? It just means investors are speculating that the long term will be worse than the short term (recession approaching). Am I right? I have basic micro and macro education so bear with me.

And if there is a recession, so what? Isn't the history of our economy nothing but cyclical? We just deal with them as far as I know. Monetary and fiscal policy exist to try to smoothen out those cycles as best they can. Am I completely wrong here? Misinformation and ignorance are terrible things and I'd like to correct them if I am misinformed or ignorant.

8/08/2006 12:25:00 PM  
Blogger jayb said...

I got this from the NJMLS website. Interesting info I didn't know since I'm only 24.


From The Real Estate Executive Summary June 2006 Issue.

The average rates for 30-year fixed mortgages continued to creep, with rates at 6.83 percent during the last week of June, according to Bankrate.com’s national survey of large lenders. At the same time last year, the 30-year fixed rate was 5.66 percent. In terms of monthly payments, at today’s rate, the monthly payment on a $150,000 30-year fixed rate mortgage would be $114 higher than at the same time last year. Adjustables kept pace, with the average one-year ARM at 6.00 percent and the average 5/1 ARM at 6.49. Rates are forecast to go a bit higher, as the Fed is likely to increase short-term rates again in August.

For those who have been in the real estate business for only a few years, today’s interest rates may seem a bit scary. But putting today’s rates into historic perspective may help a bit. This June, the 30-year fixed rate hit 6.83 percent. But in only four of the past thirty-four years were rates lower: 6.79 in 1998; 5.92 in 2003; and 5.71 in both 2004 and 2005. In the previous two decades, the average rate was 9.8 percent (‘90s) and 12.62 percent (‘80s). In the years 1973 through 1980, the average rate was 9.43. In the ten-year period 1973 through 1982, the 30-year fixed rate climbed from 7.44 to 17.49 and remained in double digits from 1979 through 1989 (with the exception of 1987, when the rates dropped to 9.2). So for those who are wondering how in the world the real estate market will ever survive a 7 percent mortgage rate, just talk to some of the “old timers” who were around when times weren’t nearly as good as they are today. Americans have an insatiable appetite for home ownership, and with the growing “Boomer” marketplace, a few rate hikes aren’t going to keep ‘em down!

8/08/2006 12:40:00 PM  
Anonymous Anonymous said...

Read ya bubbleheads. This tsunami is coming your way.

http://anotherfuckedborrower.
blogspot.com/

8/08/2006 12:53:00 PM  
Anonymous Anonymous said...

here's another one.

I know real estate is the best investment 'Always".

http://themessthatgreenspanmade.
blogspot.com/2006/08/
please-sir-may-i-
have-another.html

8/08/2006 12:54:00 PM  
Blogger grim said...

Ahh.. Sweet anticipation.. 2 minutes to go..

jb

8/08/2006 01:18:00 PM  
Blogger grim said...

The Fed pauses!

8/08/2006 01:20:00 PM  
Blogger RentinginNJ said...

…And the Fed checks.
Economic growth has moderated from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices.

8/08/2006 01:20:00 PM  
Anonymous UnRealtor said...

Look how this home builder stock plummeted after August 2005:

http://tinyurl.com/l5w8r

(link to chart)

8/08/2006 01:21:00 PM  
Blogger RentinginNJ said...

Voting against was Jeffrey M. Lacker, who preferred an increase of 25 basis points in the federal funds rate target at this meeting.

How common is dissention?

8/08/2006 01:22:00 PM  
Blogger Richard said...

the fed will hike another 25bps with language almost assuring a pause next meeting. bank on it.

8/08/2006 01:24:00 PM  
Blogger patient homebuyer said...

i guess i dont have to rush and buy now that rates are holding for a few

it is only rising rates keeping me out of the market it has nothing to do with the astron0mical prices

8/08/2006 01:25:00 PM  
Blogger Richard said...

my post was sarcastic, as in the 'bank on it'. the fed are a bunch of panzies and all the yammering of helicopter ben is just talk.

8/08/2006 01:27:00 PM  
Anonymous Anonymous said...

"However, inflation pressures seem likely to moderate over time, reflecting contained inflation expectations and the cumulative effects of monetary policy actions and other factors restraining aggregate demand."

My *ss. The cumulative effects of monetary policies including printing money like confetti?

Pat

8/08/2006 01:29:00 PM  
Blogger grim said...

.....and the indexes go.. RED?

What?

grim

8/08/2006 01:30:00 PM  
Blogger chicagofinance said...

focus on this....

"The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information."

they ain't done folks

8/08/2006 01:33:00 PM  
Anonymous Anonymous said...

and the market tanks.

what crap.

inflation is moderating?

what planet are these people on?

8/08/2006 01:34:00 PM  
Blogger grim said...

For those who aren't Fed watchers, there are 3 more FOMC meetings scheduled for this year:

September 20th
October 24-25th
December 12th

8/08/2006 01:36:00 PM  
Blogger RentinginNJ said...

One of 2 things:
1)The market has been so singularly focused on the “Fed must pause” for so long, that when the Fed finally did pause the market actually woke up to the fact that we are looking at a recession in the near future.
Or;
2)The pause language wasn’t strong enough. The market really wanted “were done” not “were just taking August off”.

8/08/2006 01:36:00 PM  
Blogger Richard said...

too much money sloshing around the system that isn't controlled by the interest rate. until we get some credit contraction don't expect inflation expectations to moderate.

8/08/2006 01:36:00 PM  
Blogger chicagofinance said...

If the Fed is unduly influenced by politics [unknown, but Ben looks yellow], scratch off that October meeting for a hike.

8/08/2006 01:37:00 PM  
Blogger Richard said...

interesting time for a pause considering there's still worrisome indicators coming out like today's sluggish productivity growth and high labor cost increases. could it be ben and co. throwing bush and the midterm elections a bone? hack indeed.

8/08/2006 01:38:00 PM  
Blogger chicagofinance said...

grim said...
.....and the indexes go.. RED?
What?
grim
8/08/2006 02:30:55 PM


extention of Friday's selling

Crack addicted traders already price in a full-stop, and they ain't going to get that confirmation yet. Wait until 3:30PM to really assess the reaction.

8/08/2006 01:40:00 PM  
Blogger NJGal said...

So, who's running out to buy that house this weekend now that the Fed has paused? Realtors just lost their "Interest rates are rising! Now's the time to buy!" line.

Or will it change to "Rates are stable and will probably drop! Now's the time to buy!"?

8/08/2006 02:03:00 PM  
Blogger grim said...

From Bloomberg:

Richmond Fed's Lacker Votes Against Leaving Rate Unchanged

Federal Reserve Bank of Richmond President Jeffrey Lacker, who has warned of complacency in fighting inflation, disagreed with the Fed's decision today to forgo an interest-rate increase.

The rebellion is the first on the Federal Open Market Committee since Ben S. Bernanke became chairman in February and the only one since Hurricane Katrina came ashore last August, displacing millions and killing more than 1,800 people. He argued for a quarter-point rate increase.

Lacker, 50, who has led the Richmond Fed for two years, may try to persuade the central bank to resume lifting rates in September, with inflation exceeding the fed's comfort zone. As research director of the Richmond Fed, he was an advisor to Al Broaddus, who cast six dissenting votes in the mid-1990s in favor of stronger Fed action to quash inflation.

``The Richmond Fed has historically been for strong money,'' said Mark Vitner, a senior economist a Wachovia Corp. in Charlotte, North Carolina. ``This adds hawkishness to the pause. This increases the odds of a September move, though only modestly so.''

8/08/2006 02:19:00 PM  
Anonymous Anonymous said...

I cut and pasted some quotes from MSNBCs blog. What a bunch of morons.


"Leaving the rates alone is long overdue. It's time to realize the true cause of the rise in consumer prices is all about energy. This needs to be separated from any evaluation of how much of an effect inflation is having on the economy. Sometimes it seems as if the folks in the big chairs have no idea what we middle class folks have to deal with. Rising interest rates will kill the economy not to mention rob people trying to sell their homes any time soon. Economics is a game any way you look at it."

Here's another smart one.

This government and its' departments are so out of touch with reality , that it is a shame. Every time Bernanke raises rates, he costs people their homes. But yet, the "raising of rates" will ward off inflation is as credible as that we are winning in Iraq. Pry it out of your backside and do something for the average American for a change!

8/08/2006 02:22:00 PM  
Anonymous Anonymous said...

"Leaving the rates alone is long overdue. It's time to realize the true cause of the rise in consumer prices is all about energy. This needs to be separated from any evaluation of how much of an effect inflation is having on the economy. Sometimes it seems as if the folks in the big chairs have no idea what we middle class folks have to deal with. Rising interest rates will kill the economy not to mention rob people trying to sell their homes any time soon. Economics is a game any way you look at it."

Of course - the goal of any central bank is to prop up housing prices should someone want to sell their home..... *sigh*

Chaka Chong

8/08/2006 02:32:00 PM  
Anonymous Anonymous said...

Bonds will rally, the dollar will fall. Bill Gross expects bonds to rally all the way to 4.2-4.3%. Given that the dollar will fall off a cliff now, a Bond rally will definitely be needed in order to provide a status quo to the Chinese, Saudis, Russians etc. and persuade them to hold on to their treasuries, and to add some more. This will be the new game being played over the next year.
It will reduce the FRM back to under 6%, but doubt that it will incentivize RE any more. For that, the Fed would have to cut all the way back to 3% to enable lenders to provide those 1% teaser ARMs again.
However, this may entice those buyers who have been sitting on cash for their downpayments since 2004 or so. In Spring 2007 with housing prices about 15% off peak, and their cash having accumulated 10-12% over the last 2 years, and the 30yr FRM at about 5.75%, these buyers may get a cumulative approx 25% off from peak 2005 housing costs.
If this happens, it might put a floor under prices. However, no one can accurately predict what would happen if there is a surge in inventory due to ARM resetting foreclosures.

8/08/2006 02:49:00 PM  
Blogger jayb said...

NJGal said...
So, who's running out to buy that house this weekend now that the Fed has paused? Realtors just lost their "Interest rates are rising! Now's the time to buy!" line.

Or will it change to "Rates are stable and will probably drop! Now's the time to buy!"?

8/08/2006 03:03:23 PM

Are you serious? If you are, really need to go out and shop for a good agent.

8/08/2006 02:54:00 PM  
Blogger NJGal said...

Jayb, you haven't been around here very long, have you? If you had been you would know that I am clearly not serious.

8/08/2006 03:04:00 PM  
Blogger Math, like gravity, is law. said...

Anon 3:49pm said "However, this may entice those buyers who have been sitting on cash for their downpayments since 2004 or so. In Spring 2007 with housing prices about 15% off peak, and their cash having accumulated 10-12% over the last 2 years, and the 30yr FRM at about 5.75%, these buyers may get a cumulative approx 25% off from peak 2005 housing costs."


Doubt it. Ponzi scheme is over.

8/08/2006 03:32:00 PM  
Anonymous Anonymous said...

Stagflation!!! I called it like 2 months ago, and certain people here said I was nuts! I told you so...buhaaaaaaaaaa

JWR

8/08/2006 04:58:00 PM  
Anonymous Anonymous said...

I keep forgetting ...

Are "we" the bubbleheads,or are "they"?

8/08/2006 06:10:00 PM  
Blogger grim said...

I'm not really sure, it sounds a bit derogatory, so I hope it's not us..

8/08/2006 06:11:00 PM  
Anonymous Anonymous said...

Looks like Ben may be yellow afterall.

But if I was a betting man (and I am, always hit on a soft 17). I would say that the other bankers influenced Ben too much.

Although there language hinted at more hikes down the pipeline. I don't understand the pause. Maybe they know something we don't?

Either way, I disagree with the pause, and I really hope to see a hike come next meeting. If we see one more pause, this Fed really is yellow. And all you guys better plan on working to the day you drop, because your salary isn't going to be worth much.

But, hey...we always have WalMart to increase your standard of living and really make that dollar stretch.

;)

SAS

8/08/2006 06:28:00 PM  
Anonymous Anonymous said...

btw-
the fed is quasi govt.

They are a private banking cartel.

Kinda like a FredMac (i know, bad example, but you get the idea).

SAS

8/08/2006 06:30:00 PM  
Blogger Math, like gravity, is law. said...

Anonymous said...
btw-
the fed is quasi govt.

They are a private banking cartel.

Kinda like a FredMac (i know, bad example, but you get the idea).

SAS

8/08/2006 07:30:16 PM

Good example.

8/08/2006 06:50:00 PM  
Blogger RichInNorthNJ said...

I think "we" are the bubbleheads since "they" don't believe there is a housing bubble.

Whateva!

8/08/2006 06:52:00 PM  
Anonymous Anonymous said...

I know the Fed sees their role as primarily inflation fighters, but could part of the decision on this round to hold off on a rate increase thinking that they might start a domino effect and "crash" a high number of ARM holders, precipitating a more widespread crisis not just in RE but in the banking community/mortgage holders as well...?

8/08/2006 07:49:00 PM  
Anonymous Anonymous said...

anon /08/2006 08:49:48 PM,

Valid point, but my only rebuttal to that is on a whole, not many Americans have ARM loans, just the recent idiots. Yes there are alot of ARM people, but on a whole, most people do not. So, I don't really think ARMs bankrupts were on the Feds minds.

I could be wrong, but hey...I am not helicopter Ben.

;)

SAS

8/08/2006 08:12:00 PM  
Blogger jayb said...

NJGal said...
Jayb, you haven't been around here very long, have you? If you had been you would know that I am clearly not serious.

8/08/2006 04:04:32 PM

The way people on here talk about agents leaves me no reason but to think you're serious.

8/08/2006 08:17:00 PM  
Anonymous Anonymous said...

But investors may want to steer clear of regional banks with major exposure to home loans, since more consumers will likely default on their mortgages if the economy goes sour. "That concerns us," Sorensen says.

from cnn business on stocks that will ride out the stay in interest rates.


http://tinyurl.com/qyrqd

8/08/2006 09:15:00 PM  
Blogger RentinginNJ said...

So, I don't really think ARMs bankrupts were on the Feds minds.

Don’t know for sure, buy ARMs could have factored into the decision. The “gradually cooling” (yea right) housing market was specifically cited as a contributing reason for the pause. Why bother mentioning it at all unless you are concerned about the relationship between the housing market and interest rates. ARMS are more sensitive to the Fed funds rate. While the majority of homeowners are probably not in ARM trouble, don’t forget, housing prices are set at the margins. If 5% of homeowners get into serious ARM trouble, the shockwaves would ripple through the entire housing sector.

It looks to me like the Fed had a choice between defending the dollar and defending the housing market and they chose the latter

8/08/2006 09:29:00 PM  
Anonymous Anonymous said...

yes RentinginNJ, very well said. Your opinion is noted.

Like I always tell people who do things on margin:

"if it goes up by 5%...hey your really smart......, but if it goes down by 5%....you lost it all."

Remeber, I am saying this with a hint of sarcasm.

; )

SAS

8/08/2006 09:41:00 PM  

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