Posted by
The Bad Mortgage Broker on Friday, February 01, 2008 12:20:03 AM
This is the start of my blog and hopefully the first of many, many more. Today I'd like to talk about the Fed's recent rate cuts and the markets reaction. First I'd like to say that I'm a little biased because I work in the mortgage industry so I'm always hoping home loan interests go down. And my view will be slanted toward what some might say is a simplistic view of the economy and all it's facets. But here I go anyway.
The stock market has about the same attention span as my 2yr old daughter. If she's playing and I don't want her to do something I know I could just go get a piece of candy, take away what she's playing with and when she starts crying, give her the piece and candy and lifes great. Instant fix and she doesn't even realize what just happened. TA DA, enter the "attention deficit disorder" stock market. You can't find a single promising thing in the economic news. (Don't get me wrong, I'm not a doom and gloom guy. I believe the US economy can ride out just about anything and come out strong, but "ride" being the key word there). And we post positive gains anyway.
So the global stock market is dropping (on MLK day) like presidential primary candidates so with all our wisdom gained from the US markets being closed we prepare. Tuesday the market opening is expecting a huge drop. Out comes the Federal Reserve Commander, with a bold 3/4 rate cut and poof, lifes all better. The DOW finishes the day up and rest of the world lost billions in a single day because of our poor economic policy spill over, US makes billions and you wonder why everyone hates us.
I of course was bracing for significant home loan rate decreases and beginning to prepare my clients for a great deal. So I'm disgruntled all the Fed rate cuts had a reverse action on home loan rates and yet the media and stock market guru's believe it's going to improve the lending markets and strengthen the real estate market. This currently is not the case and yet no one cares. So to summarize;
*Rates are not down.
*The markets are oblivious to how bad things are going to get.
*The Fed prozac prescription of rates cuts should only be taken once every 30 days.
*Consumers have yet to see the benefit from any stimulus package.
*I'm tired of explaining to consumers that the Fed cut rates caused rates to actually go up. It's not their fault, the media and low rate companies keep telling them interest rates are going down (the media because of ignorance and companies to make the phone ring).
Well that's it for today. I'm sure I'll have more to vent about tomorrow, after all it's a Presidential Election year and you know there's always going to be something to talk about.