Posts tagged ‘Interest Rate’

“Lack of funding is the biggest problem facing the housing market right now, according to the analysts, with subprime and Alt-A securitized markets shutting down and banks being forced to cut their mortgage lending dramatically due to capital constraints. So-called Alt-A loans are made to borrowers with less than prime credit ratings but who are above subprime.”
The highlight is taken from Reuters News Mail letter.

My previously posting on Jacky’s Opinion, Job losses in America; one of multiplier effect from Subprime Mortgages in America, I have told about economic theory explain the case with simple assumption, Constant Oil Crude Price and Businessmen take Capital From Loan.
Actually this post is quite well the same with my post in Jacky’s Opinion, but we focus on Loan, Bank, Mortgage and Economic Crisis. After Subprime attacked Banks and Property Investors, Banks have already been booked (yellow flag), more careful to accept new loans. The complication goes to worst because the multiplier effects are spread any sectors. Read more »

We have good news from my Uncle Sam, America. Time lag had been working for 1 month, when LA Times sent me good news that Interest rate cutting by FED has show his magic. I think worldwide economic will be impacted and reaction to better condition. LA Times told on the report that credit problem return go nice.
What does it mean? When fall into Bad Credit, Number of dollar to payback their credit has arisen, now, people have ability to payback because of lower interest rate.

Understanding people must know that correlation between interest and ability to payback their credit or loan. Lower interest rate, makes people turn to invest their money or create a job. Lower interest rate also makes dollar to payback will lower than before.

When American economic goes better, oil price will meet new equilibrium, lower than before and my prediction, oil price will turn down and down, maybe stop and stabile around $ 90-100 USD per barrel.
While Uncle Sam Economic goes healthy, banks and loan company treasure and stock will be appreciated on stock market. Dollar is also appreciated in exchange market.
New equilibrium doesn’t mean that the price and dollar in exchange market will meet to previous equilibrium. New equilibrium will lower than the highest but upper than before equilibrium.
I do sure; oil price will turn significantly in recent days. Let us see our prediction.

I have post in earlier article, Time lag and Intervention talked about how long time lag is needed in order to make intervention (cut interest rate) work.

As we see, time lag maybe runs in short time or long run; while time lag work, what the impact or reaction when time lag is working. Reuters to day, send us the good report (actually bad report to American employee) because the impact from interest rate intervention by FED doesn’t work till now.

According to Reuters, The Labor Department on Friday said non-farm employment fell by 80,000 jobs in March, the biggest decline in five years. Financial markets saw the drop as reinforcing the need for further Federal Reserve interest rate cuts.

This is just the beginning; FED expectation on their interest rate cut doesn’t work well. Time lag make unemployment rise. The report is bad news but it’s real. Read more »

First at all, I would like to make our sense that we are outstanding people so we (like I) must keep in our mind that American Economic is central of world economic, a little case (all cases) is happened in America, the impact will broke the world economic. Their economic is more power than us. So we have to look careful, analysis the impact of all events (political and economic are the example) there in America.

Recent months, American falls down. The impact is happened everywhere, anywhere, any persons and all states. USD Dollar fall down in record against Yen, Pound Sterling, Euro, and others major countries. The impact also happened to all price products, especially oil price, gold, stocks, bonds, treasury bonds. Read more »

Debt is an obligation in future. While future is uncertain condition, debt becomes uncertain condition in future also. You just make some prediction and analysis your ability to payback your debt based on some indicators such as your income (salaries), your sales, and interest rate. In macro economic we see that retail economic (micro economic is fundamental affected to debt. When FED cuts interest rate, macro economic analysis said that businessmen will turn to get credit because lower interest rate, macro economic is refreshing.

Example, if FED increases interest rate, businessmen stay at home, credit become low. Macro and micro economic run stagnant.

Another example; when interest rate raise, and oil price also raise, businessmen have loss. Profit down significant and they cut employees, fired some staff. Imagine one of the employees is you? Or as businessmen, you are the one which close your business because loss is higher than fix cost.

Those reason impacts to debt, as employees (personal payday or loan) you are in trouble in payback ability as well as businessmen, you close your company (business) than your debt is in trouble too.

Sharing your problem in Debt Consolidation Care!

If someone has a problem, she/he will find a friend to tell the problem. The case also happens to you. Sharing your debt, everything about debt in the Consolidation. Many unique debt cases are cleared there. You can share about everything, or find your related cases. You can asking and request to expert and to all Debt Consolidation members about your problems.

I do think you case isn’t alone. You think that you have unique case and no one has like you, by joining debt Consolidation care you can open your mind that you aren’t alone. Don’t shy with your debt. People sometimes shy and don’t want sharing their debt problem. In debt Consolidation care you can share everything include there the best creditor (lender), bad credit offers, asking Debt Community and all about financial problems.

Thank You Mr. Fed for your intervention on market failure; Cut the interest and allowed home loans
Adam Smith said No Intervention Please from Government! Market will be equilibrium again by Invisible Hand. Hello Mr. Smith, Who is the Mr. Invisible Hand? One I ask to Adam Smith, George Soros doesn’t believe to Invisible Hand. He doesn’t believe to free fight enterprise, free competition. He doesn’t believe that the miracle of invisible hand come from France Language.
Who is Mr. Invisible Hand? Market, demand and supply? No, John Maynard Keynes didn’t believe that. So who is the Mr. Invisible Hand? Christianity Thought said that business is evil, so businessmen must be cleaned by charity.
When market gone failure in 1930 an, Invisible hand didn’t come. Invisible hand is not real. So who replace Mr. Invisible Hand? Government? Yes Government is Mr. Invisible Hand. He came in the big recession.
Now, he came back, Government (Central Bank of course) back to clear all market failure. Fed has done it in near. When American Economy gone crazy, world economy also gone failure. American economy is the leader, and we (others economy is only follow) are behind. Fed back again after in January fed cut the interest rate. Fed backs again to stabilize American economy so we can breathe again. Through What Fed stabilizes American economy?
Let us see the failure first so we can analysis and suggest what is fed tool?
World turn to recession, high unemployment, and business doesn’t work well; flying oil price, stock declined significantly, Politic problem in Tokyo, Recession in property credit in United States and many more problems caused market failure.
In America, The most problem is Business Property; specifically failure in Home loans crash. Fed come likes Jesus and allowed millions dollar to help. Stabilize, and refresh American problem.
More detail about those cases, market failure, read related post below.
An additional opinion, Market Failure in American is also caused by Mr. Bush because he make his American economy as second target, otherwise Iraq is his first target so my predict the next American president comes from Republicans.
Recommendation Post:

FED cuts interest again on NYtimes.com
The reduction of the benchmark interest rate to 2.25 percent was less than investors had been hoping for, though it was one of the deepest in Fed history
The Fed cut the fed funds rate by 3/4 point to 2.25%. Ron Insana, of Insana Capital Partners, and CNBC’s Erin Burnett, Steve Liesman, Bob Pisani and Rick Santelli share their analysis. Read full article on CNBC news.
Bond gurus Bill Gross, of PIMCO, and Ken Volpert, of Vanguard, react to the Fed’s decision to cut a key rate by 3/4 point.
Fed cuts key interest rate on Los Angeles Times.com
By Peter G. Gosselin
In a forceful move to contain the growing credit crisis, the central bank slashes its benchmark interest rate by three-quarters of a percentage point to 2.25%.
Rate cut aims to push fearful investors to take risks
By Tom Petruno and David Colker
The Fed’s intent is to coax money from low-yielding accounts back into stocks.
WASHINGTON/NEW YORK (Reuters) – The Federal Reserve slashed U.S. interest rates on Tuesday, boosting Wall Street, which was already higher on stronger-than-expected investment bank earnings. on reuters.com