50, 75, 100, or 125?

[blazespinnaker]

I think 125 is out of the question. It would risk a collapse in the dollar.

100 would show that the fed means business. I believe it's the appropiate cut to do at this time, and I think it's what they should do. However, they probably won't - they're a group, and group mentality can not handle that type of risk taking. Ben is too new to lead strongly forward.

75 seems to me the most likely. They are very afraid for the economy and want to do something without going crazy. It's the safe, though weak choice.

50 .. if they do that, things will be bad, and will risk putting the economy into a tailspin.

[GRG55]

Re: 50, 75, 100, or 125?

I think 125 is out of the question. It would risk a collapse in the dollar.

100 would show that the fed means business. I believe it's the appropiate cut to do at this time, and I think it's what they should do. However, they probably won't - they're a group, and group mentality can not handle that type of risk taking. Ben is too new to lead strongly forward.

75 seems to me the most likely. They are very afraid for the economy and want to do something without going crazy. It's the safe, though weak choice.

50 .. if they do that, things will be bad, and will risk putting the economy into a tailspin.

Economy is already in a tailspin. Now the Fed is doing the "throttle closed, forward elevator, opposite rudder, pull out of the dive" thing. Hopefully they don't run out of altitude (interest rate cutting room) before they hit those mountains in the iTulip graphic...

[blazespinnaker]

Re: 50, 75, 100, or 125?

Heheh.

4.8% unemployment rate .. I don't think we're in a tailspin just yet.

[jtabeb]

Re: 50, 75, 100, or 125?

Heheh.

4.8% unemployment rate .. I don't think we're in a tailspin just yet.

If you believe that doctored pile of BS, I have some nice beach front property in vegas to sell you!

[Mega]

Re: 50, 75, 100, or 125?

Its like watching that French Concorde crash, its stalled out and you know its beond recovery..........horrifing, but un-avoidable.
Mike

[FRED]

Re: 50, 75, 100, or 125?

Economy is already in a tailspin. Now the Fed is doing the "throttle closed, forward elevator, opposite rudder, pull out of the dive" thing. Hopefully they don't run out of altitude (interest rate cutting room) before they hit those mountains in the iTulip graphic...

You mean this one from the Zero Bound Diaries.

[jtabeb]

Re: 50, 75, 100, or 125?

You mean this one from the Zero Bound Diaries.

NO, I think you mean this one:

[blazespinnaker]

Re: 50, 75, 100, or 125?

U.S. interest-rate futures showed more than a 50 percent chance on Friday that the central bank will cut its benchmark fed funds rate target by 100 basis points this week to revive an economy that many say is already in recession.

Well, there ya go. Maybe 125 bps isn't such a shock. They have to get ahead of this.

[Jim Nickerson]

Re: 50, 75, 100, or 125?

Well, there ya go. Maybe 125 bps isn't such a shock. They have to get ahead of this.

I don't think they will ever get ahead of "this." What we need is a serious freaking recession and cut out all this horseshit of trying to reingnite the FIRE economy.

Asha Bangalore (Northern Trust): Fed sees need to address liquidity problems again
“The Fed coordinated with other central banks on new initiatives to reduce stress in financial markets today. The new program at the Fed carries the name Term Securities Lending Facility (TSLF) under which it will lend up to $200 billion of Treasury securities to primary dealers for a term of 28 days (existing program is overnight lending) against collateral inclusive of federal agency debt, mortgage backed securities of Fannie Mae and Freddie Mac, and non-agency quality residential mortgage backed securities. Auctions under this program will commence on March 27.

“In addition, the Fed increased swap lines with the European Central Bank and Swiss National Bank of amounts up to $30 billion and $6 billion, respectively. These initiatives follow after the Fed announced last week an increase in the size of Term Auction Facility and extended the term of open market repurchase agreements.

“Will these actions unfreeze credit markets? It is a matter of time before we see the results. Market spreads had widened in recent days and raised new concerns about the credit crunch. In light of these actions, it appears the Fed will probably settle with a 50 bps reduction in the federal funds rate on March 18 versus the market expectations of a more aggressive move.”

Source: Asha Bangalore, Northern Trust - Daily Global Commentary, March 11, 2008.

http://www.investmentpostcards.com/2...2008/#more-674

[GRG55]

Re: 50, 75, 100, or 125?

I don't think they will ever get ahead of "this." What we need is a serious freaking recession and cut out all this horseshit of trying to reingnite the FIRE economy.


Source: Asha Bangalore, Northern Trust - Daily Global Commentary, March 11, 2008.

http://www.investmentpostcards.com/2...2008/#more-674

I am also in the 50 bips camp. The increase in the size of the TAF, adding the TSLF, increasing the loan durations between roll-overs, and broadened the range of collateral should increase the effectiveness/leverage of each additional rate cut - so the Fed should be able to go slower.

A 100 or 125 bips move now means the Fed successfully broke the stall/spin, but put itself into an accelerating dive right for the granite. Trying to get out of that situation risks pulling the wings off the plane...with the same end result.

[jk]

Re: 50, 75, 100, or 125?

I am also in the 50 bips camp. The increase in the size of the TAF, adding the TSLF, increasing the loan durations between roll-overs, and broadened the range of collateral should increase the effectiveness/leverage of each additional rate cut - so the Fed should be able to go slower.

A 100 or 125 bips move now means the Fed successfully broke the stall/spin, but put itself into an accelerating dive right for the granite. Trying to get out of that situation risks pulling the wings off the plane...with the same end result.

maybe bernanke's on the phone with trichet right now, trying to trade 25bps less easing here for 25bps of easing from the ecb.

[GRG55]

Re: 50, 75, 100, or 125?

maybe bernanke's on the phone with trichet right now, trying to trade 25bps less easing here for 25bps of easing from the ecb.

"...Okay J.C., I'll match your measly 25 bips and raise you another two bits. And another thing; don't call us the next time the Germans decide to invade, eh..."

[whitetower67]

Re: 50, 75, 100, or 125?

Isn't it the case that the Fed can go below 0%? (I'm thinking the Bank of Japan maintained "negative interest rates" on its t-bills in the late 90s.) And even if the rate does go to 0%, can't the Fed "maintain liquidity" like prohibit/restrict cash withdrawals from liquid accounts?

[blazespinnaker]

Re: 50, 75, 100, or 125?

I don't think they will ever get ahead of "this." What we need is a serious freaking recession and cut out all this horseshit of trying to reingnite the FIRE economy.


Source: Asha Bangalore, Northern Trust - Daily Global Commentary, March 11, 2008.

http://www.investmentpostcards.com/2...2008/#more-674

I don't think the goal is to stave off a recession here .. I really don't think that was ever the goal.

Jim Rogers can go on Bloomberg all day long and talk about how recessions are good for the economy .. I really don't think anyone disagrees.

As you can see what happen to Bear Sterns (equity just went poof), the Fed isn't trying to save anyone.

There are bigger concerns here. And the bigger concern is that these companies go belly up in an orderly fashion. That we enter into the deep recession in an orderly fashion .. that we restructure the 'FIRE' economy in an orderly fashion.

If we do it in another way, things could get rather nasty.

[GRG55]

Re: 50, 75, 100, or 125?

Isn't it the case that the Fed can go below 0%? (I'm thinking the Bank of Japan maintained "negative interest rates" on its t-bills in the late 90s.) And even if the rate does go to 0%, can't the Fed "maintain liquidity" like prohibit/restrict cash withdrawals from liquid accounts?

Real interest rates are already negative (below zero) The nominal interest rate cannot go below zero, unless the Fed and Treasury decide that people purchasing Treasuries should be paying interest to the US Government for the privilege of holding them (Good luck with that).