{"id":196869,"date":"2008-03-18T18:40:00","date_gmt":"2008-03-18T23:40:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2008\/03\/18\/economics-update-498\/"},"modified":"2008-03-18T18:40:00","modified_gmt":"2008-03-18T23:40:00","slug":"economics-update-498","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2008\/03\/18\/economics-update-498\/","title":{"rendered":"Economics Update"},"content":{"rendered":"

Any time that the Fed cuts rates, it’s the lead economic story, and today the Federal Reserve huts its discount rate by 75 basis points<\/a> to 2.25%.<\/p>\n

There is not a whole bunch left for the Fed to do. At the rate that they have been cutting this year, they will be at zero some time in July.<\/p>\n

We are in a pickle, and Paul Krugman is right when he says that at best<\/span> we are almost in a liquidity trap<\/a>, if we aren’t already there. The Fed cutting rates has very little effect on interest rates for the rest of the economy right now.<\/p>\n

As a result of the rate cuts, and the inflationary pressures involved<\/a>, Oil appears to be heading back up.<\/p>\n

Additionally, low interest rates tend to push the dollar down. The dollar spent most of today above $1.58:\u20ac1.00, though it’s now strengthened to a bit less than $1.57, about 1% below the all time low of $1.5904:\u20ac1.0000<\/a> reached on Monday.<\/p>\n


Our economy in 1000 words.<\/p>\n

Of course the real economy, the one that most of not on Wall Street live in, had a few statistics too, with Industrial output dropping 0.5% in February<\/a> and inflation on the move<\/a>, with the core producer price index increasing<\/span> by 0.5% in February.<\/p>\n

And it’s not just our economy, it’s both pillars of “Anglo-Saxon Hypercapitalism”, with banks the Bank of England’s emergency 3 day loans totalling \u00a35 billion obeing oversubscribed by almost 500%<\/a>.<\/p>\n

It also looks like Lehman may be the next brokerage to have to deal with a run on its accounts<\/a>. It’s shares were down 39% in early trading Monday<\/a>, though it had largely recovered today.<\/p>\n

One source of revenue for the various financial houses, private equity buyouts and other forms of leveraged merger and acquistion activity, appear to be drying up<\/a>. No one wants to lend right now.<\/p>\n

It probably does not help that we have it looks like a new star is born in the ppathetic theater that is the monoliner insurance debacle<\/a>, FGIC, which posted a $1.89 billion loss. If people cannot trust the insurers to pay off if you default, then maybe they don’t want to fund your ill conceived takeover scheme.<\/p>\n

This applies to foreigners, who not only are not interested in investing in American businesses, but are avoiding what used to be the safe haven of US Treasuries<\/a>.<\/p>\n

Finally, housing starts hit a 17 year low<\/a>, though the article optimistically states that it is “above forecast”.<\/p>\n

A pox on economic reporters. A little truth a little earlier, and perhaps housing starts would not be the lowest since Poppy Bush was in the White House<\/span>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Any time that the Fed cuts rates, it’s the lead economic story, and today the Federal Reserve huts its discount rate by 75 basis points to 2.25%. There is not a whole bunch left for the Fed to do. At the rate that they have been cutting this year, they will be at zero some …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1080,973,1135,1004,1200],"tags":[],"class_list":["post-196869","post","type-post","status-publish","format-standard","hentry","category-currency","category-economy","category-energy","category-finance","category-inflation"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/196869"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=196869"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/196869\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=196869"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=196869"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=196869"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}