Can Anyone Explain the Feds??

[msnln]

I dont know what makes you authority on knowledge but you are really annoying and total waste of time, for me and other members of this forum. I guess your "adding something contructive" must have made your day. you are the one who brought up "a well worn canard propagandized by the RightWing noise machine". I read your other posts and it seems pointing out your views as facts is your forte and your sole contribution to this community. Funny how you seem to be monopolizing all knowledge on not just finance but environmental and social issues of the day. All hail the mighty and knowledgable VJW!!

[VJW]

Originally Posted by msnln

I dont know what makes you authority on knowledge...

Never claimed to be the "authority on knowledge". The historical research is available to anyone.

but you are really annoying and total waste of time...

Strange, you think I’m "really annoying and total waste of time", yet you cannot keep yourself from both reading and responding to my posts. Fascinating.

I read your other posts and it seems pointing out your views as facts is your forte...

Actually, I’ve never presented my "views as facts". As I’ve clearly elucidated, that was YOUR propensity.

#

[SuzeOFan]

I read yesterday that the Fed may raise the interest rates a 1/2 point instead of the usual 1/4? Why in the world would they do such a thing??
What ever happened to wait and see??? They seem to be overly rushed in this matter.

Wow! Think what that will do to the millions of people already struggling!
Talk about a heavy burden they're levying on us!

They're going to torpedo the people ...for the sake of this 'so-called' economy!


Still don't get it on the east coast.

[msnln]

Suze, there is a small minority who feels the Fed should just raise the rate by 0.50% this once and stop with additional increases. Majority of us in the industry do not think that is going to happen as this will kill US dollar, making foreign goods such as oil more expensive. Fed Funds Futures indicate chance of this happening is virtually nil but rather, it shows 0.25% this time and 0.25% in September (or October) and then Fed stopping with the rate increase until end of the year. Here are futures quotes:

Futures Rate
Jul-06 5.285
Aug-06 5.410
Sep-06 5.480
Oct-06 5.540
Nov-06 5.565
Dec-06 5.560

[SuzeOFan]

So bear with me, but you're saying the Feds won't stop raising rates until the end of the year?!



I looked up the word 'Inflation' from Wikipedia, the free encyclopedia? and almost wished I hadn't! I got way more than I bargained for. Even the experts can't agree on what constitutes 'inflation'! So frustrating....

Is it safe to say this is all about the Feds trying to keep the dollar from losing value against foreign currency?

[msnln]

From what the futures is telling me, Fed will raise the rate by 0.25% today and most likely another 0.25% in September or October. Most likely, rate will be 5.50% by end of the year, from current 5.00%. Futures rate shows Dec 06 futures rate at 5.56%, which means there is a slight chance Fed rate will be above 5.50%, meaning low probability of three rate increases by year-end.

Fed's main concern is inflation, and dollar losing value is result of inflation. I think I brought this up in an earlier posting but if the inflation goes up, your buying power will go down. For instance, $100 pair of Jeans you buy today will go up to $110 next year if we had a 10% inflation. Pair of jeans will be the same but it costs $10 more, meaning dollar's value has gone down by that amount.

[sweeps]

Hasn't there been a low probability of 3 rate increases for the last dozen or so Fed meetings?

[msnln]

To be honest, I cannot recall how many increases were expected before past increases but the sentiment has definitely changed from continued increases in the past to limited increase, with end in sight. Also, there is article on Bloomberg that says 65% of people polled oppose rate increases. If enough people raise voice, I suppose Fed will have to listen. Last time this happened was in May 2000 when Fed rate was 6%. They raised the rate to 6.5% at the follwing meeting and left it there and started lowering rates few months afterwards.

[SuzeOFan]

Great! I hope the Fed reads this:



****KNOCK IT OFF ALREADY!!****






...we now return you to our regularly scheduled program.

[SuzeOFan]

Fed Rate Hikes Beginning to Pinch Economy
Homeowners, borrowers feeling the impact of two-year campaign:

http://www.msnbc.msn.com/id/13599156/


I'd say most of us have been feeling the *pinch* for sometime already.

[Dixiechick]

"Now the 30-year benchmark mortgage rate stands at about 6.75 percent, compared with under 5.5 percent two years ago."

WOW! My first mortgage was about 9.5% and that was good back in '89!! And my salary was 1/4 of what it is now. To think 6.75% is getting high --- no, the houses are over priced and people can't unload them when the rates go up...

Dixiechick

[SuzeOFan]

WOW! My first mortgage was about 9.5% and that was good back in '89!! And my salary was 1/4 of what it is now.To think 6.75% is getting high --- no, the houses are over priced and people can't unload them when the rates go up...

Are you saying we're spoiled and shouldn't complain?

[Dixiechick]

"Are you saying we're spoiled and shouldn't complain?"

Oh no, I complain just as much as the next person. But, rates today aren't bad even though we've had them better in the past. There are those who are glad to see the rates go up (a little bit) - CD holders for example (I'm one of those). Unless you carry much debt or are in the market for buying a house, these rate increases shouldn't affect you day to day. I've seen the effects of gas increases on my pocket book more so than the fed. reserve rate increases... But that's just me...

BTW, how do you get the little quote boxes???

Dixiechick

[sweeps]

Originally Posted by Dixiechick

how do you get the little quote boxes???

Click the Quote button next to the person's post.

The person's post will appear within [ QUOTE ] [ /QUOTE ] tags. You can edit as necessary.

[Dixiechick]

Originally Posted by Sweepsplayer

Click the Quote button next to the person's post.

The person's post will appear within [ QUOTE ] [ /QUOTE ] tags. You can edit as necessary.

Thank You!!!

Learning something new everyday...

Dixiechick

[Ima saver]

Originally Posted by Dixiechick

Thank You!!!

Learning something new everyday...

Dixiechick

Thanks dixiechick, I just learned it too!!

[SuzeOFan]

(June 29, 2006) Mortgage rates climb on inflation fears:

http://news.yahoo.com/s/ap/20060629/ap_on_bi_ge/mortgage_rates

"Financial markets continue to expect more rate hikes by the Fed over the next six months, which has added upward pressure on mortgage rates," said Frank Nothaft, Freddie Mac's chief economist.

"With higher interest rates, the housing market has begun a gradual and orderly reversion towards historical norms," Nothaft said. "New construction, home sales and house price appreciation have all been slowing over the past few months."

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*historical norms* ???

(As in like what Dixiechick said ....9.5% ....as a good 'normal')

I still need to know why the government thinks this is this a good thing??

And for *whom* is it a good thing? !

Anyone?



(P.S. - To make a quote box, copy your quote then select the last little icon image on your screen. Past your text into the pop up. Wa la!)

[sweeps]

Well, in general, higher interest rates are bad for net borrowers but great for net savers. If someone's overextended themselves with credit, they'll definitely be hosed. But many people who rely on interest income (retirees, for example) love higher interest rates.

And as msnln pointed out, the last thing that anyone wants is runaway inflation. Higher interest rates are an attempt to keep that from happening.

IMO, even more of an issue than rising interest rates is the uncertainty of rising interest rates. I'm in the minority that believes we should raise a full half point, and then be done with it. A lot of nervous energy is being wasted worrying about the Fed.

[msnln]

"With higher interest rates, the housing market has begun a gradual and orderly reversion towards historical norms," Nothaft said. "New construction, home sales and house price appreciation have all been slowing over the past few months."

I have not read the whole article but from the way this sounds, Freddie Mac economist seems to be referring to the speculative buying of real estate by investors hoping to flip the property. More speculators = more likelihood of market crash, so I think it is healthy that RE market is slowing down and digesting gains over last few years.

Fed raised by 0.25% today but said future rise in rates will be dependent on the economy, which most interpreted as saying they will stop for now and raise only if there are signs of inflation in the future. Prior to today's comments, Fed had said inflationary pressures exist and they would continue to raise rates. So, it seems rates will stay at 5.25% for at least few months!

[veronak]

Being that I am a business major ( minor ) I guess I should know somthing..lol
However the Feds as we call them consists of a board of goveners the big man is Bernake all appointed by the Pres. It is the central bank ( the main guy), they are responsible for monetary policy with in the US. which also supervises and regulate banks. Keep in mind that inflation is actually an increase in the money supply ( too much money in the economy) countries such has Jamaica, Haiti all have in increase in the money supply which decreases the dollar value. Keep in mind that the Feds has been around since the after the depression, and our economy which is one of the most watched in the world is also one of the best. They have done a great job this is the first time in recent history that the feds with the increase in rate hikes has been unable to control the housing market, which is the reason for all the hikes started by Greenspan. Yes I am poor...lol but I do believe in our Federal Reserve. Hope I was some help