Is it 75bps from the Fed!..Holy Sheet!

As Mr. Krabs would say..they're giving away free money!!

can someone please wake me up - this has to be a hallucination we're living through - why on Earth don't I do drugs?

And so begins the USD carry-trade bubble.

this can have no positive effect on manhattan real estate

0% will energize Manhattan real estate, just the way Japan's 10+ years of 0% energized Tokyo's real estate.

hmmm arent japanese car companies eating our lunches? how did that happen if their economy and real estate suck?

Those Japanese -- they can eat and eat and still lose weight. Toyota, for example, down 50% from it high last year. And 100% 0%-fed Tokyo real estate?

Let's bring back sub prime mortgages!!!!!

where do I sign up for my 1.5% fixed rate mortgage?

Let's bring back sub prime mortgages!!!!!

sorry Juiceman Manhattn boards will not allow it.

Just remember, the Nikkei almost hit 40,000 in 1989, and has never recovered. It's currently at 8568.

positivecarry, yes and the stagnant Japanese beaurocrats bellyflop along culturally unable to make any serious change without the consent of the whole country.

but the japanes still find a way to kick america's asses in car manufacturing, electronics, video gaming, hot chicks, etc, etc, etc,

Did anyone watch 60 minutes this weekend? Can someone post a link for the mortgage video?

lookin good benny lookin good...big rally..Don't Fight the Fed

How long from now can we expect the rates from the banks to lower their interest rates for mortgage and refinance options, especially the jumbo loans category?

mortgages are not necessarily tied to Fed rates

http://www.cbsnews.com/stories/2008/12/12/60minutes/main4666112.shtml

This is not my area of expertise, so, how does this affect present owners who have bought in the last 2 years and for people looking to buy right now?

Rates are already down proper. Non-jumbo loans are now at around 4.9%. Jumbo rates seem to be a bit more stubborn. You can check bankrate.com for the latest rates, but I have been told that you can get jumbos for less than they advertise on that site.

god, so it's official: "no more ammo left".

There is 1 more bullet left admin.

The effective funds rate was already at this level. This is nothing but window dressing. Now Bernake is out of bullets on the interest rate front, time to start Quantitative Easing - yay for Treasuries!

"god, so it's official: "no more ammo left"

nope- they still got the trump card -> the printing press.

alpine - Thx. I did check bankrate.com and the reason I posted the question was because I didn't see that much movement for the jumbos on the website. If the website isn't all that accurate, I guess I should call my bank about refinance options.

Right now the printing press is far more effective than lowering rates. If the Fed buys more debt from Fannie and Freddie, mortgage rates will continue to decline. THere is a good chance that we will see rates as low as 4% for non-jumbo mortgages.

Thanks alpine for posting the link. If that video doesn't worry someone, well, I don't know what to say.

I like the-in-your-face-Bernanke style...seems like a nice, quiet, reserved gentleman until it's time to jam. He is forcing us to forget our fear and remember our greed. It's the only way.

I saw that video via The Huffington Post. Scary indeed.

yes, of course. the printing press. but don't be surprised if that retaliates way before BB expects (high long term yields). USA depends on the trust on the dollar. wtf is he thinking? anyway, if i needed more confirmation that we will pay unfunded entitlements by printing money... well, no more doubts now.

"Don't Fight the Fed" - been hearing this for 14 months now. Now, granted stocks are down 45% on todays announcement, but if you followed this mantra up until now, you got hurt real bad!

Think about why the fed is doing this. Quantitative easing already brought rates down to about this range so I agree with JGR. Nevertheless, let stocks enjoy the heroin. The last 15 shots didnt last. So lets see if this does. I worry that things are so bad, that the fed felt forced to do such measures and start monetizing debt and buying up mortgages/treasuries. This is where dollar gets real hurt, gold does its thing.

But ask yourself, if business conditions are so bad and spending is deteriorating, and credit still a problem, and people got wrecked in both their RE and their portfolios, do you really see buyers flocking to the market to buy because rates are better and commercial real estate all of a sudden gets filled up because of this?

I'm putting all of my dollars in Alpacas.

http://www.alpacasofmontana.com/images/DSC_0149.JPG

"do you really see buyers flocking to the market to buy because rates are better and commercial real estate all of a sudden gets filled up because of this?"

No, of course not.

watching cnbc & someone just said/implied that the fed's actions today show that we are in a Depression.

The move by the Fed won't help real estate, but it will help certain stocks. There are people out there with money that they would like some sort of return on. When you consider that stocks have been hammered already, I suspect that they will begin looking attractive again, particularly those with dominant market share, strong balance sheets, limited exposure to credit bubble, and strong dividends. In addition, corporate bonds, some preferred stock and munis are also going to benefit.

And by "benefit" I mean that they will become more attractive. Look for rates on munis and corporate bonds to start coming more in line by Q2 or Q3 of 09, if not sooner.

mh23,
But how can you know whether the corps or municipalities are financially sound & won't go BK? Haven't the ratings companies been compromised?

well put in another way, from a different angle, the fed is doing exactly what Japan did to fight deflation in the 90s, that turned out to be a lost decade

I guess the market hadn't priced in such rambunctious behavior by the Fed. Now, with tomorrow's White House Big 3 bailout, we may just have enough market cheer to get us through this holiday season.

I wonder what the jumbo rates will be?

urbandigs just hit the nail on the head.

All of this interest rate foolery and printing money to prop up fail businesses will do absolutely zero to get the economy going again. This is only going to prolong the round of deflation we are in. The lost decade is here and it is now.

I wonder if that's the next thing we'll see, when the alt-a problem explodes, conforming limits being raised yet again.

I wonder if that's the next thing we'll see, when the alt-a problem explodes, conforming limits being raised yet again.

anyone that believes this announcment will result in:

1) buyers entering the market because of a once in a lifetime event with low rates
2) businesses flocking to sign leases for commercial spaces

should re-read what the Fed sees and reported in their issued statement:

"Since the Committee’s last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined. Financial markets remain quite strained and credit conditions tight. Overall, the outlook for economic activity has weakened further."

You can't make buyers buy! You cant make businesses sign long leases and expand! You cant make banks lend! This is not a price of money problem! this is a solvency problem and a debt deflation problem.

"urbandigs just hit the nail on the head.
All of this interest rate foolery and printing money to prop up fail businesses will do absolutely zero to get the economy going again. This is only going to prolong the round of deflation we are in. The lost decade is here and it is now."

absolutely. People said this months ago. We'll have to face the music & feel the pain one way or another, so let's get it out of the way instead of prolonging it.

Why is it that we & so many others know this, but the decision makers, blinded by denial, are making the wrong decisions? ARG!!!

"0% will energize Manhattan real estate, just the way Japan's 10+ years of 0% energized Tokyo's real estate."

"hmmm arent japanese car companies eating our lunches? how did that happen if their economy and real estate suck?"

ROTFL.

So now its two countries where perfitz has absolutely no clue what he's talking about in terms of real estate....

UD - surely some people will benefit. you have to look at those who already own - many ARMs that have variable rates will drop. I have a HELOC on one of my units that started the year at $1100 per month, now it is at $500 per month and will go even lower on this announcement.

Should the Feds moves knock mortgage rates down, those looking to refinance may be able to lower payments and lock into historically low rates.

Also not everyone is losing their jobs. Some people are making more money than they ever have. There are people who will benefit from these moves.

There are buyers out there who have money, have jobs, and want to buy homes. I know several. Lower rates may just push them into the market. There probably isnt enough of them to move the needle significantly but these people will get great buys with great financing.

UD - wouldn't this encourage more lending to businesses? At least a little bit, since right now there is none?

nyc10022 another post where you offer no value and jsut attack others. congrats

nyc10022 - another post where you attack and add no value. Congrats!

"Why is it that we & so many others know this, but the decision makers, blinded by denial, are making the wrong decisions? ARG!!!"

It's Keynesian economics rubbish. Unfortunately, everyone in power has the belief set that the Government can stimulate the economy through fiscal and monetary policy. And that isn't changing anytime soon.

More lending than the worst ever?

All this can do is slow the tide of problems... but we still have the problems. Things will continue to get worse, the fall is just a little bit slower now.

To think this is somehow going to turn RE prices around is just naive.

"There are buyers out there who have money, have jobs, and want to buy homes. I know several."

And they're all thanking the lord they didn't listen to you in January, when you told them to buy. I'm sure you're telling them to buy now, but I don't think they're as stupid as you.

"Lower rates may just push them into the market. "

Yes, sales down 75%, prices down 20%.... I'm SURE this will turn that around immediately.
Nothing speeds up demand like a tanking market.

Wow, denial is a powerful thing...

petrfitz - yes there are people making money and not everyone lost their jobs, but many many many others DID lose their job and many many others are NOT making the money they were used to making.

I see your angle, I really do, I just do not believe in it. Thats all. This is NOT a cost of money issue. This is deflation. This is debt deflation. Kinda the same I guess. This is credit contraction. This is a credit crisis. This is a highly troubled banking sector. Its exactly what happened in Japan in the 90s. Sure there are always a few out there that position themselves well and are in fine shape. But many many others are not.

The fed move here is rather troublesome to me, because it is basically a reaction to what they see in our future; and its likely very very ugly.

Waverly, you would think so, but the fact is we have deterioration everywhere and the fed is admitting it and reacting to it. So ask yourself, why would banks want to make bad loans again when credit quality is deteriorating, consumer balance sheets are deteriorating, business conditions are deteriorating, business investment is deteriorating, and industrial production is deteriorating. This is when businesses get slaughtered and go out of business, not when you pour more money into expansion and more capacity!

Business is slow, and slowing. Its a consumer driven deflationary environment. Banks are in bad shape and the fed is doing everything they can to repair the banking system, and credit markets. That is how bad things are that they did this. They are now the big player in debt markets, is this really a positive sign? This is quantitative easing. Its what Japan did when they had no room left to cut rates.

Cramer says to buy CDOs and buy Manhattan real estate NOW. I spoke to someone I know and she says BRING IT ON because there are tons and tons of sellers of CDOS and bids are still very rare!

This worries me because I wonder why they felt the urgency to do this now. Are things that bad? Im sure credit markets will thaw out, but you cant force banks to lend to businesses or consumers of poor credit quality and right now that is not what they want to do. They need that money anyway for future writedowns.

> nyc10022 - another post where you attack and add no value. Congrats!

Better that then giving people advice that would lose them money. I told folks to short, you were just an idiot for not doing it.

You are at best a troll, and at worst, a money loser for all who take your "advice".

A credit crisis is a great time to be sitting on cash. There are heaps of opportunities out there for unbelievable buys if you have cash.

NYC10022 - please provide proof that I have lost any money. You keep stating that and you know it is a lie.

Provide proof or shut up Eddie Wilson.

by the way, Cramer publicly ranted in FEB of 2008 that there will be a housing supply shortage by summer of 2008! He has been wrong so many times, that if you call the bottom enough times, eventually youll be right.

Keynesian

Thanks, jgr. Just makes me want to scream. They're muddled & befuddled in their theories & have no common sense. To prolong this for a decade+ is way worse than taking the pain now & working our way out.

"Also not everyone is losing their jobs. Some people are making more money than they ever have. There are people who will benefit from these moves."

Statements like this are just cock and bull. On the way up you could say...

"Also not everyone is getting raises. Some people are making less money than they ever have. There are people who will not benefit from these movies."

Real estate and the general economy are impacted by the sum total of market, not individual anecdotes.

UD - But wouldn't lower rates lessen the risk for the banks to loan money to businesses? I am not suggesting a free-for-all, but a loosening of the credit markets, where small businesses can get their lines of credit to do business rather than expand into new areas.

To me, that is a big concern. The small and mid-sized companies that cannot get money will need to cut headcount quickly to free-up cash and that is a tough snowball to reverse. These SOB's took the TARP money and stuck it in their pockets...not really happy about that either.

Also, I do think the ability of responsible homeowners to refi could help stimulate some consumer spending which our economy depends on...again, since there is virtually no consumer spending and no lending right now.

In theory yes. But it has not been working out that way. Banks are not lending because the economy is deteriorating fast, its actually getting worse. Banks are not lending because credit quality is deteriorating. banks are not lending because their balance sheets are still messed up.

I hope you are right, I really do. Its in my interest for all this to work. But I am concerned WHY they do such drastic measures, how bad is it really? And most importantly, what r the unintended consequences that we will pay for later on?

"But I am concerned WHY they do such drastic measures, how bad is it really? And most importantly, what r the unintended consequences that we will pay for later on?"

yup, yup, yup.

"A credit crisis is a great time to be sitting on cash. There are heaps of opportunities out there for unbelievable buys if you have cash."

Absolutely... they're just a lot less likely to be in TANKING assets. Manhattan has now fallen faster than any other market in the country.

And you told folks to BUY right before it happened.

Nice job!

> NYC10022 - please provide proof that I have lost any money. You keep stating that and you know it is
> a lie.

Hmm... pretty easy... you told us you were buying Manhattan RE in Jan. Couldn't have called that more wrong.
You also bought in Vegas. Wow, that couldn't have gone more wrong.
Then you admitted you "learned" when you lost a ton in real estate a while back.

Granted, made up stories are one thing.

You made a call, and it was the dumbest ever on this board. Period.

Couldn't have called Manhattan RE more incorrectly. And everyone here knows it.

Try all the insults you want, you made the dumbest predictions on this board. You even beat Steve...

> But wouldn't lower rates lessen the risk for the banks to loan money to businesses?

Not when interest rate risk isn't the problem.

Default risk is... and lower rates won't help businesses that are losing significant $$$.

UD,

You contradict yourself- If the Fed was omniscient, why was fighting them the right strategy? They didn't tell you 18 months ago that things were going to get this bad so why do you look to them now to see into the future correctly? Don't forget- this spring they were still talking INFLATION so I find it absurd to grant them seeing powers beyond anyone else....I also find the analogies to Japan quite relevant but take a look at Japan's money supply growth- it NEVER got above double digits (http://www.csis.org/media/csis/events/081029_japan_koo.pdf) so while they didn't have to overcompensate for the liquidation of the "shadow" banking system, I would argue that these actions seem MORE stimulative than what the Japanese did. Even so, Tokyo property prices dropped about 40% from their peaks, and RE in other Japanese cities took it even worse..The Japanese 10 year hasn't traded above 2% in over 10 years, with a fiscal deficit worse than the US in a non-reserve currency..It's easy to see this level of general debt destruction leading to sustained periods of risk aversion and thus lower-for-longer 10 yr USD rates...As it relates to NYC RE- I know I will be calling my mortgage banker tomorrow because I am one who has been waiting for the right time to buy. My thinking is that while I won't change my bid- call it 25% or so below current ask, I am more comfortable legging into carrying a mortgage when rates are this good. Also, if my ask gets hit, qualifying for a conforming mortgage in a co-op makes monthlies in my case look quite good.

"so I find it absurd to grant them seeing powers beyond anyone else..."

Hey, isn't that THEIR JOB?? Wasn't Ben's expertise on the Depression? Yes, I hold them to the HIGHEST standard. I think they have failed miserably & caused immense harm to the US & the world.

RED FACE..... hoooooo.....hoooooo..hooooo....hoooooo.....hoooooooo.
(That's Bernanke trying to re-inflate a 16wheelers' tire with his mouth)

What a Dumbass! That Bernanke.... Come on AgentRachel...pls get me that phantom 15CPW apartment... I'll pay $4000.psf... nay $15,000psf... theyr'e giving money away....

I'm wit UD... when the doc comes in with the BIG needle and tells you nothing is wrong... go get yourself a HELOC and travel the World.

"0% will energize Manhattan real estate, just the way Japan's 10+ years of 0% energized Tokyo's real estate."

Very dry.

aj202 - you mean if your 'bid' gets hit? Also, japan had a far better savings rate than the US, solets take all things into consideration. Ill try to read that paper tomorrow, thanks for providing.

I dont comtradict myself. For about 14 months now I have been arguing agains the 'dont fight the fed' group who looked at all the fed was doing and argued to buy equities, and not to fight the fed! So, Im being consistent. No, they did not forsee this, but when I see such drastic unprecedented actions, my first reaction is to wonder 'why'?

Natl re is down about 35-40% already and still falling. I do agree the fed is acting far more aggressively than did Japan, and perhaps the fact that Bernanke is a student of depression and Japan, at least he wont go down as the guy that didnt try!

but still, its an admission that at least things are comparable to Japan's! At least admit this. Maybe it wont be a lost decade, maybe it will be a lost 5 years, or 6 years. So we are year 1 with the recession starting DEC 2007.

In terms of your thoughts on bidding for Manhattan re, I truly think your feeling does not represent the masses of buyers waiting to re-enter this market.

aj202, if one can qualify, if one has job security, and if one is looking at a conforming mortgage, now might provide some opportunities. Three big ifs.

thx for the 60 Minutes piece

As bad as NYC may get, Miami was always destined to be hit much harder. It is a bubble town. If foreclosures start hitting the market in NYC, there will be buyers. Not so in Miami, or not at the same prices or volumes.

UD, here's the issue in my opinion: you could throw all the money in the universe in the system, the problem is that owners' carrying costs (a function of prices) far exceed rents and the ability of people to pay them (price-to-income ratio). Therefore, although you may be able to stave off some pain for current owners, when they come to sell they will HAVE to lower their prices. They will still be underwater, just making their payments.

"Miami was always destined to be hit much harder. It is a bubble town. If foreclosures start hitting the market in NYC, there will be buyers."

You don't know what you're talking about lowery. First, foreclosure laws in the two states are radically different. It takes 12-18 months to foreclose in New York, 1 month in Florida. Second, there is a much higher level of ownership in Miami than there is in New York (City), where the majority rent. Population of Manhattan is about 1.2 million. Over the last 10 years 8,500 units have changed hands per year.

You are comparing apples to rocks.

"You are comparing apples to rocks."

I am not comparing Miami and NYC; I am saying that one is an apple and one is a rock. There is no need to be insulting.

Miami had alot more development as far as I know compared to Manhattan. Miami is like 85% condo, while Manhattan is like 70% co-op. In Miami, speculators were everywhere. In Manhattan there were speculative investors and foreign investors, but not like the concentration in Miami.

With that said, Miami is NOT the wall street capital of USA. Manhattan is. And this is a wall street crisis. Yes there are differences in makeup of the market and the buy side demand, but lets face it, we just dont know how hard Manhattan may get hit. This is a wall street crisis and we are a wall street city

Nothing beats that $2.4 million condo in the 60 minutes peiece that is now listed for $939,000! That is a HUGE crash.

So steve, when will we see the same thing in Manahttan?

dwell,

No, that is not their job. In fact, it's pretty clear their mandate is two-fold- 1)Promote price stabiity and 2) maximum employment. So their policy responses vary accordingly. Unlike nearly everyone else, I find less fault with the Federal Reserve over the last 5 years than nearly ALL other players. If you were stupid enough to do NINJA lending, and if you're dumb enough to not know that a $6.75/hr job as a waitress or avocado picker doesn't qualify you for a million dollar home, or you were dumb enough to buy crap in your fund you didn't understand all for a little extra yield, then reap what you sow..Using "The Fed made me do it" excuse is BS...

UD,

You are correct about Japan's savings rate, and with their bulging aged population (similar to ours), you're crafting a very logical argument for why US savings rates may be setting up for a structural move higher, which would jive with my assertion that US 10 yr rates may be staying at these levels for longer than many (and ALL hedge funds) would think as bonds become the investment instrument of choice for an undersaved elderly population. If you believe we are like Japan, then it stands to reason that a higher domestic savings rate will translate to lower long term gov't bond rates. The difference between the US and Japan is they didn't have the global buyers of their bonds because they weren't a reserve currency, so it seems to me, even with an eventual decline in foreign demand (which despite ALL protests, we have yet to see), US might even offset that. As to what the fed "knows" that would force this kind of manuever, their actions today are a continuation of their previous policies and a response to the awful data that is espoused so readily on this site..There's no "magic" behind it..And yes, if my "bid" gets hit

"This is a wall street crisis and we are a wall street city."

I know, but with the 50%+ price chops in Miami, the buyers are not rushing in, because other than vulture investors fund, they don't exist, whereas in Manhattan there are people who have expressed here on this forum a keen interest in buying once prices get down to a certain level, whether it be 50% off the peak, or exactly what they are paying in rent across the street. It is those potential future buyers I think don't exist in Miami. Nevertheless, as you say, "This is a wall street crisis and we are a wall street city"

"If foreclosures start hitting the market in NYC, there will be buyers."

I guess we still have some denial.

Prices are down 20%, and we DON'T have buyers as promised. Sales are down 75%.

The "folks will jump in from sidelines" is a lie your broker made up. When folks see these declines, and when folks see foreclosures... they jump TO the sidelines.

Thats how crashes work...

"whereas in Manhattan there are people who have expressed here on this forum a keen interest in buying once prices get down to a certain level, whether it be 50% off the peak, or exactly what they are paying in rent across the street."

I remember a lot of folks saying they'd buy if prices went down 20% on this board. Well, here we are.... and nobody buying.

This is how crashes work. You get FEWER buyers, not more. Sorry, but the brokers lied.

UD, I don't have an opinion on the macro impact, because I am focussed on investment opportunities. Forget about real estate, the time to sell was 07 at the latest. Nothing the Fed has done, or can do will keep prices from falling for the reasons that Stevejhx has articulated. However, at some point, all of the cash that moved to the sidelines will start to seek a return better than that of Treasuries or FDIC savings accounts. When that happens, equities, corporate bonds and munis will become attractive, and they will be bought.
As for the question regarding munis going bk, sure that could happen. I don't use rating agencies, I do my own research. Needless to say, anytime you get more of a return than you can from an FDIC savings account/cd, you have to take some risk. When I can get an 11% return from say MET preferred, or a 6& tax free bond from Port Authority NY/NJ, or a 7.3% yield from PFE, then I feel I am being compensated for the risk I am taking. You know there are those on this board that argue that the US could get downgraded, and if you believe that, then you sure are not getting paid for the risk of owning treasuries.

AJ,

the Fed is culpable for this mess. They share culpability with other fed agencies, but the buck stops with them. The fed f'd up. Can you say they did a good job? These fed guys are supposed to be the best & brightest & they themselves are underwater. It's clear that they don't know what to do & now, we are turning into Argentina.