Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Robin Plunder who wrote (100257)	12/14/2008 5:39:14 PM
From: TH	Respond to of 110194

RP, I want to get a discussion going before I offer my perspective. GT TH

To: Robin Plunder who wrote (100257)	12/15/2008 12:24:12 PM
From: forceOfHabit	1 Recommendation Respond to of 110194

Robin, seems like the actual fed funds rate is already between .1 and .2%....so not cutting 50 would be acting contrary to market, which fed has not done very much in the past..they tend to follow market. I agree. In fact I think the Fed is currently being very reactive (not proactive) and the dominant emotion is fear. They don't have the confidence themselves to buck the market, and the market doesn't have any confidence in their policies so that any unexpected moves the Fed makes would be seen negatively. I think they're afraid to go 25 bps because (when the market expects 50) that would be seen as an admission that they're trying to stay away from the zero boundary, and it is a bigger problem than they have been admitting. I think they're afraid to go 75 bps because then they will be effectively out of conventional (rate cutting) ammunition and will have to resort to much less tried and trusted "quantitative easing" methods. (In other words, the zero boundary really is a problem.) So I think 50 bps. But I think we'll see (even more) "quantitative easing" type methods soon. (i.e. even more risky, overvalued assets on the Fed's balance sheet.) habit