Wednesday, August 22, 2007

Tell Me Why

The top financial story at The Street:

Stocks Back on Easy Street

The top financial story at Reuters:

U.S. stocks rose on Wednesday as takeover activity resurfaced and credit markets stabilized, luring investors back into riskier assets such as equities.

The top financial story at Marketwatch:

U.S. tide expected to lift Asia
Stocks expected to open higher on strength of U.S. markets' gains, alleviating fears of subprime meltdown's effect on U.S. economy.

Seems pretty clear to me - the panic is over, confidence is returning, liquidity is fine.

So tell me again, if everything I'm reading at Reuters, The Street, Bloomberg and Marketwatch is true, then why are all the free-market conservatives who usually hate government intervention/bailouts demanding at least one rate cut from the Federal Reserve in the next month and more cuts before the end of the year?

I mean, if everything's swell in the equity and credit markets and M&A season is all set to go after Labor Day, why does Helicopter Ben have to shower the market (and the economy) with cheap money?

Unless of course things aren't really that good...

...or are REALLY, REALLY scary just below the surface and when everything breaks, oh, boy look out below...


POSTSCRIPT: Barry at Big Picture calls the people demanding rate cuts whining and pleading and crying and begging and beseeching and howling and weeping anti-free market self-cry babies.

That gets it pretty well.

UPDATE: The ECB still plans to raise interest rates in September:

FRANKFURT -- The European Central Bank signaled that it is still inclined to raise interest rates by a quarter of a percentage point on Sept. 6 to 4.25%, provided market turmoil doesn't deepen.

...

In a statement, the central bank said "the position of the Governing Council of the ECB on its monetary policy stance was expressed by its President on 2 August 2007." At that time, ECB President Jean-Claude Trichet said the bank would exercise "strong vigilance" against inflation risks. The phrase is the bank's standard expression to indicate a rate rise in a month.

As the ECB and other central banks have pumped billions into markets over the past weeks in order to quell a global credit crunch, analysts and investors have scaled back expectations of a quarter-point interest-rate rise next month by the ECB.

The statement "means that the events so far have not yet brought the ECB to the point of taking back the pre-announced Sept. 6 rate hike," says Holger Schmieding, senior European economist with Bank of America in London.

Also, Asian stocks are gaining for the fourth consecutive day:

Aug. 23 -- Asian stocks gained for a fourth day, the longest winning streak in seven weeks, after a capital injection into the biggest U.S. mortgage lender reduced concern a credit-market tightening will derail economic growth.

With markets soaring all over the world this week and the credit market stabilized for now, can all the whiny ass anti-free market titty babies shut the fuck up about Economic Armageddon and the need for a rate cut for a few days until we actually get some signs that Economic Armageddon is actually here?

Comments:
You can really trust the judgment of people who never saw the sub-prime crash coming?
Sounds more like wishful thinking supported by dice and a dartboard.
The idea of dropping rates to gain control is insane, an economic nonsense, but that is what these clever analysts want.
 
Never mind that they never saw the crash coming, they helped initiate it by providing cheap money for so long and actually encouraging millions to refinance their homes to adjustable rate mortgages, knowing the resets would be high as hell.

Greenspan truly is an evil, evil man. Remember, he was one of the biggest names exhorting people to refiance their homes with ARMs and urging first time home buyers to use 2/28, interest only and other crazy schemes to buy houses they couldn't afford. Not enough bad stuff can happen to his wrinkled old bubblicious ass.
 
reality, you wrote:

"Remember, he was one of the biggest names exhorting people to refiance their homes with ARMs and urging first time home buyers to use 2/28, interest only and other crazy schemes to buy houses they couldn't afford."

The preceding is an outright lie. You will never find any evidence of this outrageous claim.
 
Greenspan:

”Homeowners might have saved tens of thousands of dollars had they held adjustable-rate mortgages rather than fixed-rate mortgages during the past decade.”

Coming from the Fed chairman, that's a pretty big thumbs up for ARM use.
 
reality, you posted:

"Coming from the Fed chairman, that's a pretty big thumbs up for ARM use."

It is nothing of the kind. Greenspan's quote is merely a statement that addresses an historical fact.

Meanwhile, the statement was lifted from its context, which means his complete thought is not in evidence.
 
You read it as a statement of fact, I read it as a stamp of approval.
 
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