Fed cuts interest rates 3/4 of a point. First time since 1984

[GUNG]

http://news.yahoo.com/s/ap/20080122/...interest_rates

[Jahpson]

what does this mean? are they trying to get us to spend more? thanks

[mmmpurses!]

The belief is that we are either in a recession or heading straight to it. Look how bad the stock market is performing today.

[envyme]

Originally Posted by JahpsonLoveYou

what does this mean? are they trying to get us to spend more? thanks

Yes, they want you to start spending. The Fed reduced the rate that they charge to banks to borrow money (discount rate) and that banks charge to each other (funds rate). This trickle downs to benefit consumers because the interest that banks charge to consumers (prime rate) is now reduced to 6.5% from about 7+%. So, it makes borrowing money cheaper which should entice consumers and business owners to borrow money to spend.

[ambrosia]

Anyone have any ideas about what this will do to interest for savings accounts/CDs?

[dr. twiggers]

How nice!!!! There is rumored to be one more cut coming before summer.....so I am going to hold off on consolidating student loans and refinancing my house to wait for that second cut.

[Vegas Long Legs]

Originally Posted by ambrosia

Anyone have any ideas about what this will do to interest for savings accounts/CDs?

oopps!

[Vegas Long Legs]

Originally Posted by ambrosia

Anyone have any ideas about what this will do to interest for savings accounts/CDs?

This will hurt the responsible people who know how to save. Especially the ones who don't have enough to make riskier investments or the elderly who need income stability.
If your locked in a CD you'll be OK, I would guess any bank investments unless locked in will go down.

[maxter]

This will also probably weaken the dollar. Unless there is a rate cut from European central banks. This means that the dollar can "buy" less foreign currency. So it takes more US dollars to buy an item in euros. For example, a Chanel bag. However, this does help the US multi nationals who sell their goods overseas. The people buying the US goods can buy them cheaper b/c their currency is "worth" more.

I have been buying gold since it made its move from $280 to $359. Last I checked gold was over $900. IT has been a great way to offset the what has been happening with oil, the dollar and the "non existent" inflation {sarcasm}. One of the reasons that OIL prices are so high is because the dollar is so weak.

I get a GREAT financial newsletter and can post more on the interest rate cuts later. The fed has been trying to manipulate the nature of markets and the economy by making money "cheap" to borrow. this only works for so long. I hate to say this but you "need" recession in order to weed out the weak businesses. I have never been a fan of Alan Greenspan or Ben Bernanke. They are no Paul Volcker.

[Roo]

Hi all, I am going to move this into the money talks section, since I am sure this will be a hot topic there.

http://forum.purseblog.com/money-talks/

[IntlSet]

^^^
Very smart move with the gold, maxter.

[maxter]

Originally Posted by IntlSet

^^^ Very smart move with the gold, maxter.

I'm not so smart. I just read as much financial news that I can. And I get a GREAT newsletter. It is expensive (about $500/year) but I was completely out of the market for the tech crash around 2000 and he signaled another bear trigger the end of November. Although it was hard sitting thru December. But he clearly knows more than I do and is about 80 years old. So he is the wise and smart one!

[IntlSet]

^^^
Which newsletter is this? It's not the Financial Times, is it?

[maxter]

Originally Posted by IntlSet

^^^ Which newsletter is this? It's not the Financial Times, is it?

Nope, it is Richard Russell's Dow Theory Letters. He is quite fascinating. Around 80 and reads about 20 periodicals a day just to keep on top of everything. He is not affiliated with any brokerage firm and is very independent.

I discovered him accidentally. I was a fan of Martin Zweig back in the day in the 80's. I'm an engineer with a couple minors, one of them is in statistics. I was always fascinated by Marty's unemotional investing whenever he was on Wall Street Week with Louis Rukeyser. He was very chart and numbers oriented and I started subscribing to his newsletter. When Marty stopped his newsletter he referred all his subscribers to Richard Russell. And I can't tell you what a joy he has been.

Here is a link to his newsletter. I'll see if I can find the one from 1999 where he called the top of the tech market. It was so interesting because he talked about "froth" in the market, people investing in stocks with no real earnings, and how fraud would also signal the top of the market. All hindsight now but he had been saying these things way before they happened.

A lot of professional investors don't believe in "Dow Theory" and I didn't start subscribing to him because of it, but he sure can support his theory with his letters and indicators.

I believe Jim Cramer has talked a bit about him on his show also. I have heard him interview by phone on CNBC a few times and he used to occasionally have an article or interview in the business newspaper that was produced on Saturday's only. I can't remember the name of it anymore. Argh! It was very dry and techy oriented.

Anyways, here's the link.

Dow Theory Letters

[maxter]

I just checked his rates. I must always renew for 2 years at a time b/c I pay $495.

He charges $150 for 6 months and $250 for a year.

HTH's