Hinting another interest rate drop...Smoke signals?greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Okay,...just heard this morning that the Fed is hinting at another 1/4 percent drop in interest rate. What sort of smoke signals about world economy and/or Y2K are we seeing if this does happen? I saw list of interest rates in a bank yesterday...makes me wonder why people are bothering.
Please someone saavy in the ridiculous world economic game explain it too me as if I was 5 years old...or at least 12 years old....All seems like a huge sham to me.
-- Donna Barthuley (firstname.lastname@example.org), November 17, 1998
Oooops! There it goes. Down to 4.75.
C'mon, gang! Borrow, borrow, borrow! Buy, buy, buy! We need to inject a little more exuberance into this sinking ship!!
-- alan (email@example.com), November 17, 1998.
It's pretty simple, Donna--most of the world right now except for the U.S. and Europe are headed for recession. The situation in Asia is more like depression. The economy in the U.S. has definitely been cooling since August, and IMHO the stock market would have crashed last month without Greenspan's between-meeting rate cut.
The stock market rose more than 20% each year in 1995, 1996 and 1997. That's the only time in the last 100 years the stock market has went up like this. Our situation right now is not all the different from the late 1920's.
Global economic problems. If the U.S. and Europe go under, there's no floor whatsoever under the world economy. The U.S. has gone for seven years now without a recession--an unusual length of time. We're due for one, and Asia could very well be what pushes us into one.
Today's Fed rate cut isn't unusual. You'd expect that in a slowing economy. The between-meeting rate cut last month WAS significant, though. Rarely is there a rate cut between meetings. Banks were becoming afraid to lend money, and some parts of the business community HAD to have money at that time because their stocks and derivatives were turning sour.
All these problems now, and Y2K isn't even a factor in the minds of most economists yet! "They talk about how far the car will go, and how fast it will go. What they didn't take into a account was that the wheels would fall off."
1999 will be "interesting" times...
-- Kevin (firstname.lastname@example.org), November 17, 1998.
wow... what an amazing sight... all morning the market was down and then ***poof*** just like magic the rate is cut and the market shoots up.
What would have happened if the Fed had disappointed the market? What will happen now that the 90 day moritorium on Russian debt is over? Will the Asian economies be able to pick up?
Today I got to see how to manipulate an economy into thinking everything is just peachy. Very interesting times.
Mike I think I'm gonna check into a refi ================================================================
-- Michael Taylor (email@example.com), November 17, 1998.
I begged my husband last night to get out of the market, now that he had regained what he had lost during the summer. My husband is NOT a gambler, but from my perspective of y2k, he IS gambling! The bubble will burst, just don't know when for sure. How can I convince him to get out??!!
-- Chris (firstname.lastname@example.org), November 17, 1998.
Kevin -- good response. I did read on another thread a reference to a Wall Street City report that the interim rate drop was due to the Bank of America being on the verge of collapse due to losses in a hedge fund. They axed their president (the former CEO of Bank of Amercia before the merger with NationsBank) and another top exec over the deal. According to the report, Greenspan lowered the rate to "save" B of A fearing that if they collapsed, they would take the whole system down with them.
What we have to keep remembering is that alot more is going on here than just Y2K, especially in the economic realm. We could easily have a major league recession before Y2K even gets here.
I keep thinking of last year's El Nino. Scientists could see this massive build-up of conditions that would "definitely" cause catastrophic weather all across the world. The top weather experts actually warned people to stay out of and even flee from the states of Florida and California due to what they predicted would occur. From that point on, every night on the news we heard nothing but El Nino, El Nino, El Nino. It was blamed for everything. It didn't matter if you were experiencing drought, snow, rain or just plain beautiful weather, it was due to El Nino. In the end, it turned out to be just the average winter for most folks. In fact, according to insurance industry statistics, the El Nino winter proved less severe (in terms of actual damage reported via insurance claims) than a "normal" year including the prior winter of 1996-97.
One of the difficulties of weeding through the news is trying to figure out what is actually Y2K-related. It's tempting to suspect that everything from the Fed's interest rate cuts to Wall Street's computer glitches is due to Y2K. But just maybe, they would have happened anyway.
-- David (David@BankPacman.com), November 17, 1998.
Chris, I wish I had a brilliant thing for you to say to your husband,..and I don't think I do...sounds like he likes "the gamble"...
Two to three months ago I urged my sister who had profit sharing stock in Walgreens to bail bail bail OUT!....She did and is ever grateful...I have never had stock, never wanted it...still don't...but I have watched the world economy and have read history....
How about urging hubby to go with less risky investment...if there is such a thing these days...how about gold?
Hang in there, Kiddo!
-- Donna Barthuley (email@example.com), November 17, 1998.
Most of the world is in or is entering into a depression (the financial pundits prefer the word "recession" because it doesn't scare people as much). The USA is about the only economy hanging on and is psychologically able to shore up the failing world economies--and only by using smoke and mirrors. The interest rate today is only the pump liquidity (credit) into the system. Many Americans are maxed out on spending/loans/credit cards. The bubble is going to burst SOON!!! Kitty in VA
-- Kitty Felton (firstname.lastname@example.org), November 17, 1998.
I suspect the objective is to keep the holiday season afloat, before the January accounting rollovers, knock over their boat.
-- Diane J. Squire (email@example.com), November 17, 1998.
for an insight into how really shaky things are read the post at gary north under banking nov 17 "$28 Trillion in Derivatives in Insured U.S. Banks" then click on the "click here" for the top 8 us banks derivatives status pretty risky in my mind. I think the big guys are trying to keep the market up afraid it will all come tumbling down. papa bear
-- papa bear (firstname.lastname@example.org), November 17, 1998.
For the past several months I've been playing chess against a very good computer program -- so good that I haven't won a game yet. Very frustrating, very educational for a semi-codger who hasn't castled in a good many years. The program is implacable; no matter what my move, it counters and threatens. I thought of that while trying to figure out what Greenspan hope to accomplish with the interest rate cut. The earlier cuts, last month, obviously had a political as well as financial purpose. He couldn't let the market tank before an election. (If there's one thing I've noticed in the past eleven years, it is that politics plays as much a role in Fed decisions as finances.) It has occurred to me that he is playing chess with the market, and the market is an implacable opponent, just like my chess program. He's in the end game, desperately trying to dodge and weave and survive long enough for . . . what? Does he think the Christmas shoppers will pull Wall Street out of the fire? Does he think Japan/China/Brazil will miraculously stage an economic turnaround? Or is he just trying to stay alive long enough to gracefully extricate himself personally from the situation and leave the mess for someone else? That's my question -- what is Greenspan hoping for? Insights are welcome.
-- JDC (email@example.com), November 17, 1998.
"When rates are low, stocks will grow. When rates are high, stocks will die."
-Charles J. Givens
The above saying is for 'average times', these ain't average times even though most folks don't see it yet.
Hey, here's a question: Will the flight of capital from other countries prop up our market? If it does, mightn't that make the inevitable 'correction' all the worse?
-- Uncle Deedah (firstname.lastname@example.org), November 17, 1998.
I've been trying to get a friend of my brother's to get out of the stock market. There is NO DOUBT AT ALL that stocks will go way down in 1999 and 2000. My brother's friend says he's in the market for the long haul.
A lot depends on whether you have savings separate what's in the stock market, or if the stock market IS your savings. A wicked recession is on its way. Do you and your husband have enough savings to live on even if neither of you have a job?
If you do have savings separate from the stock market, is it enough for an extended period of joblessness? You may need that money that's now in the stock market to complement your savings.
Take it out now, while the market is high. If you and your husband end up not needing the cash, you can always find some real bargains to put the money in during 2000.
-- Kevin (email@example.com), November 17, 1998.
The computer analogy is great - Greenspan and his cohorts are hanging in there but at some point it's all going to go slip sliding away. Not many people know what happened with B of A recently but it's all true as described above.
Now I know that some people have no time for Don McAlvany but he was recently on the Jeff Rense Sightings show - you owe it to yourself to listen to this guy - he *knows* the manipulations being played out and is fully aware that this is all tied in to Y2K, elections, and the world financial derivatives and fractional reserve mess.
Sometimes on a calm sea a yacht can be knocked over by a "sleeper wave", one that has built up over the length of an ocean and is a combination of several smaller waves peaking at just the wrong time.
The problem is we are not sailing in a calm sea at the moment, and there are a whole bunch of waves appearing on the horzon. Greenspan and Co. know this, and they also know that it is game over when the wave hits.
And it will be a Tsunami.
You need realaudio for this, he comes on after an hour or so.
-- Andy (firstname.lastname@example.org), November 17, 1998.
My scenario is: I've sold all my stocks, I have a check here for $90,000. If the banks fail and the stock market fails, what good is my $90,000 and where am I going to put it? Money market? Bonds? I've got to pay big time tax on this money. What good is gold? I know during the depression people who had gold bought up real estate and made fortunes. These are different times and situations. Anyone have a crystal ball to gaze in? Also, we do not have any debt other than a mortgage payment. It's not an option to pay it off because we may have to pack up and move somewhere to make a living. We have equity, should we refinance take the equity and see what happens? What do we do with the equity?
-- bardou (email@example.com), November 17, 1998.
Thanks for the cheers and advice everyone.
Donna, gold isn't a good investment for him, since it's been doing very poorly and shows no signs of moving up. I bought 10 maple leaves 2 months ago, and he keeps putting back on my nose how silly it was since it hasn't moved up. But I bought it as simply another barter or insurance item since I can't find anyone who knows for sure what currency if any will work when SHTF.
Kevin, we have no personal savings account to speak of, all is in retirement "profit sharing", wich is invested in the market. He owns a small construction co. which has been doing very well, and he's managed its money quiet well as well as our investments. But he's still stuck in this "for the long haul" philosophy. If the company went belly up, which could very well happen since the construction industry is one of the first one hit hard in recessions, we'd have nothing left.
I'll use your arguements and insights tonight. Hopefully he'll come around soon.
-- Chris (firstname.lastname@example.org), November 17, 1998.
Well, for once I agree with diane.
-- consumer alert (email@example.com), November 18, 1998.
You might suggest a couple of other things to convince your husband:
1) The person who held their stocks through the market crash of 1929 took over 30 years just to regain the ground they lost. Although the mantra for the individual investor during this bull market has been "buy and hold for the long haul" it just doesn't apply to a serious downturn. The prudent person does not hold for the long haul in the face of a massive downturn.
2) Have your husband compare the movements of the Dow with the movements of gold prices for the last two months. He'll see that they are inverse of each other; whenever the market goes down, gold goes up and vice versa. Also note the massive move from stocks to bonds recently. The simple reason is that there is a significant "flight to quality" by nervous large-scale investors whenever the market starts to tank. Why should the little investor get squashed? Do what the big boys do--go to quality and stability now and sleep better at night.
3) Does he worry about his portfolio? If so then suggest that he can "buy" some peace of mind simply by shifting the stocks into something "safer" such as a money market fund. Most stock analysts (Y2K denialists, all) now agree that the double digit returns in stocks are over for a while. So 5% on your money market is really not a bad return and one sleeps so much better. I cashed out all of our stocks back in May/June at Dow 9100. What a relief! This was a very cheap way to eliminate one more thing to worry about.
4) Investing in gold is not about making money. Gold is about preserving capital. Don't let him rub your nose in its lack of return; that's not the point of investing in gold, so you shouldn't get chided when it doesn't "perform" like stocks.
-- Franklin Journier (firstname.lastname@example.org), November 18, 1998.
Thanks for the tips Franklin, the more I sound like I know what I'm talking about, the more he'll listen.
If that's any indicator and I hope it is, after I talked to him last night in bed he tossed and turned for an hour, got up and paced around. He does that only when he's very worried about something at work. I didn't press him, I acted as if I was asleep. I hope he was thinking about what I said.
-- Chris (email@example.com), November 18, 1998.
Remember too - when considering changing fron the stock market, and "when" to change from the market - becasue nobody what will ealy happen - that there is no reason NOT to return at some point after 2000. Assume you believe thtaq the greatest drop is going be "after January, when rollover problems begin." Or in last quarter 1999, when people "start hoarding" cash. Bail, wait until you (he) feels there is some degree of stability (at whatever level) and get back in - for the longer haul.
In other words, sell in September 1929.....before the biggest fall - even if you don't know when. Even if you lose a little by now by not waiting until "October 27, 1929."
Buy in March 1930. Or May 1932. Or March 1933.
-- Robert A. Cook, P.E. (Kennesaw, GA) (firstname.lastname@example.org), November 18, 1998.
Personally, I don't really have a lot of money in the stock market. I am waiting til 1-2-99 and then pull it all out... That way I can pay taxes on it on april 15 2000. If the IRS is still around I will be more then happy to pay them.
Is it a gamble... yes... but... it's not enough for me to start crying over hysterically..... ( I would be po'ed no doubt.. but then I'm that every sunday when the Tampa Bay Buccaneers loose...)
Just my 0.02 dollars worth...
-- scholty (email@example.com), November 18, 1998.
a good book to read is "blood money and greed" by cliff ford.
I think that the powers that be are artifically holding up the USA economy until the EURO dollar is offical. Then the european banks make their move.
The '29 crash was followed by a '30 rebound then a 89% fall and a 2 year bull market. Yet most "experts" say fair weather ahead.
How can this be? The market is currently mostly speculation.
The market is surposed to represent earning potentials. I think that those persons who state that the market is headed for 11000 in the next year are fools. How do they figure? Y2K should surely damage our fragile global economy further.
-- WAYNE WITCHER (WWITCHER@MVTEL.NET), November 18, 1998.