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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (89415)	2/11/2001 8:41:53 PM
From: benwood	Read Replies (1) \| Respond to of 132070

1.9%? I'm sitting on 12.5k at 0.0%. It's only good until mid-May, but I'll see if anybody is dumb enough to let me transfer it to them, lest I must pay it off. Pretty simple arbitrage,though...

To: ild who wrote (89415)	2/12/2001 9:41:26 AM
From: Dan	Respond to of 132070

ild -I'll take a stab at answering. Banks get the initial money from savings accounts, cash in checking accounts, and CD's. Then, they are able to borrow from the Federal Reserve Board banks up to something like 8 times the amount of cash they have at their bank from the FRB at the Federal Funds rate which is 5.5%. Since most people don't pay off their credit cards, and since there is huge profit at 18-22% rates on cards, they are willing to gamble that a low rate will sucker enough borrowers to use their cards. Usually the low rates are 3-6 months and only up to a certain dollar amount. So, they will loose 3.5% (marketing cost) for a short time with the likely hood of making 4 times their cost. MNBA gave huge amounts to the Bush campaign to ease the way for tighter BK laws. Soon it will be harder for a BK. When the Feds pump money into the system, The more available funds cause the Fed Fund rate to drop, so cost to the banks is lower. They may also play with the bank cash requirement. Instead of 8 times, it may change the borrowing level to 10 times. (I'm not sure on the actual number) Greenspan is just letting alittle air out of the ecomony. It was at such a huge bubble, he had to ease it some. But with nasdaq STILL trading around a p/e of 100 (5 times more than historical times) he is still "Easy Al". I think bubbles do help create technological advances by crating easy borrowing for companies. But, at the cost of investors. Maybe not a bad trade off for society. Between presidents is a good time for a softer ecomony. If you add up all the taxes paid, we pay about 60% in taxes. So, the gov is now our partner in creating wealth. They cannot afford a real recession. They will keep us working as much as possible, for as long as possible. That is why I believe that when the baby boomers get ready to retire, the stock market will really drop, causing baby boomers to work more years. This will also keep them from giving us our money back in Social Security payments.

To: ild who wrote (89415)	2/12/2001 12:06:02 PM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

ild, The banks get the money from non-interest accounts, like checking. Or from their capital. or from free cash flow from their profitable lines. Or they write it off as a marketing expense and get Uncle Sugar (read you and me paying taxes) to eat part of it. And they amortize the expense over several years, because they know you won't pay off the balance when they change the interest rate to 42% a year and the soul of your first born child. <g> The banks are who get the money. The Fed buys bonds from the banks and the banks then have cash they use to make loans or to invest in shady derivatives. No, Greenspan has done everything he can to keep the patient he mortally wounded on life support. The problem is not that AG is causing the slowdown now. The problem is that he didn't allow the natural slowdown to occur 3 years ago and created greater inbalances in the economy with his overly easy credit position. In other words, we are going to have a slowdown with or without AG. But we will have a worse one, eventually, because of AG trying to delay a milder one.