NakedPuts Wrote: ------------------------------------------------------- > Did your “study” address what happens to ARM rates > tied to the prime or LIBOR when the fed funds rate > changes? Because I have some bad news for you > about that… > > http://en.wikipedia.org/wiki/File:Federal_Funds_Ra > te_1954_thru_2009_effective.svg > > http://en.wikipedia.org/wiki/File:Ted-Spread.png Yes, it did, unfortunately since ARMs only made up 29 % of mortgages in 2005 (his last year) and long term fixed rates were uncorrelated to Fed rate changes, the evidence indicated that raising rates was only causing fixed refi’s rather than curbing demand. So raising rates repeatedly to hammer on 29% of market until they swapped while hurting banks would have only have been cutting off your nose to spite your face. As someone stated earlier, he would have had to send rates sky high to even hope to accomplish any impact. Glad I can educate you.
Plantir, I would imagine that the Asian Contagion did impact fund inflows to the US over that period. Good point.
Maybe they eat too much cheese and it impacts their mood. I feel great about situations and such. What a bunch of complainers.
Black Swan Wrote: ------------------------------------------------------- > > NakedPuts Wrote: > -------------------------------------------------- > ----- > > Are you arguing the Fed has no controls over > the > > economy except controlling the fed funds rate? > > Yes, it is their primary, and most potent form of > control. Given the surplus of investible global > funds created by the Asian rise previously > described, what exactly are you suggesting > Greenspan should have done differently, and with > what Fed tools. In other words, HOW DID HE IN > PARTICULAR CAUSE IT? I agree the Fed Funds is their primary form of control, but disagree it’s the most potent form. Moving the reserve requirement is even more powerful than changing FF. That’s why they almost never adjust it, it’s too powerful.
he heh… if using open market operations is “pulling out a bazooka,” then changing the reserve requriement would be “pressing the button.” But of course it could lead to mutually assured destruction.