Wednesday, September 19, 2007

Why a Rate Cut?

Why cut rates? It makes no sense.

Foreign money is flowing out of the U.S because of the excessive borrowing we have done. A withdrawal of capital by foreigners should lead to higher interest rates.

On the other side, the U.S. investor is buying treasuries because of a lack of confidence in the bond markets. This over supply of demand for treasuries drives interest rates down.

Lowering the discount rates increases the perception of inflation, and oil is at $82 Gold is at 723 and Google is at 546.

Every poor person in the United States is now paying $1,000 extra a year for gasoline. Thats $1,000 more than our own government can get out of them at tax time. That group can ill afford it, they get hit the hardest. So if you use 3 gallons of gas a day to go back and forth from work, you too are in the same boat.

Housing is shot, but they forgot to tell the guys holding the paper. A white Christmas with a lot of red ink and no jingle.

Then you have people in Great Britain having a run on the bank. Talk about a loss of confidence.

Bernanke burned the shorts on Triple Witching, I didn't think he would do it. They had to hop in and cover their short positions and the market took off. The short players are necessary for the market. When the market drops, they step in and buy back the stock and realize a profit. So let's see, the next time the market decides to drop there won't be very many shorts buying into the falling market. You could label this "greasing the chute."

Maybe the Fed knows more than they are telling. There could be something seriously wrong with our banking system. A lack of liquidity? Four banks borrow 2 billion. Na, couldn't happen. Believe that I have a house to sell you.

Maybe we have Visa'd, just one too many plasma TV's


Tyrone said...

True, true.

Anonymous said...

Foreign investment flees, dollar tanks, foreclosures continue trending up. Only the stock market gains. We're in trouble...

Anonymous said...

Only the stock market gains. We're in trouble...
------------------------------------Uh, what about the PM`s?