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Whoa-- apparently the 0.5% interest rate cut the Federal Reserve announced a couple of hours ago wasn't entirely anticipated by the market! Currently the Dow Jones index is up more than 330 points, or more than 2.5%! The rate reduction was the first in four years, and was unusually steep by the Fed standards. The Times reports:
While an interest rate cut was widely expected, there had been profound uncertainty about whether the Fed would choose a more cautious quarter-point reduction. But the bolder action and an accompanying statement, both approved by a unanimous vote of the central bank’s policy-setting committee, made it clear that the Fed had decided the risks of a recession were too big to ignore."Developments in financial markets since the committee’s last regular meeting have increased the uncertainty surrounding the economic outlook," the central bank said. Signaling that it might cut rates more if necessary in months ahead, it said it would "continue to assess" the economic outlook and "act as needed to foster price stability and sustainable economic growth."
Why should you care what some fusty old bankers do with their rates? Here's a simple chain of logic: Federal Rate Cut = Big Economic Stimulus = Larger Wall Street Bonuses = Higher Real Estate Prices = You're Renting FOREVER, sucker! Many observers have also raised the specter of "moral hazard"-- that those reckless bankers downtown and in Greenwich will see the Fed's move as a bailout, and will take it as a sign that they can make even riskier investments down the road without worrying about losing their shirts. That could lead to very, very bad things ahead. Beware!
Related: DealBreaker commenters go wild on hearing the news
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Still nothing about Hillary Clinton's health care plan? If rate cuts and Karl Rove and Alberto Gonzales' departures are considered to affect New Yorkers, why not health care?
wow, you really know your economics. did you not follow this summer's events? the volatility? how many hedge funds closed up. they make the money b/c they're smart and aren't going to be experiencing "irrational exuberance" anytime soon. many people have already discounted their bonuses. why make people on the street seem so bad?
Shouldn't the banner read .....
Fed Cuts Rate by 0.5%, Wall Street Parties Like it's 1928
The crash didn't happen until October. Wall Street was breaking records right up until the bottom fell out. Wall Street is partying like it's September 1929.
Is anyone else looking for a helmet?
This is bad. Stagflation anyone?
Stagflation will only happen if the falling dollar finally produces inflation in the price of imported goods. Since the yuan is mostly pegged to the dollar I wouldn't worry quite yet. If you're looking for European goods on the other hand. . . well, you probably don't have money problems.
I hope #3 is kidding. Wall Street people are smart? Maybe the handful that have PhDs in physics. The rest are a bunch of liberal arts majors that would flunk out of first year college engineering calculus.
The Fed has finally become a total political tool. Greenspan (gotta pick up his book, and he plays a mean sax) understood the Fed's job was monetary policy, not propping artificially inflated markets.
Today's decision, cuts & bias are a poorly disguised effort to prop a failing market, bail the big houses & hedges, and will only encourage the ongoing bad behavior which brought about this mess. This will only make the bad repercussions more intense and more acute when the poop hits the fan.
Dadoc
#8, do you know how many engineering majors now work on wall street? more than finance majors.
Who cares? This is totally gonna lower my student loan payments in the long run. Go Federal Reserve go! Lower them some more please thx.
hey jake wat u mean by bad things ahead? for whom?
anyway, loved your old time e. village stuff like the egg store. too cute hearing your sis asking how much are the eggs.
oh, eggs prices went up where I am.
#8, do you know how many engineering majors now work on wall street? more than finance majors.
Yeah, but most of the were OR majors. Point is, the smartest people on Wall Street are vastly outnumbered by those of only slightly higher than average intelligence that are simply following the money.
#13 - You sound bitter and jealous. These above- average liberal arts frat boys are driving bimmers and living in luxury condos, banging every hot chicks that they meet. While super smart PhD engineers are stuck in research jobs with most of their paychecks going towards their student loans. The point is that school is useless.
People swing between fear and greed...
i like a the interest rates. They make me tingle in the swimsuit area
You sound bitter and jealous.
You sound like someone that couldn't come up with a better argument. You're probably a banker that took the insult and realized you aren't that smart so sex and money are the only things you have to brag about. Thanks for making my point.
Banging hot chicks and living paycheck to paycheck on a six or seven figure salary doesn't make one smart. And while some PhDs make squat in academia there are the ones on the Street e.g. the quants, that make tons of money. Point was, they are the only smart ones on the Street.