US Economic Growth Drops Sharply: WE IN TROUBLE

[AbdiWahab252]

http://news.bbc.co.uk/2/hi/business/7217769.stm

The US Department of Commerce says the economy grew at an annual rate of just 0.6% from October to December.

In the previous three months, between July and September, the economy was growing at annual rate of 4.9%

[Spookie]

The Fed is expected to make a rate cut maanta.

[Gedo_Boy]

Spookie are you an Econ major?

[Spookie]

Gedo yea, I plan to one day run the damn Fed.

[Gedo_Boy]

smart chicks are hot.

To run the Fed you have to be a 33rd degree Mason :-)
Get out your robe.

[AbdiWahab252]

Spookie,

There are more rate cuts but with the bad debt floating all over the world financial system, no one knows what effect rate cuts will have since we have never been through this before.

[Spookie]

Gedo viva the nerd revolution dheh. I think I can find a common ground with the Masons, after all Spookie is a hardcore conservative.


AW, with lower rates the debts would eventually go away. But I doubt if Fiscal and Monetary policy should be exercised at the same time. I have this odd feeling that a lot of prices will rise.

[AbdiWahab252]

Spookie,

The problem here is no one knows the extent to which the bad subprime debt crisis is. These bad securities were chopped up into different blocks & packaged with other debt securities and sold all over the work.

Think of it as this:

You are a butcher. You make sausages from 4 different cartons of meat. You finished making the sausages when you hear that one of the suppliers has had tainted meat. You don't know the which meat you used for the sausages since you mixed it all up. U hope that by mixing it with the good meat that the the risk is reduced.

Now imagine if you are the customer. What would you do ? The sausage you have may be good or make you ill. Suddenly all trade in sausages stops as no one knows if the other is carrying bad sausages.


So any fed rate cut won't help out unless the subprime debt works its way out of the system.

[Gedo_Boy]

I remember a Digital Signal Processing Prof. (very mathematical eng. course) in college was deriving something, and he got on a tangent about economic models and he mentioned how the current banking system was mathematically unstable.

That's the only thing I remember about that lecture.

I would like to see an interest & speculation free economic model.

[Spookie]

AW, there is actually nothing wrong with the market.

The notion of a recession happening is over-speculated and the only thing effecting the market is a psychological melt-down. Of course the Sub-prime mess started this but the media is the one who scared everyone into selling their stocks. I am just shocked that the Fed hasn't used Moral Suasion to calm everyone down yet.

Gedo, economics is a social science so not a lot of math is involved and the only math that is involved only looks complicated because on the banking level accountants come into play.

[galia]

AW, i think the rest of the world takes that as good news cos almost the whole does not like united snakes.

I take this a good news.