World Markets Continue their Slide

what effect would the fed lowering intrest rates this week have on the housing situation?


seems like the fed can ease stock market concerns simply by lowering intrest rates, don't they meet this month?

(i mean granted in the back of my mind i am saying wow we could have world war III soon, an economic collapse resession that domino's and gets worse and worse, and then the NWO order "saving" us, but i don't want to be an alarmist)

[edit on 6-3-2007 by cpdaman]

Well it went up some, but it isn't expected to stay that way. Most are hoping it will go positive today and maybe rub off on tomorrow, but it is still expected to go down.

J.P. Morgan and CitiGroup gained 1-2% today so far (J.P. Morgan currently +.90% and CitiGroup currently +2.26%)

The nub of the problem is that there is too much bad debt and not enough money and assets. If something goes wrong, the companies that hold all that debt won't be able ot make their minimum payments.

Imagine having so much debt that even if you sold everything you own...you couldn't make the minimum payments.

The Bush Economy has been built on the back of a housing boom that simply couldn't be sustained be-cause the Fed has put too much easy money on the market, which has resulted in too much bad debt.

Imagine the guy who really does have to sell everything he owns just now to avoid defaulting on his debts. Let's pretend he owes $60,000 in plastic that's going to wreck him. The house he paid $150,000 goes for $130,000. Hold on...He just went backwards...Yes, because his one real source of equity (hard asset savings) isn't as value-able as it was.

Imagine the single woman who lives in an apartment. She had some out of pocket medical expenses that caused her to whip out the plastic. She makes $32,500 per year. Her plastic has been racked up to $10,000. As the interest rate on that card climbs, she stops going out to dinner. She cuts back on all her fun-time expenses as her balance rises past $12,000. She doesn't miss a pay, but that darned interest rate keeps going up with heach bill. Even if she sells everything she owns, she can't make a dent in what she owes.

These things are happening now. they will only get worse.

If/when the housing market crashes, I'm assuming that this will drive up the rental market. As people are no longer able to afford there mortgages they will be forced to rent. Is this a correct assumption.

This is what has happened in Sydney, the value of property has become so out of reach for the average person that the rental market is booming. It is very difficult to find a reasonably priced rental in Sydney and some parts of Australia.

video.google.com... - minute 13 - how banks work

Do not put value on money and other stuff there is today. As you can see from above the entire system is doomed.

If the fed lowered interest rates in the next meeting it would crush the dollar. Its not even being priced in to the fed funds futures which have a 90% plus success rate in forecasting rate changes.

And any time something happens that is unexpected concerning the fed the results are usually negative for the stock market.

I do think by the end of this year the fed will be forced to lower interest rates. Its being forecast by the feds fund futures right now but is subject to change going foreword.

But they are walking a fine line between fighting inflation and keeping economic growth going.

The real problem is since the fed quite publishing monetary growth statistics(read into this as a conspiracy) the dollar has been in virtual free fall.

Sure the stock market and the housing market would see a short term boost from the lowering of interest rates but the long term implications are much greater.

The fact is there has not been one fiat currency in the history of the world that has ever survived long term and the damage to the dollar IMHO is irreversible at this point. Only short term band-aids can be applied to the mortal wound.

Have you noticed how the economic news seems to be drying up this week? That's interesting to me in light of the fact that Congress has been having a chat with officials from the credit card industry. I know there is other international news, but this topic still holds my interest. What says the rest of you?

Yes, Justin, there seems to be little interest and little content about the stock market this week. And, it has been ending in positive territory at least half of this week
Of course, it's often the case that BIG news lasts two or three days and there is often no followup.
Is it our short attention span?
Or....
Something more sinister?

We have seen hearings on Capitol Hill this week that have asked reps from the credit card companies some hard questions. I would not be surprised to learn that there was a dual effort on the part of the government and the private sector to hush things up to prevent a panic.

Those hearings won't change anything for current card holders. The promises made by corporate weenies amount to lip service with a kiss. The fact remains that there are more than enough outstanding bad debts to bring down the whole house of cards.

It's no surprise that Congress has once again failed to do the people's business. The truth is that the credit industry is very unregulated for what it is. the whole thing from home mortgages to credit cards is about to come crashing down, and I'd like nothing more than to be wrong about the whole thing.

New century financial (NEW) the second largest sub prime lender had rumors flying around it all day that it was going to file for bankruptcy. NEW also quit accepting loan applications today.

biz.yahoo.com...

Is this a isolated incident or is it the tip of the iceberg?

For those of you that dont know mortgages are bundled up and resold in whats called the secondary market.

Even a money market account that you might have at your bank or brokerage firm most likely has investments in some mortgage pool.

If NEW is the tip of the iceberg then even so called safe investment like money markets or CD's could be in trouble. If its an isolated incident then nothing to worry about.

IMHO the way the domestic and world markets have been acting the last couple of weeks there is something amiss going on and only time will tell what it is.

As for the market reaction this week the bounces that they had look like nothing more than a dead cat bounce (industry term).

A good 200-300 point up day in the next few days would reverse this current down trend on the DOW. Again IMHO these up days are nothing to get excited about.

[edit on 8-3-2007 by etshrtslr]

Now that have survived the week, what is your assessment? Does anyone feel differently than they did on Monday?

I am still waiting for the interest rates on mortgages to go down, so I can re finance

Things are now stagnate this was one of the predictions about the state of the markets.

So far oil prices are still rising, feds has not lower the interest rates, so they are betting on the markets to fix itself.

But is going slow and that means that the game of waiting and doing nothing is been played.

While some say 'no news is good news' I tend to take the opposite view. I want to know what is happening. The silence is deafening. Things are happening in the background and 'we the people' will be told when things are already in place I guess.

I would like to be optimistic but I guess there is going to be a large transferring of wealth coming up.

I'm just glad I don't have a credit card or any debt. My ass is free.

Ultimately, I'm anticipating further weakness, especially if shock waves like those from the sub-prime mortgage bomb, begin to rumble out of the prime lending market. I'm referring to the speculators with decent credit that jumped on the bubble bandwagon, and now find themselves over-extended, and making payments they can't afford...on vacant properties they can't flip.

Inspite of the rhetoric coming out of Washington and the Fed, I feel that we remain vulnerable to recession. Considering the housing situation, the flagging manufacturing sector, and the apparent peak in corporate profits, a softening by the Fed soon, wouldn't surprise me.

For the near term, it looks like nervous investors have turned to treasuries.

Another looming issue for the American economy, is the rapid decline in oil deliveries from the number 3 importer to the US...Mexico. The effects of dwindling producton at the Cantrell field, Mexico's largest, will eventually reach the pump.

Personally, I'm bullish precious metals, base metals, uranium & oil.

Peace &
Good fortune
OBE1

etshrtslr...Yen Carry Trade...the missing link?

Here's a snippet from an excellent piece written by Mike Whitney: “Black Tuesday”; Après le deluge.

“There has been an amazing amount of leverage on currency markets that has nothing to do with real economic activity. I think there are going to be dead bodies around when this is over…Our concern is that the repricing of risk we are seeing could spread to the credit markets. This is potentially more difficult to deal with, and needs watching.”-- Jim O'Neill, G-Sachs chief global economist.
www.dissidentvoice.org...

Peace &
Good Fortune
OBE1

Nope.

Things have been bubbling beneath the surface for some time now and sooner or later it will break to the surface.

There's trouble on the horizon and you'll know its arrived when everyone and their uncle is aware of the situation, people are screaming and moaning for the government to do something about it (this is where the real trouble starts) or boring us to death with free investment advice.
.

I like that video on how the money supply seems to work but it's overly simplistic and gives the impression there is no "safety net" but in actuality there is.

The basic safety net - the most disasterous one would be the fall back onto Gold and the rapid deflation of economy. In such an event you'll lose physical dollars but the purchasing power of your money becomes greater...this is a reballancing correct?

Any arguments?

I doubt it would ever go that far - and this market blip is not going to cause that.

Yes I think your correct. Its been a great trade but I think its quickly coming to an end. Again only time will tell.
I am always reminded just when you think you have the markets figured out something happens to make you realise that you dont.

I think the fed is stuck between a rock and a hard place.....lowering rates will exasperate the decline in the dollar.....raising rates crush the housing market and stocks.

"I think the fed is stuck between a rock and a hard place.....lowering rates will exasperate the decline in the dollar.....raising rates crush the housing market and stocks."

This exactly my thinking. If we assume that hte current media silence is
an indication that the recent bump in the road was an isolated incident, we are still left with this terrible truth.

More on the sub-prime market and the now defunct lender New Century (the second largest in the US): US Depression Tremors: Subprime Lenders in Meltdown

Notice that the Implode-o-meter site lists another five mortgange lenders having gone bankrupt since this thread was started!

Markets have remained jittery IMO and for most people unaware of what is going on, the economic numbers on the surface still look good to them.

Few realise how the numbers are manipulated to lull them into a false sense of security. For example: Lies, Damned Lies and Statistics - Calculating the Consumer Price Index
.