Orange County Register

 32 Comments

• 666 says:

  January 22, 2008 at 8 am

  The Feds primary job is to protect the value of the dollar. They’re doing a grand job of destroying the dollar.
• Patricio says:

  January 22, 2008 at 9 am

  I think F stands for Fed these days.
• Dave says:

  January 22, 2008 at 9 am

  The question should be “How’s Fed’s Bernanke doing at cleaning up the mess Greenspan left behind?”
• Kim says:

  January 22, 2008 at 9 am

  666:

  I couldn’t have said it better myself. The fed’s need to stay out of it. Let it run it’s course and stop trying to “fix” everything. Your only making it worse!
• NationalBubble.com says:

  January 22, 2008 at 9 am

  The Fed lowers rates 75 basis points and yet the stock market still goes down, that should tell them something.
• Ed says:

  January 22, 2008 at 9 am

  The name is Ben not Merlin. There is no wand to cure this because it is a cultural thing. People today think that there is no such thing as hard times. I was right about the dot-com bust, the housing bust and in a couple of years I’ll be right about the depression.
• lee in irvine says:

  January 22, 2008 at 9 am

  Ben Bernanke is doing a sorry job. We got into this unsustainable mess by dropping rates to 50 year lows, and that in turn made investors reach for yield which removed risk from the credit markets. That’s how the Great Ponzi Scheme of the 21st Century begun. That’s how Orange County real estate increased to unsustainable levels, without any fundamental basis. That made it possible for an average Joe to lie about his income, to buy a vastly inflated home, using a time-bomb mortgage.

  Now that equities are crashing, the Fed (including the Fed government) is desperately trying to stop this correction from becoming a full fledged bear market. Sorry, it ain’t gonna work … we still haven’t paid for the foolishness of the past.

  You can’t grow a sustainable economy by a never ending expansion of debt. And consumers can no longer create phony wealth by buying and selling houses to each other. Naive homeowners can no longer go to the well to borrow more home equity.
• Sensibull says:

  January 22, 2008 at 9 am

  666 said: “The Feds primary job is to protect the value of the dollar. They’re doing a grand job of destroying the dollar.”

  No, that is actually quite incorrect. The primary purpose of the Fed is to protect banks from runs on money.

  From Wikipedia:

  The primary motivation for creating the Federal Reserve was to address banking panics (bank runs). The Federal Reserve briefly describes the circumstances that led to its creation, the purpose for creating it, and functions of the system in The Federal Reserve in Plain English[20]:

  “Just before the founding of the Federal Reserve, the nation was plagued with financial crises. At times, these crises led to “panics,” in which people raced to their banks to withdraw their deposits. A particularly severe panic in 1907 resulted in bank runs that wreaked havoc on the fragile banking system and ultimately led Congress in 1913 to write the Federal Reserve Act. Initially created to address these banking panics, the Federal Reserve is now charged with a number of broader responsibilities, including fostering a sound banking system and a healthy economy.”

  While I hate the idea that we are entering into a period of stagflation, I think the Fed did what they had to to stave off even more disasterous consequences. I agree that our economy became too dependent on foreign investment and funny money, but I certainly don’t want to see the house of cards fall. Bernanke did what he had to. We shouldn’t blame Bernanke for this. It was all up to us. Those no doc teaser loans, those nice made-in-China BBQs we bought at Costco… add it up. We are at fault.

  I am very worried that Bernanke’s actions are too little, too late.
• h.m. says:

  January 22, 2008 at 9 am

  I think he’s doing a good job (B).

  Let’s not forget that Alan Greenspan created this mess, not Ben Bernanke.

  Alan Greenspan, during his last few years, achieved his short-sighted goals and passed the mess to Bernanke. It was years of EZ money and lax credit standards. This would have happened even if Bernanke was more aggressive with cuts earlier.
• Sick_Of_Bears says:

  January 22, 2008 at 9 am

  The Fed to the rescue again!

  They are trying to stop the resets by lowering short term rates. It may end up that the ARM reset rates will be lower than the 30yr fixed rate, so all the reset people won’t have to go get a 30yr loan.

  Then Hillary (or whatever Democrat wins) will freeze this rate for 5-7 years, thereby stopping the price declines.

  I have told you guys over and over that this was the “plan” but you never would, and still won’t, believe me. The Fed doesn’t give a $%&* about the dollar
• scwolf says:

  January 22, 2008 at 9 am

  Sorry, but reducing interest rates has very little effect on the forces that are pushing us into a recession - all it does is put off the inevitable and make things worse at the end.
• Scott A says:

  January 22, 2008 at 9 am

  FED get’s F Grade

  Poor Ben,
  This is not realy his fault as he has been handed a bad hand,
  All this was already running its corse before he took office.
  STOP GIVING IN to Political pressure.
  STOP CUTTING RATES and further deflating the USD.

  HEY BLOGGERS, GOT GOLD?
• scwolf says:

  January 22, 2008 at 9 am

  Whoa, Greenspan did not create the “laxed lending standards” that caused this housing bubble. The greed of Wall Street, the high pressure mortgage companies, and consumer buying hysteria fed the beast. Lowering short term interest rates spurred the economy, but the housing bubble was way way beyond any control Greenspan may have had.
• california mls says:

  January 22, 2008 at 9 am

  Grade: D-

  Teacher Comments: Needs to do his own homework instead of copying off his friend Alan. Alan is a poor student himself and frequently scores low grades, even though he is very popular on the playground.
• rants says:

  January 22, 2008 at 9 am

  the fed was created in 1913- just 14 years later we experianced
  the great depression- need I say more?- secondly this current
  mess was caused by greenspans easy money policies and
  “new paradigm” lax lending standards- his name will be associated
  with this depression- if we have one- not bernankes

  read the creature from jekyll island - its about the creation of
  the federal reserve
• Samson says:

  January 22, 2008 at 10 am

  OH SOB,

  You are assuming that the reset rate will be lower. The reset rates are typical many points higher than the teaser rate. They are not necessarily based upon what the current interests rates are.

  Also lowering the short term rate should lead to a lowering of the prime rate for consumer loans, but that still doesnt mean many people can qualify.

  Even if Hillary gets into office, she wont be in until Jan. of 09 and it would take a little time to get things going. So at best your wish for frozen rates probably wont happen until spring of 09 when many people here think the market will turn around.

  Think about it, the stock market is declining. Many of those that would like to buy, have all their down payment money tied up in stocks/401K’s.

  Well many have lost 10 to 20% of their value within the last month.

  So even more damage to the market.
• Ed says:

  January 22, 2008 at 10 am

  Sick of Bears

  The type of action that you believe a Dem Prez would take is exactly why I believe a depression may very well be in our future.
• Mo's mom says:

  January 22, 2008 at 10 am

  His grade is a B.

  This cut does not help the typical homeowner in California unless they have enough (a) equity to refinance at today’s current pricing (which is dropping as I type and any bank would be worried about refinancing any products at this stage in the game) or (b) money down to refinance. It does not help the average homeowner that used a no doc loan or teaser rates they could ill afford.

  It helps those who chose to enter the market right now as a homebuyer. Would I buy right now? NO. Unless some magnificant change occurs, the market will drop further and reasonable affordability within be within my reach. Never buy more than you can afford. And never buy high when you can buy low. And I believe it is going to get much lower.

  Since my money is tied in stocks and bonds and the bank, I would like for Ben to help keep it there. We can’t allow our financial system to collapse. Ben has no choice but to cut rates. He doesn’t really have any other options stop this. Even asking for an economic stimulus from the White House will take time and may not accomplish anything.

  He is in a tough position. Alan Greenspan only knew how to create bubbles. Ben is going to have to pop it to get up back on track.
• 666 says:

  January 22, 2008 at 10 am

  What happens when he can’t cut anymore? It hasn’t helped yet and I don’t see it in the near future. The average consumer and me being one of them are not so easily parted from our money with over all cost of living expenditures going through the roof. Doesn’t leave a lot of unallocated funds for what ever whim we have. Regardless of him cutting or not. The house of cards will fall unless prices on everything including real estate come in line with normal incomes. For a lot of people 3 bucks for a gallon of fuel is biting into the unallocated money for the average person, not including all the necessities that have also increased in price. If the consumer is curving the spending habits because of price increase, yet they’re income is not countering inflation how does the Fed want the consumer to continue to spend?
• rants says:

  January 22, 2008 at 10 am

  sick of morons– the japanese “fed” dropped interest rates to ZERO
  and their housing market still experianced a 15 year deflation of
  prices- its called pushing on a string- I know I know- they dont
  discuss these things on wheel of fortune
• scwolf says:

  January 22, 2008 at 10 am

  I guess I’m sounding like a Greenspan defender (I’m not) but I would like to be a bit more objective. I believed Greenspan lowered rates in the face of the last stock market meltdown of 2000 and then the 9/11 attacks of 2001 - so isn’t Bernanke’s response to lower interest rate to spur the economy no different than Greenspans’ reaction? Basically, if you put Bernanke in place back in 2000, he would no differently be lowering interest rates to curb the market chaos of 2000/2001.

  Although Greenspan’s lowering of interest rates may have had some influence on the housing bubble, what he did was lauded as necessary no differently than what Bernanke is doing now: lowering interest rates in the face of market panic.

  So let’s lay off the “Greenspan caused this whole mess” rhetoric, because Bernanke is doing exactly what Greenspan was doing 7 years ago. 7 years from now, Bernanke will be accused of causing a stagflation and exacerbating the recession, blah blah blah.
• Eat it in the OC says:

  January 22, 2008 at 10 am

  lowing interest rates? I’ll look for my paycheck to go up by 20% at the end of the week. Probably won’t though. This rate cut ain’t for the little guys like us, its for the huge investors, you know, the 1% that control 95% of the money.
• Patricio says:

  January 22, 2008 at 10 am

  “Contained”
• no says:

  January 22, 2008 at 12 pm

  I can use my home as an ATM again. You think I will have problems with my debt if I do so? But I know the they will bail me out again when I run into financial difficulties. Just inflate the dollar, and my debt will shrink to nothing. Thanks, Ben.
• no says:

  January 22, 2008 at 12 pm

  This emergency cut directly proves that the FED finally stopped denying we are in a serious ressesion.

  A recession means the housing is going to become worse. While I encourage people to use their home as an ATM and don’t worry about their debt, I definitely don’t encourage you to buy. Obviously, the price will decline sharply in the coming months and continute to drop for another 3-5 years. So don’t buy now.
• bmac says:

  January 22, 2008 at 4 pm

  We are in panic mode. He’s all ready throwing up a hail mary.
• RR says:

  January 22, 2008 at 7 pm

  Ben isn’t doing any worse of a job than the buffon who preceded him nor the imbecile who will eventually be handed the reins. If he really wants to solve the problem, he will move heaven and earth to PUT THE USA BACK ON THE GOLD STANDARD. Until that happens, your paper fiat money is only as good as the government backing it. Full faith and credit blah blah blah. Don’t know about you, but I have very little faith left (zero if Shillary or Osama are elected) and as far as credit goes, I give them full credit for the mess they have created.
• JAKE SHARP says:

  January 22, 2008 at 7 pm

  Lets get rid of the name Ben and replace it with Sadist. If you are a Sadist Bernanke supporter you are selling yourself short. Wait a minute that’s exactly what Bernanke wants. Short sell your house, short the stocks, short everything. He’s the ultimate short man. I think we will see him resign. I do support the rate cut today, but I think he’s sadistically late, what a shocker!!!
• BrantW says:

  January 23, 2008 at 2 am

  scwolf,

  So you think Greenie cutting rates till real rates were negative (lower than inflation) had nothing to do with lax lending? If so, you have no idea how lending works. The lower the baseline costs to lend are, the more loans get made. Once you reach critical mass, credit starts pushing up asset values, which creates the false paradigm that you can lend more. The upward spiral continues till it collapses. It all starts with the baseline cost of credit being too cheap. AG 100% guilty.