Calls for 1-point rate reduction grow louder

[Ichingcarpenter]

Source: cbs

Expectations that Federal Reserve next week will cut rates by a full percentage point, to 2%, gained traction among economists and traders Friday after a bailout of Bear Stearns Cos. revealed more fault lines in the U.S. financial system.

Citigroup economists said they anticipate Fed policy-makers will lower the federal funds rate by a point to 2% next week from the current 3%, "and more cannot be ruled out."

"Aggressive action is needed to stabilize the financial setting," according to economists in a research report led by Citi's Robert DiClemente. The decision by the New York Fed and JPMorgan Chase & Co.

Read more: http://www.marketwatch.com/news/story/likelihood-100-basis-point-rate-cut/story.aspx?guid=%7B0497638B%2D2B29%2D458E%2D84AC%2D152D023C7FAE%7D

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Expect a big market day tomorrow.

Which I will now dub


Manic, March, Market, Meltdown, Monday

[Newsjock]

1. Manic, but no meltdown

Quite the opposite ... the possibility of a full 1-point cut could very well send stocks surging, perhaps by 500 points or more. They will have bought themselves one more day of favorable headlines, but at what cost? Last week's one day of "good news" cost them a mere $200 billion.

[Ichingcarpenter]

3. Has the prime ever been this low?

I need to research that, 2% is a number that doesn't ring any bells

[blayne]

7. Didn't it drop below 2% in the aftermath of 9/11

http://www.moneycafe.com/library/fedfunds.htm

[Ichingcarpenter]

9. My data source shows that it was around 4.% at that time

from my link, can you explain the discrepancies
between our two data sources?

[blayne]

11. I believe your link shows "prime rates"

The prime rate is "the base rate on corporate loans posted by at least 75% of the nation's 30 largest banks" per your link.

The prime rate is currently 6% per your graph, but the Fed Funds Rate is 3% currently. The Feds lend money at 3% to the biggest banks, and the biggest banks lend money to the biggest corporations at the 6% rate.

[Ichingcarpenter]

13. Thanks

so my 1947 low was really around .87% ?

It should be an interesting week.

[blayne]

17. Should be very interesting.

I just wish I could purchase a house at these rates. I'm hoping they stay low until I am in a better position to buy.

[2Design]

14. prime rate

http://en.wikipedia.org/wiki/Prime_rate

[Ichingcarpenter]

6. 1.75% is the lowest I've found which goes to 1947

Highest was 21.5% December 1980, funny they raised the prime
from 11.5% in the summer of 1980 to almost 20% right before the election

http://www.mortgage-x.com/general/indexes/prime.asp

[2Design]

12. democrat in the WH - did the same thing to clinton - right? n/t

[DJ13]

2. One point will trigger Hyper Inflation

The Dollar will collapse, oil will hit $120, and our economy will grind to a halt.

All so the Wall street crowd can make an extra buck.

[Danascot]

26. Would you believe $200/bbl?

$200 Oil Is a Very Real Possibility

http://seekingalpha.com/article/68552-200-oil-is-a-very-real-possibility

[rsmith6621]

4. And once it is a ZERO how much lower

......can it get??????.......not much more rescue blanket left before a tumble down the hill happens.

...let me sell my home first.

[Neshanic]

20. I'm turning Japanese, I think I'm turning Japanese....

[Mojambo]

5. Gotta love that "free" market. n/t

[bronxiteforever]

8. Ben has chosen the name of the destroyer in Ghostbuster fashion "Hyperinflation"

[daleo]

10. Soon, the banks will have to pay us to borrow money.

That ought to fix things.

[Democrats_win]

15. You will pay so that these crooks can party. Hold them accountable, America!

When farmers and working Americans were having trouble in the 80s, the FED raised interest rates to 21%. Now that the usury crooks are having trouble, the FED is lowering the rate to 2%?!!! Do you realize that YOU will be funding these crooks through higher gas and food prices that these rate cuts will cause?

[ryanmuegge]

19. Exactly. People are not angry enough about this. Nothing but the blood of all of these people

and their children is adequate.

[magellan]

21. They don't understand it. And...many still have faith in the government.

Meanwhile the neocons and their supporters are preparing to blame it all on the Clenis. I've already made one attempt at putting a DU "newbie" right on that matter. Might as well be trying to reason with a brick wall.

The RW have their pass-the-buck excuse ready, and average Americans are so ignorant of what BushCo & the GOP have been doing with the money supply and deregulation, a good number will buy it.

[Demeter]

16. Gives a New Meaning to the Phrase: March Madness n/t

[CreekDog]

18. lowering rates makes stocks a more viable option

when you are looking at 1-2% for your money in a possibly inflationary environment, stocks look better and better. when business gets money through stock purchases, they can use it to buy capital or staff to create more.

i'm not sure what choice they have.

i feel like they are devaluing the currency, but the other choice is worse.

[high density]

22. Please no

I want to at least beat the CPI with the returns on my money market funds. (Not even considering income taxes!)

[bulloney]

23. Yeah, that's the panacea. Keep making money cheaper.

It's like a crack addict. After so long, you need more of it more often to keep you from crashing.

[Danascot]

24. I LOVE me the smell of desperation in the morning!

This news will do nothing but toss more gasoline (napalm?) on the fire.

(Channeling Bobby Duvall.)

[Jersey Ginny]

25. And what about inflation?

I just don't get it.

[Ichingcarpenter]

27. Inflation hurts the middle class and poor much more than the rich

The price of his new Bentley goes up, meanwhile your food goes up.