17
Sep
All Eyes On The Federal Reserve: To Cut or Not to Cut
Al Gore wins Emmy for Current TV.
Al Gore won an Emmy for Current TV, his global television network that allows viewers to “create and influence what airs on TV.” The audience gave Gore a long standing ovation as he and his Current TV partner, Joel Hyatt, walked onstage to receive the award for “interactive television services.”
Carolyn Kay on coverage of Alan Greenspan:
Please notice the difference in reporting on Alan Greenspan’s revelation that the Iraq War is all about the oil. AFP says that Greenspan mentions the opinion in his new book, as though he were some kind of innocent bystander. Reuters tells us, though, that Greenspan himself “told the White House before the Iraq war that removing Saddam Hussein was ‘essential’ to secure world oil supplies.” As usual, Greenspan is trying to have his cake and eat it, too. Krugman’s latest column reminds us of other Greenspan cake-eating incidents.
GUARDIAN: Iran Holocaust Show Sympathetic to Jews
That’s surprising enough in a country where hardline President Mahmoud Ahmadinejad has questioned whether the Holocaust even took place. What’s more surprising is that showing it on state-run television.
The Holocaust is rarely mentioned in state media in Iran, school textbooks don’t discuss it and Iranians have little information about it.
Yet the series titled “Zero Degree Turn'’ is clearly sympathetic to the Jews’ plight during World War II. It shows men, women and children with yellow stars on their clothes being taken forcibly out of their homes and loaded into trucks by Nazi soldiers.
France casts doubt on ex-ABC consultant
ECONOMIC CRUNCH
Today’s the day: Will the Federal Reserve Bank cut interest rate and if they do, will it matter? The NY Times doesn’t think so:
WILL THE INTEREST RATE CUT HELP?
As for an interest rate cut, –and the rate was cut this week by____even before it happened, the NY Times questioned what good it would do:
Rate cuts won’t attack the proximate causes of today’s economic turmoil — widespread mortgage defaults at one end of the economic scale and a credit squeeze afflicting Wall Street at the other, both rooted in the excesses of the housing boom.
A rate cut will not make most exploding adjustable rate mortgages affordable, because those loans are set to rise to market-based interest rates from very low teaser rates. The increases in monthly payments will be huge even if the Fed cuts its rates by half a percentage point — and it may cut less than that.Nor will a rate cut magically loosen credit. Rate cuts generally juice the economy through mortgage lending. But the mortgage market has seized up, and is likely to remain cramped as long as lenders are unsure about the source and extent of losses on mortgage-related investments held by banks, financial firms and hedge funds. A rate cut will not make the system more transparent.
Note the references to the “excesses of the housing boom,” a phrase that suggests this just happened all by itself. Yes, some lenders were greedy and irresponsible—and on the right, at places like the Free Republic Website where readers trashed my last newsletter because they believe it was all the fault of people who knowingly got in over their heads. How easy to blame the people. They see the world only through partisan lenses and fear that Bush will be blamed—and he will. He Is the new Herbert Hoover bankrupting America.
They don’t understand and don’t want to understand how big banks and investment institutions deliberately encouraged, bribed and incentivized people to risk their lives so they could make a fortune. It was a scam, and a crime!
(See my latest article on “THE CRIMES OF WALL STREET” on Mediachannel.org at http://www.mediachannel.org/wordpress/2007/09/16/the-crimes-of-wall-street-what-are-we-going-to-do-before-its-too-late/
THE WALL STREET JOURNAL: “TOO MUCH HOPE MAY BE PINNED ON RATE CUT”
They say the rate cut “would offer little immediate help for the fundamental problems weighing on the country’s economy and financial markets.”
The Economist: “In the short term, lower interest rates will not achieve all that much.”
So why all the hype. Perhaps because symbolically this looks like the government is coming to the rescue. It will help short term stock sales and bail out bankers but not the people who are suffering under the burden of debt and foreclosures. No one is talking about how to create economic inequality, lower prices, control gas and food cots and RAISE WAGES FOR WORKING PEOPLE. I wonder why. “Don’t be naive, a friend said, the FED is not there to help us. It is run by bankers, for bankers.It’s part of the problem, not the solution.”
STOCKS DROP
AP: NEW YORK (AP) — Stocks fell moderately Monday as Wall Street anxiously awaited the Federal Reserve’s impending decision on interest rates.
The market is betting on a rate cut from the Fed when the central bank meets Tuesday, but investors are not completely sure what it will do and what it will say in its accompanying economic statement. Furthermore, with the major brokerages’ third-quarter results yet to be released, investors are uncertain about how badly the summer’s stock downturn, souring home loans, and credit squeeze hit the banking industry.
INVESTMENT NEWS: CONSUMER CONFIDENCE DOWN
With fears over the subprime-mortgage market, the tightening job market and increasing gas prices intensifying, consumer confidence in the economy fell to its lowest point in 16 months.
SHOCK SURPRISE: TREASURY SEC’Y OPPOSES REGULATION
Former Goldman Sachs Chief and now Bush Treasury Secretary warns against new regulations.
BANKS TAKE 30 BILLION HIT
Times of London: “THE world’s investment banks are to reveal a $30 billion (£14.9 billion) hit from bad debts as they unveil results that give the first real insight into the impact of the debt crisis.”
iTulip.com: More Whales to Hit The Beach
Louis-Vincent Gave, in his letter to subscribers today, continued with a metaphor to illuminate the global liquidity contraction, “in which the central banks keep throwing in sticks of dynamite until the ocean finally disgorges a huge dead whale,” and listing as previous “whale” examples Continental Illinois, Chrysler, Brazil, Drexel Burnham, Kidder Peabody, Mexico, LTCM/Russia, and Enron/MCI/Argentina. The letter explores the idea that Northern Rock PLC, Britain’s fifth-biggest mortgage lender, may be it. We say Northern is a lead whale, and look for a lot more to hit the beach over the next year.
LETTER: DON’T GET TOO EXCITED
Writes: “Cincinnati E”
Don’t get too excited about people losing “their” homes. Trust me: for every true story of someone being abused by mortgage originators there are a dozen people who understood how their mortgages would work. The subprime mortgage market served folks who wanted to purchase property they could not afford. They were betting on a housing market where prices would increase enough to allow them to either refinance or sell with a significant capital gain when the rates reset. Well it didn’t work out for a lot of folks, but they got to live in nicer houses than they could afford for 2 or 3 years, so where is the catastrophe for them, exactly?
Why did prices start going down? That is a far more critical question than anything Schechter discusses. The fact that a lot of lousy debt got securitized and sold is more of a nit detail to the bigger question of why a lot of debt backed by the collateral of the mortgaged properties plus millions of Americans’ incomes turned out to be lousy. It’s true that the last guy holding a bag of crap has got a bag of crap, but why was the bag full of crap?
BILL BOWLES COMMENTS FROM LONDON
Apparently those who have (had) their cash in Northern Rock (around £2 billion at the last count), believe it’s better to keep what they own (or more likely owe) in a paper bag under the bed than to entrust it to a gang of financial ‘whizzkids’.
Alan Greenspan former chair of the US Fed, said “he never saw it coming”, yet it was under his ‘watch’ that the US financial markets were ‘deregulated’, the single most important source of the current capitalist crisis (as if it doesn’t have enough to worry about).
And apparently it’s not just banks that are going bust, bankruptcies amongst all businesses are up 300% this year in the US.
Hey but don’t panic, be happee … keep on spending like there’s no tomorrow (which used to be a figure of speech) to keep those shareholders happee.
See the whole essay:
Michael Kingsley: How banks rip off college students and the government
That’s a report to snack on. Your comments welcome to dissector@mediachannel.org
