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$2 million dollars to start a handjob company behind the car wash!Wasn’t the Fed supposed to cut rates in half today, from 1 percent to 0.5 percent? Well, that wasn’t good enough, for this failed economy and economic system. So now it’s “near zero,” which means “zero.” Just like Japan tried for years and years, to no effect! The Federal Reserve Bank is now out of “traditional ammunition,” according to almost-president Barack Obama, and your government is now printing money at an insane pace, and then banks are taking this money and immediately buying U.S. Treasury bonds, because nothing else is safe, and that is pretty much the end of this particular feedback loop.

Here’s something kind of funny: This current economic collapse can be largely traced back to the 2003-2004 1% Fed Rate era that fueled the housing boom by making absurdly inflated real estate prices “affordable” because these interest rates — both fixed and the evil adjustable ones — hadn’t been so low in half a century.

While it was sloppy/greedy “stated income” no-doc teaser-rate reverse-equity 105% loans that enabled Juan Drywallhanger and his old lady, Amber Asstattoo, to “buy” a 2,800-square-foot stucco monstrosity on a 3,000-square-foot lot in the Adobe Falls development behind the Sunburst Towne Center’s (now closed) Bennigan’s and Linens ‘n Things in the first place, it was the artificially cheap borrowing costs that made the option-ARM introductory payments on a $579,000 “Tuscan inspired” vulgarity briefly plausible for people making $40,000 per year and already buried in credit-card and SUV debt.

So, now that grand era can return again! Except for the loan part, as banks are not using any of this bailout money for, uh, lending.

Fed Cuts Benchmark Rate to Near Zero [NYT]
Fed Cuts Rate to Zero-0.25%, Will Use All Tools (Update1) [Bloomberg]

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60 COMMENTS

  1. They haven’t got the message up here in Canada City yet. I got a solicitation in the mail the other day offering me $12,000 credit at a point over prime, so I took it. There’s lots of good Afghani hash to be bought up hgere, and I needed some scratch to buy it with. You know what Fat Freddie says:

    “Weed will get you through times of no money better than money will get you through times of no weed”

  2. [re=200352]choinski[/re]: If this is the Weimar Republic, does that mean hash is going to cost like 3 trillion dollars a gram soon? Then my investment startegy is golden!

  3. Was it really ideal for the Fed to blow it’s load so soon into this thing? On Sunday 60 Minutes said they expect the second wave of shit-hitting-the-fan to come in 2009/2010. What’ll we have left to cut then except our wrists?

  4. [re=200344]heroinmule[/re]: We are fucked. The real problem is uncertainty. Nobody knows how fucked up everybody else is. Nobody knows who owes what and, worse, how much what own is worth–now that, my friend, is royally fucked up. Unlike Communism, where things have an absolute value (usually designated by a clueless bureaucrat) and where everything happens in the present, our system is based on futures for everything, including an asset’s value. That requires a level of trust. Uncertainty dissolves trust and, without trust, there are no futures and without futures… well, you get the picture.

  5. Wall Street, of course, loved it, ignoring the fact that this almost every economist’s worst nightmare.

    Tomorrow, when they realize this, the Dow will lose 100,000,000 points, which will be blamed on black people owning property by Jim Kramer.

  6. Yeah, we the ignorant masses were happy sheep to be merely sheared, but the stupidity and destructive nature of all this is hard to beleive.

    the rich just wanted to make money NOW, and could not just stand around and live off interest. I mean, didn’t they see this collapse coming? or do they just think swanky depression era rich peoples were cooler and they feel they need poor white people so it will not be so hard to get good help?

  7. look on the bright side, people: in Germany, the countryside is being overrun by wild boars.

    I give us at least six months to a year before we have to fight for our lives against ravenous swine in a literal, rather than figurative, sense.

  8. Not to worry, Ken. Once the economy recovers Bennigans and Linen N’ Things can re-open in all of those “Tuscan inspired” vulgarities. Olive Garden did!

  9. When the Fed dropped interest rates to 1% in 2003 at the height of the ARM scramble, I called it the “Buffalo Chicken Loan Rate”: lots of people were going to bite, but when it came out the other end, man, there was going to be pain!

  10. [re=200372]TaxWallStreet[/re]: I expect hollywood to bring us another Nick and Nora Charleston. When the drug violence spreads up here from Mexico, perhaps the narcotraficantes will switch from MAC-10’s to Thompson .45’s so we can relive the exciting years of prohibition just as in the old days. Maybe even a new Untouchables. good times.

  11. [re=200372]TaxWallStreet[/re]: For the rich, it’s not whether the collapse would come, but when. It’s like the withdrawal method, it’s effective as long as you pull out at the right time.

  12. [re=200381]MadMangosteen[/re]: ours is just being overrun by wild boors. NoVa is full of them, driving insanely, berating clerks, basically being the center of the Universe. I’d rather have boars.

  13. Originally read as “Tucson Inpired,” immediately followed with confusion, then anger, then denial, then acceptance, and finally, reread.

  14. [re=200349]facehead[/re]: You laugh, but I’m pretty sure Japan actually did that in the ’90s — as in, your savings account actually shrunk over time instead of growing — in a desperate attempt to get the thrifty Japanese to “stimulate the economy” by buying crap they didn’t want or need.

  15. The Banks’s foreclosed on Juan Drywallhanger in 2007. Wait ’til the Joel OptionArmer and his wife Lisa Lipo run out of credit cards to pay their bills…you know, when things gets bad for the people who are supposed to live good.

  16. [re=200352]choinski[/re]: The difference–in Weimar, there was hyperinflation. Here, in Amerika, it’s deflation that has the econominds turning coal into diamonds in their rapidly clinching rectums, which sucks for them because, with deflation, diamonds are worth $10 now.

  17. These fucking guys are so funny! Just when absolutely no one has any money, can’t borrow any money, can not get a job to make any money – these SOBs want to cut the interest rate to zero? WTF is that suppose to do for a bunch of broke muthafukas?!!!?

  18. [re=200381]MadMangosteen[/re]: If we were properly Tuscan-inspired, we’d all just be stone-cold crankin’ out wild boar sausages in the backyard. Nom nom nom!

  19. You can’t compare the present-day US to Japan in the nineties. Japan was not the largest debtor in the world. Japan had (still has) lots of industry. Whatever worked/didn’t work to produce ten or fifteen years of stagnation in Japan will probably be less effective in our case.

  20. I better post something so I can move the comment box up and look at Campbell Brown again.

    “Feedback loop” hell, what we’ve got now with this square-root-of-negative-zero prime rate is the Great Monetary Circle Jerk of 2008.

    What I want to know is, will the circle jerk be unbroken?

    [Time for esoteric joke about Hopey the Plumber Unblocking the Liquidity Trap.]

  21. Marx said that the traditional solution to the problem of the overproduction of capital (which is what we have) is the violent destruction of capital–somebody else’s capital. That means a war. Which is what got us out of the Great Depression. But it can’t be the war in Afghanistan.

    We have to attack a country or continent that has a lot of capital, and destroy it. The EU, for example. Can we get everyone pissed off at them? Maybe Campbell Brown could think of something. Or scare them to death with her huge black presence.

  22. Wow. As bad as the news gets, Campbell Brown keeps that same lovely, toothy style. I went to H.S. with a girl like that, who reacted the same way to her grades.

  23. [re=200411]DangerousLiberal[/re]: Indeed, the problem here is deflation. The solution is inflation, to encourage everyone who is saving their money now to spend it before it becomes worth less, or worthless. Unfortunately, in the past, inflation was often a by-product of an overheating economy. Ours is cold to the touch. The best we can hope for is demand-pull inflation from a huge increase in government spending, a la Krugman via Keynes.

    On the other hand, deflation decreases our real amount of debt to our future Chinese overlords.

    No I am not an economist, nor do I understand my first paragraph. But I am hopeful, because Hopey will save us all. SAVE US ALL YOU HEAR?

    Stop staring at me Campbell. See? Both hands free.

  24. Hell ya! Loan me some money at no interest! I promise to become a too-big-to-fail bank, first thing tomorrow! Yew betcha! I swear I will repay every single effin’ penny, less my salary, and my hot-as-hell secretary’s salary. And the phone bill, hot tub maintenance, and the PO Box. But — after that, I will repay ALL the rest.

  25. [re=200523]Aurelio[/re]:
    The army’s not having a hard time finding recruits these days. Bush fuckup #223,254 – blowing all that good terror hysteria on nonexistent WMDs, attacks that never happened and making air travel worse than it already was. Now they’ll have to invent some totally new threat that hates our freedom. Eurohorseman of the commie apocalypse? Chinamen Hitler armies? I think the Mexican Horde is our best bet. We won’t have to go very far and Lou Dobbs’ projected head will lead us into battle.

  26. Doodz, I got a solution – I just loan the moneys to myselfs now. I got a great rate that way – way better than that goober down at the fed is showing. Pshaw –

  27. I’m with facehead on this one: a Fed rate of negative 1% would encourage the banks to reborrow money to the government thus setting off the Reduncancy Syndrome and establishing the so-far elusive Perpetual Economic Motion (PEM) the world covets…

  28. Yes, but how will this impact the international truck nutz cartel and the local truck nutz retailing pipeline? Is free money going to enhance or degrade the general availability of truck nutz to deserving American families.
    It’s all very well to jump the shark but not while one garfels the Narthog, let’s try to keep our eye on the ball here people.

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