Fed lowers rates

NEW -> Contingent Buyer Assistance Program
<p>Take it up with Congress. I suspect your typical OC legislator is anti-regulation and pro- free market, so I don't expect you to get very far.</p>

<p>And, um, by its very nature, isn't the futures market run by and for speculators?</p>
 
<p>awgee - That is why dropping the discount rate helps the banks from the lack of rollover from the commercial paper. Instead of rolling over to new commercial paper they roll it over to borrowing from the Fed. Why do you think Mozilo was whining that they didn't drop the discount rate by 100bps? They have no more commercial paper available at a rate lower than the MBS pools. They can't afford to pay to borrow if that makes sense. The lower the discount rate the larger the spread for them. Oh well deal with it Orangzilo!</p>

<p>As for oil T. Boone Pickens was just on CNBC and he said oil was to go higher. He even said that he could see it hitting $100. For those who don't know who Mr. Pickens is he is the most successful energy trading hedgefund manager ever. He is always year after year in the top three for hedgefund managers. It might be because he charges one of the highest fees at 45% of the profit. </p>
 
lm - The stock answer is that the speculators deny the extremes that would be prevalent without the speculators participation. I would tend to agree with this answer, but then I have been "raised" with this theory.<p>


The other answer is that shouldn't the owner of the oil be able to sell his property for whatever price he wants and to whomever he wants to? Who am I or the goevernment to tell property owners what to sell their property for? My guess is the capitalist system, although painful at times, is the most efficient system.
 
<p>Well it is my understanding that it exists so that farmers for example can hedge their bets buy buying futures contracts for thir products. Say I am producing wheat and I want to protect my profits, I'll buy futures in case something happens to price of grain.</p>

<p>There is a fundamentally sound reason for this derivative to exist, but its no being used like a craps table.</p>
 
graphrix - They were already borrowing from one another at 4.85%, and the amount the member banks borrow from the Fed is tiny compared to what they borrow on the open market. 4.85%, 4.75%? I don't think it will be enough of a diff to make any diff on whether or not they want to buy paper.
 
<p>"GE is doing well bc of Bush Foreign policy"? </p>

<p>How so? what facts do you have? Do you even know what kind of business GE have??</p>
 
lm - The farmer sells his future production to a speculator. Some use it as a hedge, others as a way to make a living or lose a living.
 
<em>"There is a fundamentally sound reason for this derivative to exist, but its no being used like a craps table."</em>





Without the speculators, the hedgers wouldn't have anyone to sell to. The price we pay to allow the transfer of risk from one party to another is commodity speculators.
 
"Not surprising given its size, GE spends considerably to advocate its interests. In 2001 and 2002, the company spent more than $31 million lobbying Congress, federal agencies and the Executive Office of the President on issues touching on virtually all aspects of its operations: defense appropriations, environmental cleanup, energy, science and technology, aviation, banking and finance, telecommunications, domestic and foreign trade, foreign relations and taxation. GE spread its lobbying business among many individual lobbyists and lobbying firms, both in-house and outside. It spent $16 million on overall lobbying in 2000, twice what it spent in 1999."





That's from the first hit on Google. I don't feel it necessary to look further into what's common knowledge.





If your purpose is to prop Bush's policies, 1: I fiercely disagree, 2: This isn't the appropriate forum and I will refrain out of respect for those running this forum.
 
<p>Short term happy face...intermediate term frown!</p>

<p>Rate Cuts Will Make Inflation Problem Worse</p>

<p>http://www.smartmoney.com/aheadofthecurve/index.cfm?story=20070914</p>
 
<p>awgee - You are right that the rate of the discount rate doesn't help them all that much. What it does is save them from the rates they would be charged on commercial paper. I have heard that the spread over the LIBOR for CP that is backed my MBS is anywhere from 300 to 500 bps. If the average weighted coupon on the MBS pool is a measly 7.5% they would be bleeding like crazy. IMO it is just a way to buy time in hopes that the commercial paper will come back. CFC and the like keep buying time and soon time is going to run out. </p>

<p>For fun check out the amount of <a href="http://www.abalert.com/Public/MarketPlace/MarketStatistics/index.cfm">U.S. non-agency MBS</a> issuance. August 2007 was the lowest August since 2002.</p>
 
<p><a href="http://biz.yahoo.com/usnews/070918/18_5_ways_to_cash_in_on_the_fed_rate_cut.html?.v=1&.pf=loans">Five Ways to Cash in on the Fed Rate Cut.</a> This was on the front page of Yahoo.</p>

<p>And so it begins.</p>
 
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