Bernanke says BAM!

Wow, guess that "R" word is coming closer... like a freight train more or less. In case you missed it, the Fed lowered short-term rates by an unprecedented 3/4 point this morning. Not only that, they did it well before their scheduled meeting on 1/30 (where most expected that they'd drop it a half point anyway). So what does this mean? I'd say they are trying to stop the bleeding and give Wall Street some good news (esp. since the Dow 'futures' was showing about a 500-600 point drop--BEFORE the markets opened! So I guess that's why Ben and the boys did an Emeril and said BAM! How 'bout those rates? Again, we'll see what happens now!

Solution to our ills? Shop and Spend!

Did you "shop 'til you drop" this past Christmas/Holiday season? Evidently not enough as our 'guvment' is going to have to give us money to go spend! Why? To rev up our economy of course! Apparently there will be a news conference today in order to discuss an "Economic Stimulus" package. What does that mean? "Rebates". Huh? Well, remember what you have to play with every April 15th? Yep, now it's time for some fun wealth distribution, only this time hopefully we all share in the fun! "Putting money into the hands of households and firms that would spend it in the near term" is a priority, Bernanke told a House committee. So is this going to be enough to keep us out of a recession? I sure hope so (especially for a cost of $100+ Billion)! I know my family did its' part as we bought plenty of toys and video games for Christmas (as "modeled" by grandson Gavin and his "Rock Band" box--no, the game was not for him, but as is the norm, he had more fun playing in this box than with some of his toys. Not only that, he actually SLEPT in said box. Don't tell DFACS!). So what else will rev up the economy? Spend spend spend! It is expected that the Fed will lower the Fed Funds rate by another .50% on the 31st which will result in a Prime Rate of 6.75%. Again, this really does nothing for long-term mortgage rates (except for HELOCs or other programs tied to Prime) but it will make 'short-term money' cheaper for many small companies and/or manufacturers. We'll see what happens! Here's Bernanke's latest testimony to congress.

December 20, 2007 Newsletter info

Economic Ramblings


Foreclosures are still in the news, but some positive signs for Nov. US figures-we are up 68% from 2006, but down 10% from October. As for GA, we are now #7 in the US, dropping 21% from Oct (up "only" 27% from 2006, stats from realtytrac.com). What's this mean? BUY A HOUSE! Why do we still have so many fence-sitters? No clue as we have low rates, high inventory, motivated sellers, so go figure? I still think the media needs to shut-up and let some positive vibes flow! Reports? The Fed did drop rates a quarter but the R word still threatens. The Fed also dumped some $ into the system so that banks have more money to lend. This is important so that banks can obtain $ w/o looking 'weak' (which would further damage consumer confidence). Retail sales have been 'okay' but people keep waiting for 'the big sale', though I think we've seen the best pricing. Perhaps sales will be down and there will be 'fire sales' before year-end so you can spring for a larger TV... The National Association of Realtors thinks that existing home sales will rise in 2008, but new homes won't see much recovery until '09. I actually think new home sales will start to rise in '08, but the bad news lies in the fact that builders still have excess inventory & homes will continue to sit until Summer. Rates should still remain under 7% which blows my mind (remember the Carter era?) but the key thing to remember is that we live in GA, our prices are reasonable, living costs low, & living standards great! New regs? Check out what the FED has in mind here.

My other blogs...

My email newsletters are ordinarily split into three groups: Wine Tips, Economic News and Miscellaneous ramblings. Instead of saving each 'full' email in one blog, I split them into three separate blogs. Here we have the Miscellaneous Ramblings blog, which is "Bo Knows". The Economic News blog is "Bo Knows The Economy". Finally, wine tips can be found at "Bo Know VINO". All in good fun.... If all else fails, check out my website too! Cheers!

Let's get something straight: I AM NOT AN ECONOMIST

These are random musings, soapbox items and overall madness concerning the economy. I basically read a bunch of articles and come up with my 2 cents on the subject matter (though worth much LESS most likely). Feel free to slam the thoughts or (even better) agree with my thoughts! All in good fun... Cheers!