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“Fed Will Have To Step Up Its Game…”
By Sherman Ragland | August 16, 2007
I have been in the Boston area for the past 24 hours while more turmoil wreaks havoc across both US and world financial markets…
The 2nd best part of the trip was my decision to let the HERTZ rental car clerk convince me to rent a Shelby convertable mustang to drive from the airport in Providence, RI to Rockland, MA, about an hour and twenty minute drive…
The car was “THE BOMB”, the speedometor says it tops out at 140 mph, but I have reason to believe you can do better faster than this…
Inside the car was a Sirius Radio with over 130 channels. For my birthday last year my wife got me a new set of wheels with a Sirius radio, but I was too cheap, or more accurately I could not see the value, to paying a monthly fee to get a bunch of radio stations I do not listen to anyway. Having said that, the Shelby Mustang had a Sirius radio and after flipping around finally settled on CNBC’s station on Sirius, which of course is the same as the cable channel.
As you know, the stock market was DOWN AS MUCH AS 365 Points Yesterday, and as you might have thought everyone involved in the financial industry thought the world was coming to an end today.
So on the way back from Rockland, Massachusettes to the airport in Providence, Rhode Island the traffic was a total disaster from Route 3 all the way to I-93, so instead of an hour and twenty minutes, I am in the Shelby Mustang for almost two and a half hours. But the entire time I am listening to CNBC on Sirius.
It was an absolute ZOO!
Finally, around 2:00 PM, Lawrence Kudlow comes on and starts talking about the “Sub-prime VIRUS”, and how “Only a Handful of People Took This Sub-Prime Thing Seriously…” and people should have been listening to them.
HEY LARRY – ARE YOU READING THIS BLOG!??
Cause today you sure did sound like things I have been writing about for weeks. I’ll put in a plug for you and your show on CNBC, if you put in a plug for my blog on your show – Deal??
Any event, Larry, excuse me, Dr. Kudlow makes one of the most intelligent arguements made to date for the FED to STOP PLAYING AROUND with this situation and LOWER THE STUPID DISCOUNT RATE – CUT THE BLASTED INTEREST RATES ALREADY BEFORE WE ARE ALL DEAD!
As you have read in this blog, and as Larry stated earlier today … “The Federal Reserve has done an o.k. job of injecting liquidity into the system by pouring in tax-payer money to the tune of $132 Billion, but this is not going to be enough. The virus is spreading to every sector of the financial community and now they need to give serious thought to cutting the discount rate it charges to banks.”
A cut in the discount rate would help ease pressures on the banks in short run, and ideally stop the tide of rising interest rates longer term.
While it WILL NOT help the hundreds of thousands of people now facing foreclosure, or those “in the pipeline” to lose their houses due to the implosion of the Sub-prime lending community, it will allow banks to make a bigger spread on the loans out there now, add more liquidity to the system, and stop the VIRUS from spreading into ALL SEGMENTS of the Mortgage market.
For those of us still standing after the “Neutron Loans” finish the job it will be a great time to go shopping and we will need access to capital from both private lenders and the remaining segments of the mortgage market to make it happen.
Thanks Larry, for both the intelligent contribution to the dialog and for reading my blog!
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Tags: cnbc, financial industry, hertz rental car, larry kudlow, shelby mustang, sherman ragland, sirius radio, sub prime virus, subprime mortgage
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