It is of no small consequence that after all of the hand wringing of yesterday, during MLK's Birthday and subsequent US holiday, the stock market quickly sunk over 400 points on Tuesday morning until Bernanke's Fed loosened up on Fed Rate. The market resurgence began almost immediately with the magical easy-credit-elixir of new life between banks easing the strain on the mortgage market high rolling financiers who have been closing in on the borrowers duped over the last 5 years by their promises of easy credit and gain. The market still lost 128 points on the day, when all is said and done.

Low and behold those Countrywide and Citi-group Chief-Lemmings can once again breathe a sigh of relief, as Gov Lemming-in-Charge Bernanke came to their rescue and halted the leap and pushing over of stuffed and numerous Lemmings, stuffed from high profits of fraudulent loans, off the cliffs of no-bonuses-this-year and having almost been pushed into the sea of destitute joining those who were sold bogus mortgage loan instruments with adjusted usury rates of return. It would be interesting to see if the duped will show them leeway of not being eaten by them. Having reproduced so quickly and with the mortgage industry drying up in the Winter of no-credit, the abundance of these long-in-the-tooth, over stuffed rodents are destined for certain destruction after devouring all the ripe and unripe green mortgage applicants available. They stored little for the future consumption. The dearth of remaining mortgage applicants, suffering from the throes of recession, are clearly not enough to support such an immense population of Lemming mortgagers.

And what about those stock market Lemmings when the newness of the Bank Loan rate decrease wears off and no longer can suffice their hunger? Will they lean down enough to live on lower profits or again begin their march to the cliffs with squeals of hunger? Perhaps a few of them will be pushed into the sea of lost investments having bought the Lemmings-of-the- mortgage-paper and decrease the population. And those SUV-hogs . . . when a barrel of oil ascends to a new historical level driving gasoline prices upwards . . . upon decreased Fed Rate in no so distant future? And of the Middle East Lemming who grows fat on the excess of the Western Lemming for oil to drive their Suv-Hogs. I sense a charging of the bulls towards the cliffs of recession stumping on the Lemmings before them. Spring will not bring a resurgence of new growth and we are in for a drought.

Or as my friend ducadmo would say, perhaps it is time to make “Lemming-Aide.” A tad of bourbon in my “Lemming-Aide” please, and don’t skimp!

Soon after the Fed made its 0.75% rate cut, 2-year US Treasuries followed the rate down, for no obvious reason. No carry trade there, yet. However, if the Fed keeps reducing the rate and the administration keeps finding ways to increase the deficit and between them destroy the dollar which will force the interest rate on Treasuries up, there will be a wide spread and finally, after a long and painful wait, the banks will be able to make money with no risk. Nobody will ever think to call it a premeditated crime.

True, but this is a purely hypothetical case as it is autarktic.

And uh, to what extent isn't this exactly what banks have done and do?

If the system was truely autarkic, then the Treasuries would be wholly purchased by the domestic banks. Truth is, the government must go off-shore to sell a significant portion of the bonds, so the bond price will be set by the foreign bidders and the domestic banks will take advantage of the high rates driven by those bidders.

Run's post would have been a lot funnier if he had the grammar skills to match his pretensions of intellect. I can barely tell what the hell is supposed to be going on half the time: comma splices, run ons, other wretched features of a poorly written paragraph make appearances at nearly every available opportunity.

mooiebaas:

True, but this is a purely hypothetical case as it is autarktic.

And uh, to what extent isn't this exactly what banks have done and do?

Autarkic! Nice word. Here it is in a relevant sentence: The Miorioris formed a stable autarkic society--until the Maoris stopped by one day and enjoyed them for lunch...

hellifiknow:

The same as the economy, it is not supposed to make sense. You have read way to much into it.

Of course you can feel free to debate the economics of this administration. I am sure myself and others will offer up a nice response.

Phil:

I pretty much have a guaranteed remortgaging of my home at a realistic rate of less than .75 of 1% above the old one. $400 to secure it (with a real bank!) for the next 25 years at that rate, thanks to a mortgage broker who cared enough for his client.

As he and I talked today, here is a little history of cuts in Federal Funds rate and the results impacting mortgages:

Period / Fed Funds Rate Cut / Impact to Home Rates

January to June 2001/ Down 2.25% / Rose 0.10%

October to December 2001 / Down 0.75% / Rose 0.45%

May to August 2003 / Down 0.25% / Rose 0.78

In the short term, there will be a drop for mortgage rates. In the long term mortgage rates will climb. It looks as if Bernanke may have moved to save Financier-Lemmings.

PS: The slashes divide the headings and numerics

That's a relief! I thought it was me ...

Barry, Barry, Barry:

It was not written to be serious. It was written in a fashion to match the economy, strained, convoluted and making little sense. If you can make sense of this economy, please let me know.

PS: It was you . . .

Oh, thank you! (I was bought up to be polite to strangers ...) Now, back to Adam Smith ...

Barry:

No thank you. If you have something substantive to say, then feel free to wail away. Pretty mundane so far. A cursory examination does not reveal much of anything being added to this board.

I might agree if I could understand you. Obscure cove aren't you? I am reminded of Alan Turing's test to decide if one is addressing an artificial intelligence but I have forgot how to do it ...

Barry:

There was no request made for an agreement from you. Hang around and contemplate the dilemma of your understanding. It will come in time.

It would be nice if you were to put something more than the superficial on this board. We await your wisdom on the economic environment, which the latter has been rather interesting of sorts. Here, I'll start you off . . . .

So Barry, do you Benanke's cut of Fed Funds between banks was timely after the stock market dropped or was the drop due to other issues outside of the US econmic control.

"So Barry, do you Benanke's cut of Fed Funds between banks was timely after the stock market dropped or was the drop due to other issues outside of the US econmic control."

run75441 you are failing Basic English.

I think you might try:

Barry [familiar, but better than Oi! You! And far better than beginning with "So, ..." Never a good way to begin to write a sentence I feel] do you [think] MR [title please] Benanke's decision to lower the Federal Bank's interbank lending rate by [figure] was timely in view of [sounds better] the sudden fall in [global] stock market indices or, [comma] was the fall of these indices consistent with factors beyond US Federal Bank [delete economic (NB spelling)] control? [question mark].

Answer I do not know nor do I care. Yet, I feel I have made a friend.