Japanese Car Zone - View Single Post - Federal Reserve cuts interest rates, stock soar

450SEL6.9 · 09-20-2007, 01:40 PM

Notic, our loonie reached parity with the U.S. dollar again. First time since 1976. Honestly, do our fellow Canadians understand the implications of this? All I hear about on TV are brain-dead newscasters saying it is cheaper to buy things in Buffalo and our currency goes a long way in the U.S. these days. I wonder how many more manufacturing jobs Canada will lose, but economists don't seem to care because the energy/commodity sector is lifting the entire country.

Rob, I do want to see a recession because a massive amount of bankruptcies is the only way to shake out the problems. There are many irresponsible people who bought way more house than they could afford. I don't think a rate cut helps their debt. It lowers the cost of their payments, but the fact remains that debts need to be repaid and these people bought more they want they could pay. Realistically, many people need their home values to rise substantially just to cover the amount they owe on the mortgage. The property market in U.S. bubbled because of the few years of low interest rates after 2000. Now that the bubble exploded, I think a few interest rate cuts will not save the real estate market.

Household debt in America is still higher today (as a % of GDP) than before the great depression. I don't see how much more the Fed can cut rates to help these debtors. Some are predicting the Fed funds rate will fall to 3.00% - 3.75%. I think that could produce a vicious and catastrophic cycle.

I think Canada has a similar problem (mortgages eating up 40-60% of a family's monthly income), but people are ignoring it, like Americans ignored their housing problem/bubble for years.

09-20-2007, 01:40 PM	#5
450SEL6.9 Inactive Account Join Date: Oct 2005 Posts: 1,142 Thanks: 172 Thanked 108 Times in 95 Posts	Re: Federal Reserve cuts interest rates, stock soar Notic, our loonie reached parity with the U.S. dollar again. First time since 1976. Honestly, do our fellow Canadians understand the implications of this? All I hear about on TV are brain-dead newscasters saying it is cheaper to buy things in Buffalo and our currency goes a long way in the U.S. these days. I wonder how many more manufacturing jobs Canada will lose, but economists don't seem to care because the energy/commodity sector is lifting the entire country. Rob, I do want to see a recession because a massive amount of bankruptcies is the only way to shake out the problems. There are many irresponsible people who bought way more house than they could afford. I don't think a rate cut helps their debt. It lowers the cost of their payments, but the fact remains that debts need to be repaid and these people bought more they want they could pay. Realistically, many people need their home values to rise substantially just to cover the amount they owe on the mortgage. The property market in U.S. bubbled because of the few years of low interest rates after 2000. Now that the bubble exploded, I think a few interest rate cuts will not save the real estate market. Household debt in America is still higher today (as a % of GDP) than before the great depression. I don't see how much more the Fed can cut rates to help these debtors. Some are predicting the Fed funds rate will fall to 3.00% - 3.75%. I think that could produce a vicious and catastrophic cycle. I think Canada has a similar problem (mortgages eating up 40-60% of a family's monthly income), but people are ignoring it, like Americans ignored their housing problem/bubble for years.