Don't Believe the Fed-Rate-Hike Hype

If the FDIC is under pressure, what happens when one (merrill) or more (Lehman) investment banks go under? How can they survive with antiquated business models, and without the ability to create investments? The primary fear is a Baby Boomer panic: runs on banks we've never seen before. If the baby boomers start to question FDIC insurance capability to protect thier money....whats to stop them from exiting the systemic tentacles of the government? The greatest fear today is bank runs by Baby Boomers.

Every day 154.6 million Americans get up, go to work, and get paid. Somehow we are led to believe the sky is falling and it is not. Things have slowed down, meaning we have had a drop in growth, though there has been no recession, or actual decline in GDP. We may still see a slight decline, though it will be mild if at all. We have been hammered, and I mean hammered, with all kinds of media “evidence” about how bad everything is. We feel it at the gas pump and in the grocery store, but somehow we’re doing ok, why is that? Simple – we are a wealthy nation, and in reality have the ability to shift spending habits easily. America’s doing great, and heading towards a much stronger, leaner, more efficient economy. Slowdowns and recessions have that effect. We just came out of watching our victories and defeats in Beijing, have been watching the dollar regain some respect around the globe, effectively lowering the price of gas (a trend reversal that looks to have “legs”), and now have our attention drawn to the election. 154.6 million Americans will be heading off to work, collecting their paychecks, paying their mortgage, putting gas in their cars, buying groceries, and moving forward. We will continue buying the latest technology, clothing, automobiles. We will continue going out to eat, keep ourselves healthy, and buy gifts for friends and family. We will continue to go to sporting events and concerts, movies and amusement parks. We are a wealthy nation, we work hard and we play hard. We have a strong sense of self worth which is many times measured in material possessions, and become disgruntled when we have to shift some of these patterns when prices shift. We are already getting past this.- we are a wealthy nation and have made adjustments. The next “wave” in the US economy is up. We will regain strength as the dollar continues to rise, corporations increase profits due to streamlining, we reduce the budget deficit under new leadership, and excessive real estate inventory is reduced. We’ve all been here before folks, wake up with a smile knowing the sun is shining and that we have wealth beyond imagination. It truly is a great day!

ZEPPELIN RULES!!

I just got back from a couple of weeks in Europe. That was all the evidence I needed to convince me that things here in the US are much, much better than the media let on. Fact: first, almost everything here in the US is cheaper than in Europe; second, the quality of goods and services is much, much better; third, the variety, choice, and selection is much better than in Europe. This is based on being in all the major European nations UK, France, Italy, Germany, etc. Americans are whining about things being bad, but in fact they are a whole lot better than in Europe.

Ed K.... good call, I like it.

Mortgage Interest is a Tax Deduction, or above the line. However, the new 7500 Tax Credit for first time home buyers is Great. Too bad that same bill also included all credit card transactions to be reported to the IRS.

Kusos to Ed-K I could not have phrased it any better. Only one caveat! We are a great nation and a wealthy one. But beware of the underclasses who do not possess the wealth to buy new cars and afford college educations for their children. We still have many millions who do not feel wealthy, particularly as their equities in homes and portfolios are down. The caveat is "not to be too complacent" in this great economy of ours.......she is vunerable. Otherwise, do wear a smile, it is a great day, everyday.

Ed K......You are right, but know your history. Restaurants, Entertainment Venues, etc. THRIVE during bad times. Also, it is a good time to get into that business in my opinion. People are still going to work, it is what they are coming home to that is changing. Also, note history on the dollar, wasn't long ago it was .90 was it???

The Mortgage Interest is a Tax Deduction, or above the line. However, the new 7500 Tax Credit for first time home buyers is Great. Too bad that same bill also included all credit card transactions to be reported to the IRS.

FED loosens restrictions........Banks/Public hang themselves......FED tightens restrictions...........However, the FED gets more power after every cycle.

First to reedersong: the mortgage interest tax deduction is an "BELOW the line" deduction. The STUDENT LOAN deduction is an "above the line" deduction. Second. If the economy is doing so great and we are so rich, than why can't the Fed raise interest rates. I'm tired of these meager returns on my savings.

I would probably trust the FED before I would trust Blodgett, but it is Damned close.

THE US ECONOMY IS BOOMING!!!!!!!!

If you believe "the media", you'd think we are all walking away from homes and eating cat food so we can afford to put 1 gallon of gas in the car. Of course, "the media" want you to feel this way so you will vote in Obama. Ask yourself this, "What does the President do for you day to day, month to month?"....Answer: nothing. Congress affects you more, they sign the laws, they spend the money, they write the tax code. What has Congress done in the past 22 mos? Answer: Nothing but blame Bush for all the problems. The real problem is Congress. Vote them all out. Especially Pelosi and Reid. They are both idiots.

The value of the dollar rises and falls with the Fed Reserve interest rate. The cost of oil has fallen as the dollar's value rose. To reduce inflation the interest rate must rise. This will aid the middle class and employment and reduce industies income. This must hit a balance. The baby boomers are not the money holders of this USA. The large capital holdings are in 1% of the population---these are the millionaires and up. This is not the baby boomer class.

FREEBIRD!!!

To: Out of Focus - Wednesday August 27, 2008 02:45PM EDT...............Intriguing...Mortgage Interest is on the Itemized Deductions sheet. By below the Line...Of Course I mean a CREDIT. Mortgage Interest is not a TAX CREDIT it is a DEDUCTION....Above the line and below the line can be applied in this manner. Note the difference between Mortgage interest deduction and CHILD TAX CREDIT. The difference is The Child Tax Credit is applied DIRECTLY TO WHAT YOU OWE AT THE VERY END. Mortgage Interest Deduction is not. However, I do understand what you are talking about.

Raise rates already FED!!!!!!!

A lot of this "gloom and doom" is media hype, in order to make the Democrats look better than the Republicans. We do need a 50 basis point hike in the Fed Rate,now, not later. I also believe the talking heads and 90% of the media, are just hypeing what the Feds will do. This also includes Wall Street. A Fed Rate hike,anytime soon,appears to be "wishful" thinking. However, it is certainly needed by savers,fixed income and low wage earners. Our assets are quickly wasting away. A rate hike of at least 50 basis points,would bring some balance to what the Feds have been doing for the big dog's. It will happen, but not soon, because of politics and the way our capitalistic system works. Nuff Said. Jim

I think Raising rates would be the best thing the Fed could possiblly do. A stronger dollar as of late has drove gas, food, etc down somewhat, which is what I want. Fed, please help accelerate this process and raise reates immediately!