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Home › Forums › Housing › A logical, coherent Jim Cramer video… (I can’t believe I typed that)

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  • August 17, 2007 at 9:10 AM #9916
    davelj
    Participant

    He discusses how the Fed wants to cut the Fed Funds rate but is hesitant to do so until some of the “bad financial actors” – Countrywide, WaMu, and possibly Wachovia (owns Golden West) – are out of business or greatly diminished. (Although the fact that he doesn’t understand that the FDIC insures S&L deposits as well as bank deposits is a bit weird. Probably just a brain fart.)

    This is actually not a bad take on the Fed’s current thinking.

    http://videoplayer.thestreet.com/?clipId=1373_10374749&channel=Cramer+On+Demand&cm_ven=&cm_cat=&cm_ite=&puc=dm&ts=1187365938555&bt=NS&bp=WIN&bst=FF&biec=false&format=flash&bitrate=300

    August 17, 2007 at 2:26 PM #77167
    barnaby33
    Participant

    What he basically said was, that the FED controls the market and thats why its never good to bed on the negative (in the long term.) I love how he left himself an out with, “could we see 12k, possibly.”

    The FED my want to lower interest rates, but may not be able to. Especially if it actually cares about inflation.
    There already seems to be a fair amount of capital flight in terms of the yen, if they cut but thats going to ramp up hard and fast. The market will take it in the shorts the end game is the same.

    Josh

    August 17, 2007 at 2:26 PM #77289
    barnaby33
    Participant

    What he basically said was, that the FED controls the market and thats why its never good to bed on the negative (in the long term.) I love how he left himself an out with, “could we see 12k, possibly.”

    The FED my want to lower interest rates, but may not be able to. Especially if it actually cares about inflation.
    There already seems to be a fair amount of capital flight in terms of the yen, if they cut but thats going to ramp up hard and fast. The market will take it in the shorts the end game is the same.

    Josh

    August 17, 2007 at 2:26 PM #77314
    barnaby33
    Participant

    What he basically said was, that the FED controls the market and thats why its never good to bed on the negative (in the long term.) I love how he left himself an out with, “could we see 12k, possibly.”

    The FED my want to lower interest rates, but may not be able to. Especially if it actually cares about inflation.
    There already seems to be a fair amount of capital flight in terms of the yen, if they cut but thats going to ramp up hard and fast. The market will take it in the shorts the end game is the same.

    Josh

    August 17, 2007 at 6:10 PM #77282
    ucodegen
    Participant

    Add to the above, that the Fed has to find the financing for Congress’s deficit spending. That is finance either of two ways:

    1) Printing money which increases money supply and is highly inflationary.
    2) Issuing treasuries. The yield (fed rate) on the treasuries has to be high enough for people/institutions/countries to want to by it. Too low a rate, and no buyers. This means that the fed may not be able to lower interest rates very far.

    August 17, 2007 at 6:10 PM #77403
    ucodegen
    Participant

    Add to the above, that the Fed has to find the financing for Congress’s deficit spending. That is finance either of two ways:

    1) Printing money which increases money supply and is highly inflationary.
    2) Issuing treasuries. The yield (fed rate) on the treasuries has to be high enough for people/institutions/countries to want to by it. Too low a rate, and no buyers. This means that the fed may not be able to lower interest rates very far.

    August 17, 2007 at 6:10 PM #77429
    ucodegen
    Participant

    Add to the above, that the Fed has to find the financing for Congress’s deficit spending. That is finance either of two ways:

    1) Printing money which increases money supply and is highly inflationary.
    2) Issuing treasuries. The yield (fed rate) on the treasuries has to be high enough for people/institutions/countries to want to by it. Too low a rate, and no buyers. This means that the fed may not be able to lower interest rates very far.

    August 17, 2007 at 6:20 PM #77291
    bsrsharma
    Participant

    Fed has to find the financing for Congress's deficit spending.

    These two are unrelated. FED can create money. Congress can only borrow (or tax) money. There is very good reason why they should be separate. It is the U.S. Treasury (Bureau of Public Debt) that issues Treasuries (Bond, bills & notes). FED has nothing to do with it. FED issues money – your Dollar says "Federal Reserve Note"

    August 17, 2007 at 6:20 PM #77412
    bsrsharma
    Participant

    Fed has to find the financing for Congress's deficit spending.

    These two are unrelated. FED can create money. Congress can only borrow (or tax) money. There is very good reason why they should be separate. It is the U.S. Treasury (Bureau of Public Debt) that issues Treasuries (Bond, bills & notes). FED has nothing to do with it. FED issues money – your Dollar says "Federal Reserve Note"

    August 17, 2007 at 6:20 PM #77438
    bsrsharma
    Participant

    Fed has to find the financing for Congress's deficit spending.

    These two are unrelated. FED can create money. Congress can only borrow (or tax) money. There is very good reason why they should be separate. It is the U.S. Treasury (Bureau of Public Debt) that issues Treasuries (Bond, bills & notes). FED has nothing to do with it. FED issues money – your Dollar says "Federal Reserve Note"

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