Comments on: Fed Cuts to 0-0.25%; Target Range, Not Funds Rate http://www.ritholtz.com/blog/2008/12/fed-cuts-to-00-25/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Tue, 14 Feb 2012 16:08:10 +0000 hourly 1 http://wordpress.org/?v=3.0.5 By: Mark E Hoffer http://www.ritholtz.com/blog/2008/12/fed-cuts-to-00-25/comment-page-3/#comment-134372 Mark E Hoffer Thu, 18 Dec 2008 02:34:30 +0000 http://www.ritholtz.com/blog/?p=13050#comment-134372 wunsa-, you say: " yes, I watched that video when Barry posted it in the Cafe." when, where was that? wunsa-,

you say: ” yes, I watched that video when Barry posted it in the Cafe.”

when, where was that?

]]> By: wunsacon http://www.ritholtz.com/blog/2008/12/fed-cuts-to-00-25/comment-page-3/#comment-134234 wunsacon Wed, 17 Dec 2008 20:42:36 +0000 http://www.ritholtz.com/blog/?p=13050#comment-134234 (Muttering to self: Sh!t...I really have become the FDR/Bernanke apologist/public defender.) "Okay, now, boys, be fair...one at a time..." ;-) (Muttering to self: Sh!t…I really have become the FDR/Bernanke apologist/public defender.)

“Okay, now, boys, be fair…one at a time…” ;-)

]]> By: wunsacon http://www.ritholtz.com/blog/2008/12/fed-cuts-to-00-25/comment-page-3/#comment-134233 wunsacon Wed, 17 Dec 2008 20:39:07 +0000 http://www.ritholtz.com/blog/?p=13050#comment-134233 >> in short-term cash bank accounts or hoards rather than making long-term investments. This makes a recession even more severe, and can contribute to deflation. >> From Wikipedia…and AGG is so right. Who says the lower rates make a recession more severe? One branch of economists, who appear to be legion in the blogosphere and in wikipedia. Imagine the hoarding if Treasuries were paying higher interest rates. The complaining comes from one school of economists who hate anything and everything FDR ever did. I don't think that's the sole motivation at all. But, I think it explains part of it. I don't mean to disrespect the view. Often, the FDR critics are wonderfully intelligent, well-meaning people. But, for instance, Mark Hoffer, yes, I watched that video when Barry posted it in the Cafe. And, I AGREE with it. All the "scoffing" that I read of people putting it down doesn't persuade me it's the wrong policy. A wrong policy at the time was Smoot-Hawley. Anything to lower the velocity of money worked against the re-inflationary measures. That's what we must avoid this time. >> wunsacon, you are spending a lot of time with a rah-rah for how we can beat deflation. Remember that until 2 month ago Benny was not fighting deflation. What people like Bernanke say behind closed doors is hidden from us. They say cheery things because of this: who wants leaders to tell us how bad things are or are going to get? If he made dire predictions earlier on, people would say he's throwing the election. >> Bruce in Tn Says: >> December 16th, 2008 at 7:10 pm >> Well, if the whole world tries to cut rates simultaneously….who wins? Who exports to whom? Who imports from whom? If every country’s currency is pushed to AWAP..(as worthless as possible)..how does a rational investor make a long term decision? Will we have worldwide ZIRP next week? Yes. But, it's not to "beggar-thy-neighbor" if we're ALL cutting in unison. You might ask: what difference does it make then? It's this: to reduce -- in real terms -- everyone's debts the world over. Because when the fictional liquidity of all that fake mortgage debt was taken away, it made everyone else's "good" debt unservicable. By convincing every CB to cut in unison, we avoid cascading defaults. >> in short-term cash bank accounts or hoards rather than making long-term investments. This makes a recession even more severe, and can contribute to deflation.
>> From Wikipedia…and AGG is so right.

Who says the lower rates make a recession more severe? One branch of economists, who appear to be legion in the blogosphere and in wikipedia. Imagine the hoarding if Treasuries were paying higher interest rates.

The complaining comes from one school of economists who hate anything and everything FDR ever did. I don’t think that’s the sole motivation at all. But, I think it explains part of it.

I don’t mean to disrespect the view. Often, the FDR critics are wonderfully intelligent, well-meaning people. But, for instance, Mark Hoffer, yes, I watched that video when Barry posted it in the Cafe. And, I AGREE with it. All the “scoffing” that I read of people putting it down doesn’t persuade me it’s the wrong policy.

A wrong policy at the time was Smoot-Hawley. Anything to lower the velocity of money worked against the re-inflationary measures. That’s what we must avoid this time.

>> wunsacon, you are spending a lot of time with a rah-rah for how we can beat deflation. Remember that until 2 month ago Benny was not fighting deflation.

What people like Bernanke say behind closed doors is hidden from us. They say cheery things because of this: who wants leaders to tell us how bad things are or are going to get? If he made dire predictions earlier on, people would say he’s throwing the election.

>> Bruce in Tn Says:
>> December 16th, 2008 at 7:10 pm

>> Well, if the whole world tries to cut rates simultaneously….who wins? Who exports to whom? Who imports from whom? If every country’s currency is pushed to AWAP..(as worthless as possible)..how does a rational investor make a long term decision? Will we have worldwide ZIRP next week?

Yes. But, it’s not to “beggar-thy-neighbor” if we’re ALL cutting in unison. You might ask: what difference does it make then? It’s this: to reduce — in real terms — everyone’s debts the world over. Because when the fictional liquidity of all that fake mortgage debt was taken away, it made everyone else’s “good” debt unservicable. By convincing every CB to cut in unison, we avoid cascading defaults.

]]> By: jc http://www.ritholtz.com/blog/2008/12/fed-cuts-to-00-25/comment-page-3/#comment-134115 jc Wed, 17 Dec 2008 13:55:22 +0000 http://www.ritholtz.com/blog/?p=13050#comment-134115 Excess of clarity. Apparently Gentle Ben thought there would be excess clarity if he announced rates were cut to zero so he mumbo-jumoed about ranges. So here we are folks, no effective solution to the RE disaster yet, unemployment zooming, consumers on strike, TARP tapped out, and Bush mulling formally starting another great depression by pushing the auto industry into BK. Happy days are here again... Excess of clarity. Apparently Gentle Ben thought there would be excess clarity if he announced rates were cut to zero so he mumbo-jumoed about ranges. So here we are folks, no effective solution to the RE disaster yet, unemployment zooming, consumers on strike, TARP tapped out, and Bush mulling formally starting another great depression by pushing the auto industry into BK. Happy days are here again…

]]> By: Mark E Hoffer http://www.ritholtz.com/blog/2008/12/fed-cuts-to-00-25/comment-page-3/#comment-134064 Mark E Hoffer Wed, 17 Dec 2008 04:58:53 +0000 http://www.ritholtz.com/blog/?p=13050#comment-134064 Jono, here's EJ's take that he fit around that YouTube: http://itulip.com/forums/showthread.php?p=66592#post66592 Jono,

here’s EJ’s take that he fit around that YouTube:
http://itulip.com/forums/showthread.php?p=66592#post66592

]]> By: Jono http://www.ritholtz.com/blog/2008/12/fed-cuts-to-00-25/comment-page-3/#comment-134053 Jono Wed, 17 Dec 2008 03:57:28 +0000 http://www.ritholtz.com/blog/?p=13050#comment-134053 Mark E Hoffer, that video is gold. The masses still believe in that Keynesian bullshit today. The Austrians were right all along. Mark E Hoffer, that video is gold.
The masses still believe in that Keynesian bullshit today. The Austrians were right all along.

]]> By: Andy Tabbo http://www.ritholtz.com/blog/2008/12/fed-cuts-to-00-25/comment-page-3/#comment-134045 Andy Tabbo Wed, 17 Dec 2008 03:34:09 +0000 http://www.ritholtz.com/blog/?p=13050#comment-134045 gregh: on yen chart there.... I love how this guy is saying "It's amazing how it's sort of identical...." in price movement and duration. This guys needs to study a little Elliot Wave....that is an ABC pattern up from the lows and we're near an A=C target. We're also near the 78.62% rebound of the ENTIRE decline from the 1995 highs to the 1998 lows. The 113.50-114.00 is a VERY critical resistance for the Yen in my view of things. - AT gregh: on yen chart there….

I love how this guy is saying “It’s amazing how it’s sort of identical….” in price movement and duration. This guys needs to study a little Elliot Wave….that is an ABC pattern up from the lows and we’re near an A=C target. We’re also near the 78.62% rebound of the ENTIRE decline from the 1995 highs to the 1998 lows. The 113.50-114.00 is a VERY critical resistance for the Yen in my view of things.

- AT

]]> By: gregh http://www.ritholtz.com/blog/2008/12/fed-cuts-to-00-25/comment-page-3/#comment-134041 gregh Wed, 17 Dec 2008 03:14:51 +0000 http://www.ritholtz.com/blog/?p=13050#comment-134041 Yen watchers - It is nearing completion of an 18 month rally - http://kevinsmarketblog.blogspot.com/2008/12/long-term-view-of-japanese-yen.html Yen watchers –
It is nearing completion of an 18 month rally – http://kevinsmarketblog.blogspot.com/2008/12/long-term-view-of-japanese-yen.html

]]> By: Clay http://www.ritholtz.com/blog/2008/12/fed-cuts-to-00-25/comment-page-3/#comment-134021 Clay Wed, 17 Dec 2008 02:27:05 +0000 http://www.ritholtz.com/blog/?p=13050#comment-134021 Effective Fed Funds Rates From the St. Louis Fed Reserve (hope the links work,they have graphs going to the mid 1950's): Monthly on the 1st of each month: Jul 2.01, Aug 2.00, Sep 1.81, Oct .97, Nov .39 http://research.stlouisfed.org/fred2/series/FEDFUNDS Weekly: 11-12 .28, 11-19 .36, 11-26 .56, 12-3 .49, 12-10 .13 http://research.stlouisfed.org/fred2/series/FF Daily: 12-8 .12, 12-9 .13, 12-10 .11, 12-11 .14, 12-12 .15 http://research.stlouisfed.org/fred2/series/DFF?cid=118 Effective Fed Funds Rates From the St. Louis Fed Reserve (hope the links work,they have graphs
going to the mid 1950′s):

Monthly on the 1st of each month: Jul 2.01, Aug 2.00, Sep 1.81, Oct .97, Nov .39
http://research.stlouisfed.org/fred2/series/FEDFUNDS

Weekly: 11-12 .28, 11-19 .36, 11-26 .56, 12-3 .49, 12-10 .13
http://research.stlouisfed.org/fred2/series/FF

Daily: 12-8 .12, 12-9 .13, 12-10 .11, 12-11 .14, 12-12 .15
http://research.stlouisfed.org/fred2/series/DFF?cid=118

]]> By: philipat http://www.ritholtz.com/blog/2008/12/fed-cuts-to-00-25/comment-page-3/#comment-134020 philipat Wed, 17 Dec 2008 02:25:26 +0000 http://www.ritholtz.com/blog/?p=13050#comment-134020 Most cars in the US and UK, especially Mom's SUV (aka Chelsea Tractors in UK) were purchased for many years using MEW/0% Finace/Incentives/All of the above. It's all part of the same consumer de-leveraging. Perhpas in the next cycle we can think about sustainable growth? Not a hope as long as short term incentives remain the norm. Most cars in the US and UK, especially Mom’s SUV (aka Chelsea Tractors in UK) were purchased for many years using MEW/0% Finace/Incentives/All of the above. It’s all part of the same consumer de-leveraging. Perhpas in the next cycle we can think about sustainable growth? Not a hope as long as short term incentives remain the norm.

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