Is this something they should have done long ago? Their timing is horrible. Let people get in trouble and then jerk out the rug and then give them one bandaid when they need 100 stictches.
2007-08-17 14:01:45 · 4 answers · asked by Anonymous in Business & Finance ➔ Other - Business & Finance
It's treating an axe wound with a kiss and a bandage. This didn't go well in the late 80's, it's not going to go well now either. We'll end up in 14% interest rates before long.
2007-08-17 14:56:30 · answer #1 · answered by SpankyTClown 4 · 1⤊ 1⤋
I was a bit disgusted.
They did do this a long time ago--too many times. America is the most indebted nation in the world because of these low, low rates.
These bad loans need to be shaken out of the system--or the system will never get better. The 50 basis point pullback is just delaying the inevitable.
It's a bit like one more interest payment to keep the Ponzi Scheme going another day. One of these days, the pyramid will crumble.
It's like taking a cold medicine: It covers up the symptoms, but doesn't cure the problem. In this case, loosening credit when the problem has been that credit has been too loose is pouring gasoline on the fire.
Too many people with low incomes have borrowed too much money. People who repackage and trade this crap debt have figured out dozens of ways to convince themselves and their customers that the loans aren't quite THAT crappy. So a lot of them circulate in highly leveraged pools. Unfortunately, the loans ARE that crappy and many CAN never be paid off. They need to let them default and get on with it or soon, credit will dry up to the point that even people who CAN afford loans wont be able to get them because the buyer's market will be too shell shocked and risk adverse to provide funding. That's the moment when we'll see Spanky the Clown's 14% interest rates--just like back in the 70's and 80's.
If you believe that this market needs "100 stitches", you don't really understand all the mechanics of what's going on. There is a great article in Salon this week (link below) that explains in laymen's terms why your position is wrong.
I agree with everyone above, particularly Spanky the Clown.
2007-08-17 21:57:24 · answer #2 · answered by Nick V 4 · 1⤊ 1⤋
I think, this will make little difference. There are still by one count (Jim Cramers Best Blogs) there are seven million people who are still in danger of lousing their homes because of bad loans and being upside down in their homes. They need to let this work it self out.
2007-08-17 21:21:07 · answer #3 · answered by The Last Lamoe 5 · 2⤊ 1⤋
it'll make little or no difference by Tuesday.
and you don't want to go 'save' all these mortgages and houses -- to do that you'd have to give 30 billion or so to the hedge funds and investment bankers who got us into this mess. they blew it [big time] and need to take their medicine like the spoiled brats they are.
hehe ... I saw news of layoffs on Wall St. today. :-)
2007-08-17 21:11:28 · answer #4 · answered by Spock (rhp) 7 · 2⤊ 1⤋