Shady, shady business.

[TTBHG]

[url]http://articles.moneycentral.msn.com/Investing/SuperModels/WhyTheFedCutsWontHelpYou.aspx?GT1=33002[/url]

By Jon Markman
The Federal Reserve today will attempt to get out in front of the worst financial crisis to hit the world banking system in five decades by slashing short-term interest rates from their current perch at 3% to the lowest levels in years.

But its effort will have little effect on the ability of the average American to get a cheap loan for a new home, car or college education even as it has a large effect on U.S. banks' ability to fix their balance sheets by racking up fat profits.

If that sounds unfair, welcome to the latest episode of a brutal new American business ethic, in which the government bails out bad bets by risk-taking banking executives in New York with money that it borrows from middle-class families and foreign investors. The effort is gilded with fancy financial language and cloaked in the guise of a rescue that helps all citizens, but the reality is that Washington is essentially robbing the poor to help the rich.

It seems odd, but these are extraordinary times. Normally, when the Federal Reserve cuts the rate at which it lends money to U.S. banks, those banks in turn cut the rates at which they lend money to citizens and companies for personal and commercial use. Simple enough. Yet in the past few months, banks have made three important changes in their usual practice:

They have not been passing all of their interest-rate savings to customers.

They have restricted lending only to most creditworthy, documented applicants.

They have cut the total amount they're willing to lend.

Good for banks, bad for you
Banks are taking these seemingly perverse steps in an effort to reverse the effects of the massive losses they have withstood for lending too broadly to consumers and companies with lousy credit over the past five years.

They're pulling a big 180, which is as confusing as it is disheartening. Rather than providing funds to prospective home buyers and business people with legitimate needs for moving into larger homes or expanding factory lines, records show the banks are hoarding the low-cost money they're borrowing from the Fed and investing it in Treasury bonds paying higher interest yields. They're then pocketing the windfall profits to repair their own ravaged balance sheets[/size]

More in Link.

I personally think it is just big business but it is disheartening for people looking for help with lower interest rates on big loans.

[a1bion]

John Kenneth Galbraith once said that the only real socialism we have in this country is for the rich.

[radbag]

being in business is about making money...banks are in the business of making money too.

[TTBHG]

John Kenneth Galbraith once said that the only real socialism we have in this country is for the rich.

And he was correct.

I read an article about a week ago that I wish I would have linked and now I can't find it. DON'T QUOTE THESE NUMBERS, but the gist of it was that when interest rates were over 5%, people were getting 30/fixed for around 6-6.5%. Now that rated are going to be between 2-2.5%(after today's cuts) 30/fixed rated are at 5.5-6.3%. The banks have simply kept al of that money.

[TTBHG]

being in business is about making money...banks are in the business of making money too.

I have zero problem with them making money but you are a smart guy Rad. How much money are they going to make if the housing market almost single handily pushes the economy into a prolonged recession? They need to spur(which is what the fed is trying to do) the housing sector.

[radbag]

cash is king.

those who have it, dictate the pace of play

those who want it have to play by the rules

[radbag]

the quick, easy, surefire way to stimulate the economy is to allow more oil drilling.

the technological advances that have been made that will prevent oil spills and protect the environment are well documented...they should drill up in alaska, they should drill in the gulf, they should drill in my ass if there's oil...anything to alleviate the price of gas....anything to get us back to being a net exporter again....anything that creates jobs....anything that can get us in a place where we can take advantage of the oil prices and invest heavily on alternative fuel types thereafter.

[IHateUGAlyDawgs]

the quick, easy, surefire way to stimulate the economy is to allow more oil drilling.

the technological advances that have been made that will prevent oil spills and protect the environment are well documented...they should drill up in alaska, they should drill in the gulf, they should drill in my ass if there's oil...anything to alleviate the price of gas....anything to get us back to being a net exporter again....anything that creates jobs....anything that can get us in a place where we can take advantage of the oil prices and invest heavily on alternative fuel types thereafter.

from what I remember in my economics classes, if you're a net exporter it means that your currency/economy is not doing as well and thus your products are cheaper. If your currency/economy is doing well you can afford to import more and thus you would be a net importer.

[TTBHG]

the quick, easy, surefire way to stimulate the economy is to allow more oil drilling.

the technological advances that have been made that will prevent oil spills and protect the environment are well documented...they should drill up in alaska, they should drill in the gulf, they should drill in my ass if there's oil...anything to alleviate the price of gas....anything to get us back to being a net exporter again....anything that creates jobs....anything that can get us in a place where we can take advantage of the oil prices and invest heavily on alternative fuel types thereafter.

I disagree. There have been studies that high oil and gas prices have yet to hurt the economy. People are still buying at the same or higher rate. Auto manufacturers are still selling low MPG SUV's at an alarming rate. High gas prices are simply the price of doing business anymore.

[TheTodd]

I disagree with that TT. People are seeing higher costs for good across the board because of increasing transportation costs. I think that higher gas prices are effecting the economy greatly.

[radbag]

the quick, easy, surefire way to stimulate the economy is to allow more oil drilling.

the technological advances that have been made that will prevent oil spills and protect the environment are well documented...they should drill up in alaska, they should drill in the gulf, they should drill in my ass if there's oil...anything to alleviate the price of gas....anything to get us back to being a net exporter again....anything that creates jobs....anything that can get us in a place where we can take advantage of the oil prices and invest heavily on alternative fuel types thereafter.

I disagree. There have been studies that high oil and gas prices have yet to hurt the economy. People are still buying at the same or higher rate. Auto manufacturers are still selling low MPG SUV's at an alarming rate. High gas prices are simply the price of doing business anymore.

that's the way i and you look at it....but tell that to mr and mrs joe america who no longer are able to go to the movie theater because they'd prefer to fill up on gas to get to work....or mr old timer who is retired and living on a fixed income and can't afford to drive himself to relatives for thanksgiving because he'd rather eat dog food....or how bout ms widow with 3 kids who has to choose between buying gas or clothing her kids?

oil, gas, energy - it's expensive...and people are maxing their credit cards cause they can't afford it...it's a problem.

and to those who of us who view the rising cost of energy as the cost of business, the cost has to be levied down on someone right? so if it bites into my profit margins, i'm gonna have to pass the extra costs onto the consumers of my goods...then get back to the 3 people in my above examples...how can they afford my goods that i've just raised if they can barely heat their homes or gas their cars? they're choosing the essentials over my goods...i'm gonna be out of business as a result.

[radbag]

I disagree with that TT. People are seeing higher costs for good across the board because of increasing transportation costs. I think that higher gas prices are effecting the economy greatly.

FUCK!!! i just duped your post basically todd...sorry bro.

[TheTodd]

It's cool rad, you're post was more eloquent.

[TTBHG]

I disagree with that TT. People are seeing higher costs for good across the board because of increasing transportation costs. I think that higher gas prices are effecting the economy greatly.

No disrespect Todd/Rad, but some of the country's foremost economists disagree with you.

[url]http://www.usatoday.com/community/utils/idmap/28809166.story[/url]

WASHINGTON — Drivers may be griping about record high gasoline costs, but the recent surge in the price at the pump will have little impact on most consumers and will be hardly noticed in the broad economy, say several economists, including those at Standard & Poor's, LaSalle Bank and the Federal Reserve Bank of Dallas.
Rising incomes will help offset higher gas prices for most Americans, they say. And although gas prices are at unprecedented levels, not adjusted for inflation, the price gains have come over a number of years, giving consumers time to adjust their budgets.[/size]

"It's going to slow things down … but luckily, consumers' pocketbooks are doing reasonably well," Standard & Poor's chief economist David Wyss says. "Some people are going to get hurt by this. But the overall impact on the economy is going to be fairly limited."

Low-income households that are already stretched thin are likely struggling to pay their higher gasoline bills, Wyss says.

The nationwide average price of a gallon of regular gasoline was $3.209 Tuesday, up more than a penny from Monday and 32 cents higher than a year ago, according to motor club AAA.

Lots more in link. I just pulled the first couple paragraphs.

[radbag]

wherever you got that from TT, throw it away and never read that publication again....that's rubbish.

fed of dallas huh? oil rich dallas huh?

it's simple math tt...costs rise every day....there's a monthly/weekly/daily assessment on allocation of funds/income derived by the average/normal salaried worker...how can someone not say that soaring energy prices are not affecting the economy? it is because if you can't afford to go to the movies, you don't go....if you can't afford to buy new sneakers, you cherish the old ones....if you can't afford to put the new roof on the house, you pray it doesn't rain....

energy costs effect everyone directly AND indirectly...

[radbag]

i just clicked the link and the very first comment that my eyes were drawn to was this

When analyzing the impact on the economy, it's important to look at the pace of change in price, not the level of the price, says Stephen Brown, director of energy economics at the Dallas Fed.

That's because over time, consumers and businesses adjust to higher prices. It's the sudden jumps that cause problems.

how does business expect to 'adjust to higher prices'?

let's see:

1 - raise the cost of goods and services (not good for the economy)
2 - cut staff (not good for the economy)
3 - decrease output of goods (not good for the economy)
4 - decrease quality of goods (not good for the economy)

i guess businesses will and can adjust...good point.

[IHateUGAlyDawgs]

more material to discuss...

Recession? 38% say [url=http://www.rasmussenreports.com/public_content/business/general_business/recession_38_say_depression_somewhat_likely]DEPRESSION[/url] somewhat likely...

While economists debate whether the United States is in a recession or merely about to enter one, 38% of Americans say the nation is at least somewhat likely to enter another Depression. That figure includes 13% who say a Depression is Very Likely. A Rasmussen Reports national telephone survey found that 55% say a Depression is Not Very Likely or Not at All Likely. ...

Sixty percent (60%) believe that the federal gasoline tax should be suspended until gas prices come under control. Twenty-four percent (24%) disagree. Lower and middle-income Americans are even more supportive of suspending the gasoline tax.

Suspending the federal gasoline tax is supported by 65% of Democrats, 61% of Republicans, and 51% of unaffiliated voters.

More in the article.

[TTBHG]

wherever you got that from TT, throw it away and never read that publication again....that's rubbish.

fed of dallas huh? oil rich dallas huh?

it's simple math tt...costs rise every day....there's a monthly/weekly/daily assessment on allocation of funds/income derived by the average/normal salaried worker...how can someone not say that soaring energy prices are not affecting the economy? it is because if you can't afford to go to the movies, you don't go....if you can't afford to buy new sneakers, you cherish the old ones....if you can't afford to put the new roof on the house, you pray it doesn't rain....

energy costs effect everyone directly AND indirectly...

Rad, fuel is cheaper in America, one of the richest countries in the world, then it is in almost every other country in the world. Minus the one's who subsidize it(Iraq, for instance). All of the countries that have very stable economies are consistantly paying $5/ gallon for gas. Go to Germany, France, UK etc and buy fuel and then come back here. You will be happy to pay $3.30/gallon. We have been spoiled for many years and we are finally catching up with the rest of the world.

I spend around $50/week in gas. I drive a 2005 FX4 F150 Ford. That is a four door, four wheel drive with a 5.4L V8. By far, not the most fuel efficent vehicle in the world and I spend $200/month. I know people that have a $150/ month cell phone bill. I know people that pay $100+ for satellite TV. How much do you pay a month for massages and haircuts? It is all relative.

[TheTodd]

Those countries have excellent infrastructures that allow people to move about their country without much need for a vehicle.

[IHateUGAlyDawgs]

this is the point, TT...a lot of consumers have gotten used to the lower price of gas here, what is spent in other countries be damned. your point on the satellite TV, cell phone, massages, haircuts, etc..is precisely the point. All luxury items...gas prices rise, less money for luxury goods, less luxury goods bought, worse for the economy.

[radbag]

wherever you got that from TT, throw it away and never read that publication again....that's rubbish.

fed of dallas huh? oil rich dallas huh?

it's simple math tt...costs rise every day....there's a monthly/weekly/daily assessment on allocation of funds/income derived by the average/normal salaried worker...how can someone not say that soaring energy prices are not affecting the economy? it is because if you can't afford to go to the movies, you don't go....if you can't afford to buy new sneakers, you cherish the old ones....if you can't afford to put the new roof on the house, you pray it doesn't rain....

energy costs effect everyone directly AND indirectly...

Rad, fuel is cheaper in America, one of the richest countries in the world, then it is in almost every other country in the world. Minus the one's who subsidize it(Iraq, for instance). All of the countries that have very stable economies are consistantly paying $5/ gallon for gas. Go to Germany, France, sUcK etc and buy fuel and then come back here. You will be happy to pay $3.30/gallon. We have been spoiled for many years and we are finally catching up with the rest of the world.

I spend around $50/week in gas. I drive a 2005 FX4 F150 Ford. That is a four door, four wheel drive with a 5.4L V8. By far, not the most fuel efficent vehicle in the world and I spend $200/month. I know people that have a $150/ month cell phone bill. I know people that pay $100+ for satellite TV. How much do you pay a month for massages and haircuts? It is all relative.

you're preaching to the choir brother.

i pay 50 twice a week...my wife pays 50 three times a week....i'm the guy you talk about when you say it's the cost of business...i can't imagine someone living on a fixed income doing that...or a student doing that...or a person just starting out with wife and kid and new mortgage, etc...

as for the United Kingdom, their salaries are way higher than ours...i don't have a problem paying a 40 bucks per gallon if the salaries are up commensurate ya know?

[radbag]

this is the point, TT...a lot of consumers have gotten used to the lower price of gas here, what is spent in other countries be damned. your point on the satellite TV, cell phone, massages, haircuts, etc..is precisely the point. All luxury items...gas prices rise, less money for luxury goods, less luxury goods bought, worse for the economy.

i'll be honest and i'm not trying to be stupid cause we've got a GREAT FUCKING discussion going but if gas gets to the point by which i can't get a massage every month, i aint gettin one...i'm not going to the restaurants either if heating oil prices continue to skyrocket....and i'm not going on vacation if the costs of goods and services continue to rise based on energy costs being passed down to the consumer...who hurts? the state/city/county i am not vacationing at because i can't afford to....the massage therapist who does this on the side to pay for college....the waitress who relies on tips to pay for gas

[TTBHG]

this is the point, TT...a lot of consumers have gotten used to the lower price of gas here, what is spent in other countries be damned. your point on the satellite TV, cell phone, massages, haircuts, etc..is precisely the point. All luxury items...gas prices rise, less money for luxury goods, less luxury goods bought, worse for the economy.

It doesn't matter what you have gotten used too. I want the days of bulding a house for 30k to come back. I want the days where you could buy a brand new vehicle for $1000 to come back. I want the days of a 5 cent Pepsi to come back. They aren't coming back just like the days of 80 cents/gallon gas are gone. To say that gas prices are hurting the economy are false. Believe me when I tell you that the mortgage mess is having a 20 fold more effect on the economy then the price at BP.

[TTBHG]

this is the point, TT...a lot of consumers have gotten used to the lower price of gas here, what is spent in other countries be damned. your point on the satellite TV, cell phone, massages, haircuts, etc..is precisely the point. All luxury items...gas prices rise, less money for luxury goods, less luxury goods bought, worse for the economy.

i'll be honest and i'm not trying to be stupid cause we've got a GREAT FUCKING discussion going but if gas gets to the point by which i can't get a massage every month, i aint gettin one...i'm not going to the restaurants either if heating oil prices continue to skyrocket....and i'm not going on vacation if the costs of goods and services continue to rise based on energy costs being passed down to the consumer...who hurts? the state/city/county i am not vacationing at because i can't afford to....the massage therapist who does this on the side to pay for college....the waitress who relies on tips to pay for gas

For every guy that can't go on vacation or to the masseuse because of gas prices, there is another guy who just got a bonus or a raise who will go in your place. It is a vicious cycle but I maintain, all the bitching notwithstanding, that fuel prices rising is such a minute part of the economy.

[TheTodd]

Minute yes, but it is one of those issues that increases the costs of many products across the board and with that could lead to higher than normal inflation and that is what is feared.