The FED lowered interest rate again today. While this will hit the headlines as great news, I am viewing it as a a double edged sword . On one hand this will potentially help the real estate market. Lower interest rates could help move cautious buyers of the fence. It could help create a refi boom for my lender friends. While it will be seen as a proactive move by our government to prevent a recession I have to wonder how did we get here? and Are we letting the culprits off Scott free?
The FED decided that economic stimulation was more important than inflation, while most of us are struggling with the every day essentials already. How long will it be before gas hit's $5 a gallon, milk $6 a gallon. So the question I really want to ask is? Will Wall Street ever be held accountable for their actions anymore? I don't see the government lining up to bail me out of crappy investment into Krispy Kreme donuts. Before we all start shouting hooray let's make sure we realize the long term costs to all of us. Please don't take my word for it, let me know what you think.
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Interesting post but I just do not see it happening. The Fed can cut rates all they want if value is not addressed it does not matter.
Most of the country is in a declining market and with the large amount of home owners that have "tapped" any equity over the last few years it will be hard to sell a home or to refinance. I think the rate move benefits more on wall street than my street.
This is why I tell all clients to refinance while we still have value since I am not sure how long it will last.
Happy Selling!
Tony Grego - Indiana Mortgage Broker
I agree Tony. The Fed wants us to think he is helping the average joe but he is bowing to Wall Streets whims.
Thank YOU! Ever since they started talking about this "stimulus" plan, I've been shaking my head . Don't people realize that this is really just welfare for the rich? It will do very little to address what's wrong with the housing markets and in turn the economy.
The fact of the matter is that the reason that the economy is weak right now is because the government has been spending money like a drunken sailor on a Saturday evening shore leave. The result of which is that the dollar is at historic lows, which tends to lead to inflation (as you pointed out).
What they are doing right now is, as you is pointed out, is kissing Wall Street's butt when they should be fixing what's wrong with the credit markets. I wrote a blog myself on this issue and if you email me telling me it's alright, I'd be happy to post a link that that blog.
Bob Mitchell
ValueList Real Estate Services, Inc.
I don't think we will see inflation like the Carter years. Once the housing market starts to shed its excess inventory the fed will raise rates to cut off inflation.
Chris, I don't think we will ever see those kinds of numbers again.
Michael: Thanks for giving me permission to post these links. "No Such Thing As A Free Lunch" and "Four Concrete Steps To Fix The Housing Market" . Also, don't be so sure about inflation remaining in check. The current administration has painted the fed into a corner here. I liken it to the Harry Chapin song, 50,000 lbs of Bananas.
Bob Mitchell
ValueList Real Estate Services, Inc.
Mike - The other thing it does is crush the people on fixed incomes - namely seniors. Most of them have conservative investments that are tied to these rates. They are going to feel a pinch in their wallets.