Low Rates Could Be Around for Long Term (NYT)

[Up2Late]

(I'm wondering if it all isn't some "Under the Table" Kickback, or Payback for not investigating the Mega Profits they are making right now.)

Low Rates Could Be Around for Long Term

By EDMUND L. ANDREWS
Published: June 27, 2005

WASHINGTON, June 26 - Federal Reserve officials, who meet this week, are beginning to suspect that the perplexing decline in long-term interest rates is more than a temporary aberration. The possibility has major implications for the economy, and it creates new puzzles for Fed officials on how they should respond.

On Thursday, the Fed is all but certain to raise the federal funds rate on overnight loans between banks by another quarter point, to 3.25 percent. That would be the ninth increase in the last year, and the central bank is expected to signal that it will continue to raise overnight rates at a "measured" pace.

But the real debate at the meeting is expected to be about the unexpected decline of long-term interest rates, which have kept mortgage rates at their lowest level in decades and fueled what many analysts fear is a bubble in housing prices.

Alan Greenspan, chairman of the Federal Reserve, said in February that the low long-term rates were a "conundrum" but might simply be a "short-term aberration." But Mr. Greenspan and other senior officials are now suggesting that the change is more enduring. The debate is over why the change has occurred, and different theories lead to sharply disparate conclusions about the best way to respond.

<http://www.democraticunderground.com/discuss/duboard.php?az=post&forum=102&go_ahead=doit>
(more at link above)

[The_Casual_Observer]

1. Low interest rates coupled with a stagnant stock market

make it impossible to get any sort of a return on retirement investments and create cheap money that has caused a spiral in home prices simply because they can ask more for the properties. I don't know who this benefits in the long run

[customerserviceguy]

11. Any speculative market

benefits those who know when to jump off the bandwagon. Usually, that is the point when everybody and his dog is trying to buy the commodity in question.

That would be about now. If you can figure out some way to live without your house, sell it now, and rebuy it after the bubble bursts. Yes, I'm a techie, but I spent 25 years in the title insurance business first, and I've seen the cycles.

[DeepModem Mom]

2. kick

[Toots]

3. The US dollar is losing value at a very rapid pace so the only thing of

real value is real estate. The ones that control the market know that and are allowing a large buy up of real estate by the wealthy at dirt cheap financing.

[mom cat]

9. That's the best explanation that I've seen. Thanks.

[Heewack]

12. Most are predicting a rising dollar

... for the second half of the year.

Today it edged up against the Euro and Yen.

U.S. Dollar Rises Against Euro, Yen After Consumer Confidence Reaches 3-Year High


FRANKFURT, Germany (AP) -- The U.S. dollar rose against the euro Tuesday after American consumer confidence reached a three-year high.
In late afternoon European trading, the 12-country currency bought $1.2081, down from the $1.2158 it bought in New York late Monday.

http://biz.yahoo.com/ap/050628/dollar.html?.v=3


Nike, U.S. Companies With Overseas Sales May Have Slower Growth
June 27 (Bloomberg) -- U.S. companies that get more than half their revenue from outside the country, including Nike Inc., may have slower profit growth in the second half because of the rally in the dollar.

http://www.bloomberg.com/apps/news?pid=10000103&sid=aUSrAQOCsStg

[Renew Deal]

4. Fix that DU link.

[Up2Late]

7. Sorry, I don't know how that happened, the one at the top works

The mods would have to delete that link:shrug:

[ckramer]

5. Looks like US is repeating what Japan had experienced in the 90's

Which was interest rates remaining low while the housing market collapsing. Wow.

What other tools are there for the Fed to stimulate the economy this time?

[spinbaby]

6. Japan still hasn't recovered

Remember when the real estate in Tokyo was rumored to be worth more than the North American Continent? They thought, too, that real estate would never go down.

[Up2Late]

10. Looks like we are truly screwed, the best thing the Feds could do is...

to start cutting the Federal Budget Deficit and Debt by cutting Defense spending. They need to take actual action to push for a stronger Dollar.

BAAAAWWWAAAHHHHAAA! :rofl: Yeah, like THAT is going to happen! :hide: WE'RE SCREWED!!!:cry:

[liberalcenter]

8. and any push in liquidity in the Money market

skips the stock market and boosts the oil market.
Welcome to the new world of $100 oil. Good thing forward looking GM has built a "smaller" Hummer just in time.... (Dumbasses)

[northzax]

13. it's because there is tons of cheap money floating around

especially from overseas. We are trading paper for good with China, and eventually, they'll call in their debt.

This is an interesting idea, actually, thanks for posting it.