Quote:
Originally Posted by Ronald Garrett  I just read something in the paper today. It said that everytime the Fed {USA} lowers the interest rate it lowers the dollars value. Everytime the dollar loses value the price per barrel goes up. Everytime the price per barrel goes up, a gallon of gas goes up. Catch 22? |
All I see with a lower rate is my credit cards getting cheaper and perhaps teh stock market being helped to stay up.
It won't help the housing market much if at all. Banks can't loan out money that exceeds what they have in assetts on their balance sheets, and with house prices dropping so drop the value of their assets. Lower rates means less reward for the risk of a loan - and as we've seen lately there is tremendous risk. Most mortgage outifts are brokers - they're just salesman and the actual loan goes off to become an investment or some such...and those are what's failing and ain't nobody buying more of em! Less valuable houses mean no home equity loans as there is no, or dropping, equity, and banks aren't gonna give you 95% of a house that will drop in value 10-20% - you'll be tempted to walk away and dump the house on the bank.
I'd say let the stock market drop and do it's thing. It'll recover, long term. However, the baby boomers are in charge, and about to retire over the next 10 years and they don't want to see their retirement nestegg get crapped on. Or the politicians let that happen and screw a large, vocal (AARP) group that will support, or not, their re-election.
The cost of gas is a drag on the economy. I can't possibly understand how they figure inflation - if what I pay at the store counts, then we've got the highest inflation in 10 years. Unless it's adjusted for fuel prices or some such crap.
Long term perhaps the weakening dollar will cause us to buy more american made products, or increase investment in the US by foreign companies. Or maybe China will still be a better deal - and as they grow and use more oil (more cars, more middle class, fewer mud huts) the price of oil will just continue to climb.
Linear Mode
