The Fed has lowered short-term interest rates this year, but longer-term bond yields have risen. This is confusing Wall Street. Alan Greenspan is acknowledging the fact that the 10-year U.S. Treasury and 30-year mortgages remained low even as the Fed jacked its key short-term federal funds rate from 1% to 4.5%. Overall, bond yields rose more in one month when the Fed was cutting rates, than during two years when the Fed boosted rates. Some people are now believing that this could prevent or slow down an economic "recession".
Basically, no one knows what is going to happen in the rates over the next month. There is suspicion that the widening gaps between short and long term loans, may help with incentives for banks to give long term loans. Though, others think that cuts in rates are just an overreaction that will result in inflation. I think that a cut in rates will help home buyers, but prices of houses also are a problem. Though, finding a low rate is key. I do not know too much on that subject, buy wouldn't they want a lower rate on short term loans, because they will get their money faster??
Monday, February 25, 2008
Sunday, February 10, 2008
Article: A recession of global dimensions?
http://money.cnn.com/2008/01/21/news/economy/recession_global_dimensions.fortune/index.htm?postversion=2008012213
This fits directly with what we have been talking about in class. We (the U.S.) are worried about job scarcity here, and many jobs are being created abroad. This is creating an increase in the unemployment rate. It basically is jobs are not being created here, which is what we need. Something to watch in the future.
The article also discusses the fact that in the past decade or so Americans have been spending money like crazy, while the rest of the world has been saving by the billions. Now we find ourselves borrowing their money to pay ridiculous prices for good and things we need, such as houses. Basically, if everyone else didn't save their money for us we would be in pretty bad shape now.
A great point was also made that at one time America influenced the world economy and now it is turning around where we are influenced by the world. It is a fact that I do not believe everyone has grasped quite yet and is possibly key for success.
This fits directly with what we have been talking about in class. We (the U.S.) are worried about job scarcity here, and many jobs are being created abroad. This is creating an increase in the unemployment rate. It basically is jobs are not being created here, which is what we need. Something to watch in the future.
The article also discusses the fact that in the past decade or so Americans have been spending money like crazy, while the rest of the world has been saving by the billions. Now we find ourselves borrowing their money to pay ridiculous prices for good and things we need, such as houses. Basically, if everyone else didn't save their money for us we would be in pretty bad shape now.
A great point was also made that at one time America influenced the world economy and now it is turning around where we are influenced by the world. It is a fact that I do not believe everyone has grasped quite yet and is possibly key for success.
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