muses of the moment

January 27, 2010

Fed’s new interest rate

Since the Fed can’t lower rates anymore and can’t raise (for fear of collapsing the economy), they are opting for changing the definition of interest rate or creating another interest rate.

So moving forward (at some point, not today) “official” interest rates will be a spread. And guess who gets to borrow at the lower end of the spread? GS and gov. And guess who gets to borrow at the high end…everyone else.

Anyway, it’s all noise. This will do nothing to help the average American get a lower rate on their mortgage. This changes nothing. The housing market and commercial real estate market are still doomed.

Make sure that in the future any stats that include an interest rate in its calculation is clear about what interest rate they are using.

Click here  for the detail.

Side musings: Elizabeth Warren was on Jon Stewart’s show last night. Once again she gives a very good, simplified view of the banking f-up. She also encourages voters to email/contact their senators regarding banking regulation reform. Groovygirl encourages the same thing. Whatever your view, tell your senators. Click here  for video.

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