So what do you think? Will the Fed Gov't really kill us by raising interest rates?

With gas the way it is and you know everything will be going up due to everything going on, do you think they will really deal us another blow by raising rates on mortgages? If so, how do all the homeless get back into the market? How will anyone survive?

Re: So what do you think? Will the Fed Gov't really kill us by raising interest rates?

the interest rates are bound to be going up....that i think is inevitable

Re: So what do you think? Will the Fed Gov't really kill us by raising interest rates?

I unfortunatly think the rates will go up regardless of any new circumstances....

as yes, its gonna be mighty hard to live!

Re: So what do you think? Will the Fed Gov't really kill us by raising interest rates?

Re: So what do you think? Will the Fed Gov't really kill us by raising interest rates?

But with the interest rates going up....
House prices are sure to drop...

IMO i would rather have higher interest rates...
You can always remortgage!

But once you purchase a home for a price...that is it..

Re: So what do you think? Will the Fed Gov't really kill us by raising interest rates?

I agree that I would rather have the rates go up, because companies will fight over themselves to get you re-fiananced with them, and the houseing prices have to go down when rates go up...

Re: So what do you think? Will the Fed Gov't really kill us by raising interest rates?

I teach College Economics and it usually works in the opposite direction. Let me explain...

There are two things that the Federal Government can do. I won't bore you with all of the complicated details but it is not a given that interest rates will go up.

The Fed often cuts interest rates in order to stimulate buying in other sectors of the economy. Interest rates go down, cheaper to borrow the money, more money borrowed=increased spending.

Oil is a highly inelastic product, meaning the demand is not contingent upon the price... if it was on sale at 50% off would you buy more and store it in your bathtub or just drive 50% more? No. Since the price has more than doubled in the last few years have any of you permanently cut your driving down by 50%? No.

That being said you will now cut back on other "elastic" products... all high end goods and or subsitute for what you feel are reasonable cheaper substitutes based on your preception of quality (ex. Charmin TP vs. Pathmark)... in order to try to keep within your budget. Who will feel the pinch of this? Higher end retailers, higher end real estate, non-essential providers. If you normally go out for steak once every month you will now substitute that with a cheaper alternative for a restaurant or not go out at all. So more people will be shopping at Wal-Mart and less at Bloomingdales

That leads to all non-essential "elastic" markets for goods and services to see a decrease in demand for their goods and services. In order for these business to "stay afloat" and continue to employ people they might have to borrow money. In order for us to purchase we might need to finance the purchase. In order to keep us, the consumers coming in they have to make it cheaper for us. Well, they (the businesses) can only cut back the price so much... but what the Federal Reserve can do is make it cheaper for us to finance those purchases. The Fed sets the prime lenading rate and mortgage and credit ard companies follow suit.

It is in the Federal reverves best interest to keep the economy stimulated and keep the businesses and us spending. If we spend, more people work. Alan Greenspan and the Federal Reserve Board will feel pressure to announce a cut in interest rates.

A historical example... Sept 11th... remember shortly there after many of the car manufacturers announcing 0% financing? That's because people were scared. Remember Bush saying keep going out there and spending (in so many words).

Of course, economics is like a spider web of many forces interacting but this only covers a part of it.

So, in a nut shell, the Fed Gov't will not raise interest rates. If they did they would create, for sure, a recession. They need spending even if it's deficit spending.

Re: So what do you think? Will the Fed Gov't really kill us by raising interest rates?

Re: So what do you think? Will the Fed Gov't really kill us by raising interest rates?

I am more interested to see what the President will do now. It is probably another excuse to further his political agenda of supply-side economics- which I really don't think works.
Lucky for Bush, this hurricane has totally made it impossible for the news to focus on the new data that shows that the income gap in this country has gotten larger once again. In NYC the richest 5th make 52xs the poorest fifth... now THAT is an income gap...
Just like after 9/11 and at the beginning of the Iraq war-when he should be RAISING taxes, he'll probably be lowering them- again... to benefit those who don't need it..

Here's how good President Bush's supply-side economics work:

But job and income growth haven't materialized so far. On Tuesday, the government released data showing that for the second straight year pretax real median household income failed to grow. Meanwhile, the official poverty rate rose from 12.5 percent in 2003 to 12.7 percent in 2004. And on Friday, the Bureau of Labor Statistics reported that the economy added 169,000 jobs in August: not bad, but nothing to write home about.

But of course we won't hear anything about that- and the reason why our economy will be sluggish will be the hurricane- well it was bound to be sluggish hurricane or none.

Re: So what do you think? Will the Fed Gov't really kill us by raising interest rates?

Posted by neeniebean86

Posted by MissJones
If so, how do all the homeless get back into the market?

we're not homeless, and we make decent money, and we still cant 'get into this market'. in either regard, whether its prices or rates, its just out of control, and MANY people can afford the housing that they *should* be able to- and even if they do, they are spreading themselves sooooo super thin just to make the payments. But yes, i'd rather see the rates go up, so that the prices drop again, and then theres at least hope to refi in a couple of years

Re: So what do you think? Will the Fed Gov't really kill us by raising interest rates?

I can see the Fed raising another half point in the next six months.

But I do not think the mortgage rates will go anything past 6% until the job market gets better.

It just seems like every 3-4 good reports we hear of the job marking improving... we get slammed by one company's announcement of laying of 10,000 workers (or something to that effect).


I don't mind the rates increasing though cause the interest rates in my bank are GREAT. I just opened an account that will get me 3.75% interest checking!