Did you ever feel you were on a ship of fools?
That's how I feel sometimes when I watch the market zig and zag with every little news tidbit. Today housing news and the Federal Reserve's lack of simpathy for speculators and hedge funds drove share prices down. I would be perfectly happy if the Fed rate stayed at 5.25% for years. I think consistency is a good thing, and we have not had any for a long time. If it is the goal of the current members of Federal Reserve to establish more stability and predictability in the market place, I'm all for it, and in the long run everyone will know where they stand.
If the Federal Reserve lowers rates and other nations do not, where do you think investments will move? The rate has not changed in over a year and most companies did fine. The housing market was pushed by cheap money and speculation. We do not need a return of those circumstances. We can be confident that the Fed will continue to support the banking system and depositors. It ends there.
Lowering rates devalues the dollar. Perhaps foreign buyers improve our balance of trade if this happens. Even more likely foreign investors come in scooping up precious resources and property on the cheap. Let's all clean up our own balance sheets, tighten our own belts and encourage Mr. Bernanke and company to run a tight ship. There will continue to be rough times ahead but in the long run we will be better off.
Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He is on the advisory board of Internet start-up CircleBuilder.com.
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Reader Comments (Page 1 of 1)
8-29-2007 @ 12:17AM
PAUL said...
The dollar is going to weaken no matter what the fed does. All America is concerned with is waging a futile war in Iraq. To top this illegal immigration is now suddenly a big deal. As if the regular American is so hard working and productive. ICE is kicking out people who would be buying houses and raising demand for properties. Instead Joe six pack is running up debt and drinking the country to oblivion. If only America was an educated nation it would never elect BUSH man as a leader.
8-29-2007 @ 7:14AM
s. Burgess said...
Alan Greenspan may be right. He forecast a major recession later in the year.We will have to watch foreign markets to see if his forecast rings true.
8-29-2007 @ 7:26AM
Bobbie said...
I very much agree with Mr Liber. Also, bad loans are bad loans and middle class America does not need to pay the price for these mistakes. The reason these loans were made is because the federal government says a mortgage/loan industry can not discriminate whether or not the individual can pay the money back.
8-29-2007 @ 9:27AM
Warren said...
"The dollar is going to weaken no matter what the fed does. All America is concerned with is waging a futile war in Iraq. To top this illegal immigration is now suddenly a big deal. As if the regular American is so hard working and productive. ICE is kicking out people who would be buying houses and raising demand for properties. Instead Joe six pack is running up debt and drinking the country to oblivion. If only America was an educated nation it would never elect BUSH man as a leader."
Wow, angry and bitter much? Knock that chip off your shoulder dude, you'll live longer.
8-30-2007 @ 2:50AM
scooperson said...
MY comments:
This is complex, but my educated read is as follows:
Want to fix the US economy for the long term?Forget about short term interest rate changes by the feds to "fix" the daily equity markets and bail out the subprime gamblers, as this only creates more instability. Focus on VALUE and EARNINGS in investing in equities. Messing with interest rates has far greater implications and effects world markets and US ability to sell off its debt. Weakened ability to sell US debt will make the now problems of the subprime market seem like a flea on your dog compared to losing your dog's legs....!
Fix the deficit!!! This is our primary problem!!!!
Rate cuts and increasing fed deficit devalue US dollars, and we cannot afford any more erosion. Yes a weak dollar temporarily bails out a weak business model, but all things considered, A strong dollar is global economic control!!!
Get the fat cats to understand that fixing long term
US debt is in their best interests. The political right demands less
tax and financial responsibility yet demands greater military
involvement in foreign affairs. This is illogical! Also private
equity drain and the creation of a new "middle man" in the economy
is not a positive long term development. Decrease in interest rates
perpetuates more private equity leveraging and far less value for
most common share holders and their 401k and pension funds. If the
right wing demands greater and long term involvement in foreign
excursions, then pay for it, that is a logical business decision.
You cannot fight a war on credit and then farm the job out to private
enterprise, duh, a calamity waiting to happen... RE markets in US,
what goes up comes down, it will level off and adjust, the fed bank
should sit this one out.
Affordability of owning a primary residence has greater positive effect on US economy than speculators in real estate pumping prices. Lowering fed rate to create a "fix" for ARM gambling, both by creditors and debtors is a cure worse than the
disease...
An ARM is actually defined as a "LEG" kicking your
behind, read the fine print in the contract, that is what it said! Kick the participant....
sc
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