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View Full Version : If the interest rates on money loaned to banks



Hallelujah
01-20-2009, 03:27 PM
is 0%, why do their Money Market and CD rates keep falling. Falling further than when they were paying more for their money from the feds.

il Padrino Ute
01-20-2009, 03:28 PM
Dunno.

But it's Obama's fault now. He's the President.

8BR
01-20-2009, 03:33 PM
Because the demand for Treasuries is just coming off record highs, so yields are super low. Treasury yields were at 0% in December.

8BR
01-20-2009, 03:34 PM
http://www.ustreas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtml

wuapinmon
01-20-2009, 03:38 PM
is 0%, why do their Money Market and CD rates keep falling. Falling further than when they were paying more for their money from the feds.

Think about what the amount of money available vs. the amount being loaned is. If money is free but lending is down they lose that incentive to keep deposits on the books to offset outstanding debt because they can borrow from free vs. paying you to borrow your money....also, they know that the economy sucks so any return you can get, you'll take, and they lower the rates because inflation is down because spending and oil are down.....it's a feedback loop (sort of....not really). They just want to write off/sell the bad loans, hoard cash without too much expense so they can pounce on assets of banks that fail. It's a waiting game. The bailout plan, in my opinion was done too hastily without enough forethought....however, I don't think they had the luxury of time when they made the decisions. They did what they thought was best.

I'm not an economist, so I could be wrong...this is my theory. I read, a lot. And I don't watch TV news.

Hallelujah
01-20-2009, 03:57 PM
Think about what the amount of money available vs. the amount being loaned is. If money is free but lending is down they lose that incentive to keep deposits on the books to offset outstanding debt because they can borrow from free vs. paying you to borrow your money....also, they know that the economy sucks so any return you can get, you'll take, and they lower the rates because inflation is down because spending and oil are down.....it's a feedback loop (sort of....not really). They just want to write off/sell the bad loans, hoard cash without too much expense so they can pounce on assets of banks that fail. It's a waiting game. The bailout plan, in my opinion was done too hastily without enough forethought....however, I don't think they had the luxury of time when they made the decisions. They did what they thought was best.

I'm not an economist, so I could be wrong...this is my theory. I read, a lot. And I don't watch TV news.

So because of the feds lowering their rates, my savings rate goes down? If that is the case, not only is the taxpayer paying for the bailouts, we're taking in the shorts with our savings rates?

Hallelujah
01-20-2009, 03:59 PM
Dunno.

But it's Obama's fault now. He's the President.

LOL

Excellent point. The Dems can no longer point their finger at the Repubs. They control EVERYTHING. But trust me, they will continue to blame Bush.

Wasn't it the Dem controlled congress the last two years? The dumb repubs should have played that up this last campaign season. but then again, McCain didn't instill any confidence either. I thought McCain would have gotten clobbered, yet it was still somewhat of a close election.

Keep you hands inside the ride, it's going to be a doozy.