Fed cuts .5% yet again…

[Pasadena Broker]

Look in the mirror

I think we’re all in for a world of hurt. When I sit with family and friends, we inevitably end up talking about the economy and I have to tiptoe around the subject just so I don’t alarm them. Not because I’m on this site which I do lurk, but because my industry was in the front line and part of the problem. You’d be surprised with the disconnect I see day in and day out, the nice older lady that bought up north in Cameron Park for $650K with $300K down and an appraiser tells me that the house is worth $450 max, or the Option Armed couple in their late 50’s who have 3.5 years on the loan before it recasts, just a couple of examples.

For anyone to think this won’t affect you personally, is what I mean by disconnect. The run up was exuberance and hubris, and downturn will be the same, but from a different group of people that feel they’re well insulated. And to state that ‘Well, I’m ok.’ Unless you have billions and can afford to buy a part of Patagonia, you are part of this network.

[davelj]

kewp,

“Borrowing from the Fed to keep minimum reserves” doesn’t make any sense. Fed borrowings don’t count as Tier I or Tier II capital. And they have nothing to do with Loan Loss Reserves. Maybe you mean that banks are borrowing from the Fed to help maintain liquidity because the deposit market is very competitive? I don’t think this is necessarily a bad thing considering that the Fed Funds rate is below the rate being offered on most certificates of deposit these days.

“At what point do banks start to lose a significant % of deposits?” I don’t understand this question. All banks will move their deposit rates down, albeit to varying degrees. Where is a person going to go if they want an FDIC insured deposit? Are you suggesting that people will take their deposits out of banks due to the low rates and invest them in some other instrument with the same risk profile that’s got a higher yield? I’m curious as to what that instrument might be.

[davelj]

kewp,

“Borrowing from the Fed to keep minimum reserves” doesn’t make any sense. Fed borrowings don’t count as Tier I or Tier II capital. And they have nothing to do with Loan Loss Reserves. Maybe you mean that banks are borrowing from the Fed to help maintain liquidity because the deposit market is very competitive? I don’t think this is necessarily a bad thing considering that the Fed Funds rate is below the rate being offered on most certificates of deposit these days.

“At what point do banks start to lose a significant % of deposits?” I don’t understand this question. All banks will move their deposit rates down, albeit to varying degrees. Where is a person going to go if they want an FDIC insured deposit? Are you suggesting that people will take their deposits out of banks due to the low rates and invest them in some other instrument with the same risk profile that’s got a higher yield? I’m curious as to what that instrument might be.

[davelj]

kewp,

“Borrowing from the Fed to keep minimum reserves” doesn’t make any sense. Fed borrowings don’t count as Tier I or Tier II capital. And they have nothing to do with Loan Loss Reserves. Maybe you mean that banks are borrowing from the Fed to help maintain liquidity because the deposit market is very competitive? I don’t think this is necessarily a bad thing considering that the Fed Funds rate is below the rate being offered on most certificates of deposit these days.

“At what point do banks start to lose a significant % of deposits?” I don’t understand this question. All banks will move their deposit rates down, albeit to varying degrees. Where is a person going to go if they want an FDIC insured deposit? Are you suggesting that people will take their deposits out of banks due to the low rates and invest them in some other instrument with the same risk profile that’s got a higher yield? I’m curious as to what that instrument might be.

[davelj]

kewp,

“Borrowing from the Fed to keep minimum reserves” doesn’t make any sense. Fed borrowings don’t count as Tier I or Tier II capital. And they have nothing to do with Loan Loss Reserves. Maybe you mean that banks are borrowing from the Fed to help maintain liquidity because the deposit market is very competitive? I don’t think this is necessarily a bad thing considering that the Fed Funds rate is below the rate being offered on most certificates of deposit these days.

“At what point do banks start to lose a significant % of deposits?” I don’t understand this question. All banks will move their deposit rates down, albeit to varying degrees. Where is a person going to go if they want an FDIC insured deposit? Are you suggesting that people will take their deposits out of banks due to the low rates and invest them in some other instrument with the same risk profile that’s got a higher yield? I’m curious as to what that instrument might be.

[davelj]

kewp,

“Borrowing from the Fed to keep minimum reserves” doesn’t make any sense. Fed borrowings don’t count as Tier I or Tier II capital. And they have nothing to do with Loan Loss Reserves. Maybe you mean that banks are borrowing from the Fed to help maintain liquidity because the deposit market is very competitive? I don’t think this is necessarily a bad thing considering that the Fed Funds rate is below the rate being offered on most certificates of deposit these days.

“At what point do banks start to lose a significant % of deposits?” I don’t understand this question. All banks will move their deposit rates down, albeit to varying degrees. Where is a person going to go if they want an FDIC insured deposit? Are you suggesting that people will take their deposits out of banks due to the low rates and invest them in some other instrument with the same risk profile that’s got a higher yield? I’m curious as to what that instrument might be.

[Coronita]

Look in the mirror

I think we're all in for a world of hurt. When I sit with family and friends, we inevitably end up talking about the economy and I have to tiptoe around the subject just so I don't alarm them. Not because I'm on this site which I do lurk, but because my industry was in the front line and part of the problem. You'd be surprised with the disconnect I see day in and day out, the nice older lady that bought up north in Cameron Park for $650K with $300K down and an appraiser tells me that the house is worth $450 max, or the Option Armed couple in their late 50's who have 3.5 years on the loan before it recasts, just a couple of examples.

For anyone to think this won't affect you personally, is what I mean by disconnect. The run up was exuberance and hubris, and downturn will be the same, but from a different group of people that feel they're well insulated. And to state that 'Well, I'm ok.' Unless you have billions and can afford to buy a part of Patagonia, you are part of this network.

 

Well said….

 

This is what a lot of you folks wanted though. You wanted a recession. You wanted things to get so hairy that people start losing their jobs left and right, so there would be firesales. Come on, where's that spirit now…You folks aren't flinching now, even though your own steady income is now sort of a starting to shake a bit directlyror indirectly, are you?

 

Me, I'm terrified of this recession.

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[Coronita]

Look in the mirror

I think we're all in for a world of hurt. When I sit with family and friends, we inevitably end up talking about the economy and I have to tiptoe around the subject just so I don't alarm them. Not because I'm on this site which I do lurk, but because my industry was in the front line and part of the problem. You'd be surprised with the disconnect I see day in and day out, the nice older lady that bought up north in Cameron Park for $650K with $300K down and an appraiser tells me that the house is worth $450 max, or the Option Armed couple in their late 50's who have 3.5 years on the loan before it recasts, just a couple of examples.

For anyone to think this won't affect you personally, is what I mean by disconnect. The run up was exuberance and hubris, and downturn will be the same, but from a different group of people that feel they're well insulated. And to state that 'Well, I'm ok.' Unless you have billions and can afford to buy a part of Patagonia, you are part of this network.

 

Well said….

 

This is what a lot of you folks wanted though. You wanted a recession. You wanted things to get so hairy that people start losing their jobs left and right, so there would be firesales. Come on, where's that spirit now…You folks aren't flinching now, even though your own steady income is now sort of a starting to shake a bit directlyror indirectly, are you?

 

Me, I'm terrified of this recession.

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[Coronita]

Look in the mirror

I think we're all in for a world of hurt. When I sit with family and friends, we inevitably end up talking about the economy and I have to tiptoe around the subject just so I don't alarm them. Not because I'm on this site which I do lurk, but because my industry was in the front line and part of the problem. You'd be surprised with the disconnect I see day in and day out, the nice older lady that bought up north in Cameron Park for $650K with $300K down and an appraiser tells me that the house is worth $450 max, or the Option Armed couple in their late 50's who have 3.5 years on the loan before it recasts, just a couple of examples.

For anyone to think this won't affect you personally, is what I mean by disconnect. The run up was exuberance and hubris, and downturn will be the same, but from a different group of people that feel they're well insulated. And to state that 'Well, I'm ok.' Unless you have billions and can afford to buy a part of Patagonia, you are part of this network.

 

Well said….

 

This is what a lot of you folks wanted though. You wanted a recession. You wanted things to get so hairy that people start losing their jobs left and right, so there would be firesales. Come on, where's that spirit now…You folks aren't flinching now, even though your own steady income is now sort of a starting to shake a bit directlyror indirectly, are you?

 

Me, I'm terrified of this recession.

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[Coronita]

Look in the mirror

I think we're all in for a world of hurt. When I sit with family and friends, we inevitably end up talking about the economy and I have to tiptoe around the subject just so I don't alarm them. Not because I'm on this site which I do lurk, but because my industry was in the front line and part of the problem. You'd be surprised with the disconnect I see day in and day out, the nice older lady that bought up north in Cameron Park for $650K with $300K down and an appraiser tells me that the house is worth $450 max, or the Option Armed couple in their late 50's who have 3.5 years on the loan before it recasts, just a couple of examples.

For anyone to think this won't affect you personally, is what I mean by disconnect. The run up was exuberance and hubris, and downturn will be the same, but from a different group of people that feel they're well insulated. And to state that 'Well, I'm ok.' Unless you have billions and can afford to buy a part of Patagonia, you are part of this network.

 

Well said….

 

This is what a lot of you folks wanted though. You wanted a recession. You wanted things to get so hairy that people start losing their jobs left and right, so there would be firesales. Come on, where's that spirit now…You folks aren't flinching now, even though your own steady income is now sort of a starting to shake a bit directlyror indirectly, are you?

 

Me, I'm terrified of this recession.

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[Coronita]

Look in the mirror

I think we're all in for a world of hurt. When I sit with family and friends, we inevitably end up talking about the economy and I have to tiptoe around the subject just so I don't alarm them. Not because I'm on this site which I do lurk, but because my industry was in the front line and part of the problem. You'd be surprised with the disconnect I see day in and day out, the nice older lady that bought up north in Cameron Park for $650K with $300K down and an appraiser tells me that the house is worth $450 max, or the Option Armed couple in their late 50's who have 3.5 years on the loan before it recasts, just a couple of examples.

For anyone to think this won't affect you personally, is what I mean by disconnect. The run up was exuberance and hubris, and downturn will be the same, but from a different group of people that feel they're well insulated. And to state that 'Well, I'm ok.' Unless you have billions and can afford to buy a part of Patagonia, you are part of this network.

 

Well said….

 

This is what a lot of you folks wanted though. You wanted a recession. You wanted things to get so hairy that people start losing their jobs left and right, so there would be firesales. Come on, where's that spirit now…You folks aren't flinching now, even though your own steady income is now sort of a starting to shake a bit directlyror indirectly, are you?

 

Me, I'm terrified of this recession.

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[lendingbubblecontinues]

Bring on the pain…

This country NEEDS it to survive.

Terrified? Of what?

[lendingbubblecontinues]

Bring on the pain…

This country NEEDS it to survive.

Terrified? Of what?

[lendingbubblecontinues]

Bring on the pain…

This country NEEDS it to survive.

Terrified? Of what?

[lendingbubblecontinues]

Bring on the pain…

This country NEEDS it to survive.

Terrified? Of what?

[Author]

Posts