Are people that stupid that they don't realize that the lower interest rates are not passed down

[still_one]

They have been lowering interest rates for months, yet the banks are not passing that reduction to consumers via mortgages

Tell me again why the tax payers bailed out Bear Sterns, and why that bail out did not go through Congress?

Even the funding for the Iraq war went through Congress, and this should have also. Yet no one in Congress protests. Maybe Congress doesn't KNOW the Constitution

[OwnedByFerrets]

1. No, just the

average Murikan;)

[BOSSHOG]

2. My mortgage company

is offering a refinancing deal, but our current rate is less then what they are offering. And our one Credit Card Company (USAA) has lowered its rates every month for the past four months. However, commercial banks waste no time in lowering rates on interest bearing accounts.

[still_one]

5. I am not talking credit cards or home equity. BankRate.com sure has shown

that the rates are not being passed down for mortages

[lpbk2713]

3. 59 Million people voted for Shit-for-Brains. Not once. But twice.

So the answer to your question is ... YES ... people really are that stupid.

[RB TexLa]

4. Huh? All the loan offers I have been getting have been much lower. Just had Wells Fargo call

offering a very good financing deal for investment property. All but a couple of credit cards have lower their rates in the last couple of months.

[still_one]

7. Bank rate presents a different picture with mortgages

http://www.bankrate.com/brm/publ/30yrmolg.asp

[RB TexLa]

12. This was a mortgage the lady called offering, and it was a lower rate than when she called a couple

of weeks ago.

[still_one]

15. OK. Those graphs were national graphs

I remember when the fed dropped a quarter point, that would directly be reflected to borrower. I guess my point is I don't see that anymore

[jobycom]

6. It's more complicated than that.

Lower Fed rates mean that lenders can borrow more money, which gives them more money to loan. That can lower interest rates by increasing supply. It can also lower points fees, which lenders charge to make up the money they lose when the market causes interest rates to drop below the lending rate.

A lot of the mortgage industry collapse we saw over the last couple years wasn't because people didn't want to make loans, it was because lenders did not have enough money to loan. As you know (but not everyone really thinks about it), lenders borrow the money they loan, and interest rates affect how much they can borrow.

The bigger issue is the wealth base of the economy. The economy is struggling, not because people can't get loans, but because the base of the economy has been undermined. The economy grows from the bottom up, and money is nothing more than labor in paper form. When labor stumbles, the economy stumbles from the base. Bush's tax cut plans, and all of his policies, have favored big business over small, and have favored entrenched rather than new business. That creates fewer employers, which drives wages down. That encourages large business, which can profitably move jobs overseas, rather than smaller businesses, which keep them here (Contrary to popular belief, that's less about NAFTA, and more about Republican ideology. We had the same problem under Reagan, before NAFTA was invented.)

Lowering interest rates can give a "surge" to the economy by putting money in pockets, just as Bush's tax rebate scam will do. In a strong economy it can work. But in this economy, the surge will run its course, and things will settle back down again. The economy is what has to be fixed. Our base economy is eroded.

That's not a short term problem, either. It started under Reagan, if not before. Under Reagan we became a debtor nation, meaning we imported more than we exported. We've done so ever since, but under Clinton the import/export surplus shrank, because Clinton reversed Reagan's policies and focused the economy on middle and lower income businesses. But that ended with a bang under W, and that's what we have.

We need another Clinton, whether it's Clinton or Obama. :) And you are right--we do need smarter Americans, too.

[still_one]

9. I agree. Looking at the charts though the rate reduction is definitely not being passed

down like it used to be. If the fed lowered a quarter, the quarter would get passed down. What I have seen in the charts is in some cases the rate either stays the same or may even slightly go up

You are right, it is more complicated than I expressed

but my other point was the fed had NO authority to use tax payers money for the bear stearns deal without Congressional approval

[Captain Angry]

8. Go check the yield curve.

The 30 year rates that mortgages follow haven't fallen as much due to concerns about inflation.

Low interest rates were absolutely passed down. How's the interest rate on your savings/checking account?

Which arm of the US Government that taxes pay for were part of the Bear Sterns bailout? I seem to recall that it was the Federal Reserve Bank that made the loan. I could be wrong, but that's what I think happened.

[still_one]

10. Inflation? The government says inflation is under control, as reflected by

TIPS, and ibond rates

http://www.bankrate.com/brm/publ/30yrmolg.asp

[Captain Angry]

11. Your graphs make my point.

The yield curve reflects what people will pay for the bond at each maturity level.

The 30 year mortgages being offered these days are only a little bit above the 30 year Treasury level for the buyers with the absolutely best credit. So you add the 1% or so markup that the bank gets, and you get the levels reflected in your graphs.


The actual inflation level has nothing to do with 30 year rates. The perceived future level of interest rates that banks feel we'll see are the rates there. Buyers of 30 year bonds are thinking that rates will eventually have to move way up from current levels to combat inflation. They don't care what the Government releases as a core inflation rate, they care what the level will be realistically.

So, yes, interest rates fell and are reflected pretty well by current available mortgage rates. Watch what happens if the Fed cuts again, but actually says they're going to stop cutting for a while. And then in 6 weeks when they meet again, if they don't cut, rates on mortgages may begin to rise in anticipation of the day where the rate actually goes up. As long as the next administration that takes office does something to combat the true inflation levels we're seeing, not the ones that have been reported, mortgage rates shouldn't shoot up too much as rates increase. If we get certain candidates, we might be back on our way to the 10%+ mortgage.

[still_one]

14. I don't think 10% is in the cards, unless we get a real fed chairman who does his job

which is to keep inflation in check and protect the dollar

[JDPriestly]

13. They are passing the lower rates on to savers.

The interest rates paid on savings can be as low as 2%. So they are encouraging spending -- in spite of the fact that the debt to earnings ratios of American households is just appalling and is actually dragging the economy down. Senior citizens, people who are retired, are simply cutting back. You don't hear from them because the MSM is not interested in people over 65 unless they have a lot of money. The banks are acting in a criminal way. No wonder Jefferson and Adams agreed that they did not like banks.

"Jefferson felt that a national bank would encourage people to desert agriculture for speculation and give the commercial interests too much power in the federal government."

http://encarta.msn.com/encyclopedia_761570282_6/thomas_jefferson.html

Banking institutions, paper money, and paper speculation are capable of undermining the nation's stability and could be a danger in time of war. The Constitution does not empower the Congress to establish a National Bank. Rather than trust the nation's currency to private hands, the circulating medium should be restored to the nation itself to whom it belongs.

Thomas Jefferson -- http://etext.virginia.edu/jefferson/quotations/jeff1325.htm

I do not remember the conversation between us which you mention in yours of November 15th, on your proposition to vest in Congress the exclusive power of establishing banks. My opposition to it must have been grounded, not on taking the power from the States, but on leaving any vestige of it in existence, even in the hands of Congress ; because it would only have been a change of the organ of abuse. I have ever been the enemy of banks, not of those discounting for cash, but of those foisting their own paper into circulation, and thus banishing our cash. My zeal against those institutions was so warm and open at the establishment of the Bank of the United States, that I was derided as a maniac by the tribe of bank-mongers, who were seeking to filch from the public their swindling and barren gains. But the errors of that day cannot be recalled. The evils they have engendered are now upon us, and the question is how we are to get out of them ? Shall we build an altar to the old paper money of the Revolution, which ruined individuals but saved the republic, and burn on that all the bank charters, present and future, and their notes with them ? For these are to ruin both republic and individuals. This cannot be done. The mania is too strong. It has seized, by its delusions and corruptions, all the members of our governments, general, special and individual. Our circulating paper of the last year was estimated at two hundred millions of dollars. The new banks now petitioned for, to the several legislatures, are for about sixty millions additional capital, and of course one hundred and eighty millions of additional circulation, nearly doubling that of the last year, and raising the whole mass to near four hundred millions, or forty for one, of the wholesome amount of circulation for a population of eight millions circumstanced as we are, and you remember how rapidly our money went down after our forty for one establishment in the Revolution. I doubt if the present trash can hold as long. I think the three hundred and eighty millions must blow all up in the course of the present year, or certainly it will be consummated by the re-duplication to take place of course at the legislative meetings of the next winter. Should not prudent men who possess stock in any moneyed institution, either draw and hoard the cash now while they can, or exchange it for canal stock, or such other as being bottomed on immovable property, will remain unhurt by the crush ? I have been endeavoring to persuade a friend in our legislature to try and save this State from the general ruin by timely interference. I propose to him, First, to prohibit instantly, all foreign paper. Secondly, to give our banks six months to call in all their five-dollar bills (the lowest we allow); another six months to call in their ten-dollar notes, and six months more to call in all below fifty dollars. This would produce so gradual a diminution of medium, as not to shock contracts already made--would leave finally, bills of such size as would be called for only in transactions between merchant and merchant, and ensure a metallic circulation for those of the mass of citizens. But it will not be done. You might as well, with the sailors, whistle to the wind, as suggest precautions against having too much money. We must bend then before the gale, and try to hold fast ourselves by some plank of the wreck. God send us all a safe deliverance, and to yourself every other species and degree of happiness.

http://yamaguchy.netfirms.com/jefferson/adams.html

In the November 15th letter, John Adams reminded Jefferson of Adams' proposal to establish only one national bank, limit its capital and discourage banking in that manner. I have the letter in hard copy, but do not find it on the web.

[backscatter712]

16. Actually, there are cases where they pass down the lower interest rates.

That's when you go shopping for CDs, and you can't find one that pays you more than 0.5% in interest. :mad: