Rates cut.

As expected the Fed just cut interest rates to try to stem problems in the US housing market:

Faced with a widening mortgage crisis, the Federal Reserve Tuesday cut a key interest rate for the third time in three months.

“Incoming information suggests that economic growth is slowing, reflecting the intensification of the housing correction and some softening in business and consumer spending. Moreover, strains in financial markets have increased in recent weeks. Today’s action, combined with the policy actions taken earlier, should help promote moderate growth over time,” the central bank said in a statement released with the announcement.

Story on MSNBC.

Many analysts believe the current quarter and the early part of next year will represent the period of maximum danger for a possible recession.

“I think a full-blown recession can be avoided but just barely,” said David Jones, chief economist at DMJ Advisors. He predicted that the Fed will follow up with three more rate cuts at its first three meetings of 2008.

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patriotz
patriotz
12 years ago

The IMF did a pretty exhaustive study of housing bubbles and their collapses and concluded that price declines seldom exceed 30%.Considering that Calgary and Edmonton took a bigger haircut than that in the 80's (as did Vancouver of course), I think they should pay more attention to their own back yard.And it's not like we have "seldom" seen a global runup in housing like the one which is now deflating – we never have. So perhaps we may also see a bust that has never been seen before?

Drachen
Drachen
12 years ago

MC:Yes that would be absolutely accurate.I've seen this pointed out before and I think it's missing the forest for the trees. Yes, it's historically accurate to say that over the last 4 corrections prices have fallen an average of 28% but in each of those corrections the fall has mirrored the gain. So our run up was twice as big doesn't that imply that the fall will be twice as big? This was brought up on another blog recently so I'll use the same analogy here as I did there.If you drop four medium sized rocks off a peir and compare the splashes, then get a fifth rock, twice the size of any of the others and prepare to drop it off the pier the same kind of analytical thinking would lead you to believe that the splash will be… Read more »

misanthropic curmudg
misanthropic curmudg
12 years ago

MKTue, Dec 4, 07 at 08:56 PMFor those who have taken a $50 – 70k shavecut on their house price, I would suggest don't panic. The IMF did a pretty exhaustive study of housing bubbles and their collapses and concluded that price declines seldom exceed 30%. On a 500K home, that would only be 150k. Not much money in an economy that's on fire.this is a comment in the Edmonton Journal on their housing problems

wg2c
wg2c
12 years ago

Dear thumbsup,Rile them up some more!Sincerely, wg2c.

Strataman
Strataman
12 years ago

However, all these repos, swaps, loosening of collateral requirements, and anonymous borrowing arrangements do is provide temporary liquidity. And as I have said many times recently the problem is not liquidity, the problem is insolvency. That problem is only going to get worse with rising consumer loan problems, rising charge card delinquencies, more foreclosures, rising unemployment, and collapsing commercial real estate.Basically an international banking collapse..so much for the experts!http://preview.tinyurl.com/d8q6j

ThumbsUp
ThumbsUp
12 years ago

Who u gona quote next?Drachen……Drachen,I got that link which you did not find u can register with e-mail and follow the link from you mail box cbre.comA recent report on global market rents for November 2007 shows:1.London(westend)England2.Bollywood,Bombay,India3.London(city)England8.New Delhi,India10.Hong Kong34.Calgary35.TorontoGlobal 50 Indexfastest Growing(Ranked by 12-month%increase in occupation cost in local currency and measure)1.Singapore2.Moscow,Russia3.Bollywood,Bombay India6.Banglore,India9.Edmonton,Canada10.London,West,England12.New Delhi,India35.Calgary sub,Canada

rob/satv is on a rol
rob/satv is on a rol
12 years ago

thumbs/satv/realtor:The source of your links are your industry's spoon fed to the lazy media, bogus and manipulated stats.You low lives know, this time of the year is a great time to pump out to the media your manufactured bs.form the article, ie:," Century 21 Canada president Don Lawby said in a news release."and :"Century 21 Canada released results today from a survey of its brokers on first-time buying "Who u gona quote next?tqn, reality check, newsflash, and Aaron and Rob, or have I already mentioned them?

Nick
Nick
12 years ago

Just wait until this Friday when the Montreal Accord asks for another extension…http://www.reuters.com/article/bondsNews/idUSN1152720620071211

kfinancials
kfinancials
12 years ago

Correlation doesn't mean one thing cause another. It just means they are positively related but does not mean one will cause another. Anyone with an intro stats course could tell you that. Either the person at CBC is manipulating the information or that person knows nothing about stats.

jesse
jesse
12 years ago

"Late exit from family nest may delay home purchase: StatsCan"You did read the part about "boomerang kids", right? All those 20-something renters/owners with jobs will never move back in with the parents if their jobs disappear, of course!

jesse
jesse
12 years ago

"Wall street was just the casino, moving money from one pocket to the other, and skimming off its take."That doesn't explain the writedowns. A lot of the stuff was shuffled off the balance sheet with no caveats and yes in this case the debtholder is screwed and the bank is clean. Some of the loans had loss contingencies (assumedly to give the banks a wider spread) and these are the ones the banks are having to deal with.

ThumbsUp
ThumbsUp
12 years ago

My take on this, is that politicians are going all out to bail out the housing market, so the Fed don't have to trash the dollar as completely. Hmmmmm politicians? where do the live? in homes where other people lives.Why do we live in homes?because homes are basic necessity for all of us.So what is the priority for all of us include government is?to fix the problem related to homes that will be countinue for rest of life "mind it compulsory".O.T.Official stats were released its available online plus some bonus links about what's happening in buying sides."The housing market continues to be strong," says REBGV president Brian Naphtali. "November figures show strong growth compared to last year, are basically on par with figures from 2005, and are 16 per cent higher than the same period in 2004. REBGVHPIHPGwhile staying in… Read more »

patriotz
patriotz
12 years ago

Who provided all that cash? Wall street.Nope. Wall street was just the casino, moving money from one pocket to the other, and skimming off its take. It did get caught holding a few chips itself, but the big losers are the holders of MBS, CDO, ABCP, and other trash spread from China to Norway.

markx
markx
12 years ago

Bailing out Wall Street is bailing out housing market, as Wall Street has real skin in the housing bubble, not the average Joe Sixpack. The average FB never put anything into the house they bid up. People bought because it was easier to get a mortgage and win a bidding war than to get approved for an apartment rental. The ARM teaser rates ensured that payments were lower than rents, and multiple refinances provided essentially free money. Who provided all that cash? Wall street. Now who gets bailed out? Again, Wall Street, by taxpayers and US dollar holders.

Warren
Warren
12 years ago

I think the various housing "bail out" plans are just talk, and big government expenditures won't happen. As patriotz says, this is a Wall Street problem, they'll get some low rates, but I think the Bush government will just let them eat their losses for the most part. They are on the way out anyway.Four years of a floundering economy under the democrats and they'll re-elect some Bush hillbilly.

patriotz
patriotz
12 years ago

As expected the Fed just cut interest rates to try to stem problems in the US housing marketI would say to try to stem problems from the US housing market, i.e. this is (another) attempt to bail out Wall Street, not housing.Housing is toast and believe you me everyone knows it, including Bernanke. There is simply too damn much supply of housing in the US and nothing, but nothing, is going to stop prices from returning to traditional multiples of rents and incomes, and probably lower for some time.

Strataman
Strataman
12 years ago

And the stock market crashed (again) cause it was like a person transfering his debt from one credit card to another, and then finding out that the new credit card didn't quite cover it all, and they actually had to keep paying for their stupidity!

markx
markx
12 years ago

Fed only cuts quarter point, which really disappoints Wall St. My take on this, is that politicians are going all out to bail out the housing market, so the Fed don't have to trash the dollar as completely. I wonder how the US government is going to pay for the housing bail out, if the USD is not completely trashed. It would require some serious tax hike to make any difference in the market.