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Oh Goodie, Feds say No End in sight for Interest Rate Hikes

 
Anonymous Coward
05/03/2005 07:15 PM
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Oh Goodie, Feds say No End in sight for Interest Rate Hikes
No End in Sight for Interest Rate Hikes By JEANNINE AVERSA, AP Economics Writer
20 minutes ago



WASHINGTON - The Federal Reserve, worried about rising inflation, pushed a key interest rate higher Tuesday and signaled that Americans´ borrowing costs are likely to keep climbing in the months ahead.

In response, commercial banks began lifting their prime lending rates, which are used for many short-term consumer and business loans.

Federal Reserve Chairman Alan Greenspan and his colleagues, sticking to a course of gradually raising rates, nudged up the federal funds rate by one-quarter of a percentage point, to 3 percent. It was the eighth increase of that size since the Fed began to tighten credit last June, and it left the rate at the highest level since the fall of 2001.

Banks´ prime lending rates were rising a quarter-point to 6 percent, also the highest since 2001.

The federal funds rate, the interest banks charge each other on overnight loans, is now triple the 1 percent rate — a 46-year low — that prevailed before the Fed embarked on its rate-raising campaign.

Fed policy-makers, walking a tightrope, are confronted with two challenging economic forces: rising inflation pressures on the one hand and slowing economic growth on the other.

Higher interest rates are a defense against rising inflation. But when it is more expensive to borrow money, some consumers and businesses are less inclined to spend and invest, factors that would further chill an already cooling economy.

The policy-makers, in a brief statement issued after their closed-door meeting, acknowledged that the economy had hit a rough patch in early spring. "The solid pace of spending growth has slowed somewhat, partly in response to the earlier increases in energy prices," they said.

Oil prices soared into record territory in March and hit a new peak of $57.27 a barrel at the beginning of April — straining household and business budgets. Prices have since retreated and settled at $49.50 a barrel on Tuesday.

The Fed also drew fresh attention to rising prices in general.

"Pressures on inflation have picked up in recent months and pricing power is more evident," the statement said, a reference to businesses finding it easier to raise prices to customers. But it tempered that inflation warning with an assessment that longer-term inflation expectations remain "well contained." That phrase was inadvertently omitted from the Fed´s statement. It later issued a corrected version to include it.

The Fed also said underlying inflation — which excludes energy and food prices — is "expected to be contained."

Against that backdrop, the Fed said it could continue on its path of gradually raising rates. In Fed parlance that is stated as "at a pace that is likely to be measured." To analysts, that phrase translates into quarter-point increases.

On Wall Street, the Dow Jones industrials gained 5.25 points to close at 10,256.95.

Private analysts expect the Fed to boost rates by another quarter-point at its next meeting June 29-30 and probably through much of this year. That said, they also believe the Fed´s future rate decisions could become increasingly more dependent on how inflation and economic activity unfold.

"The Fed, while acknowledging the slowdown in the economy, is focused more on inflation. That means their work is not done," said Stuart Hoffman, chief economist at PNC Financial Services Group. "The Fed will become even more of a data hound and not quite as much on automatic pilot" when it comes to raising rates.

For economists and investors, that´s a subtle shift in their perceptions. At the Fed´s previous meeting, on March 22, policy-makers´ hawkish tone about inflation ignited speculation that the central bank might raise rates more aggressively — possibly by a bolder half-point — in the summer. That spooked Wall Street, sending stocks tumbling.

Since that meeting, however, the economy has flashed signs of slowing.

Over the first three months of the year, the economy grew at a 3.1 percent annual rate, the slowest in two years as energy prices restrained spending by individuals and companies. Some economists believe growth in the April-to-June period could be even less.

Employers added just 110,000 jobs in March, the fewest in eight months. April´s employment report comes out Friday, and economists predict it will show that 170,000 jobs were created.

Fed policy-makers, however, said labor market conditions "continue to improve gradually."

Inflation, meanwhile, is climbing. Driven by expensive gasoline and energy products, overall consumer prices jumped by 0.6 percent in March, the biggest increase since October.

Even more troubling to economists was the 0.4 percent rise in core inflation — a gauge that excludes energy and food prices. That was the largest increase in 2 1/2 years.

yahoo news
Anonymous Coward
12/08/2005 10:16 AM
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Re: Oh Goodie, Feds say No End in sight for Interest Rate Hikes
They just keep on stickin it too use, with their make believe inflation fears! F*ck em!
Anonymous Coward
12/08/2005 10:16 AM
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Re: Oh Goodie, Feds say No End in sight for Interest Rate Hikes
I hope it goes up to 6% so my investments in the money market go up, new homes and cars drop and the poor average person has to go back to work. Then us working stiffs will be able to enjoy the fruits of our labor
Anonymous Coward
12/08/2005 10:16 AM
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Re: Oh Goodie, Feds say No End in sight for Interest Rate Hikes
This does not bode well for those with maxed credit cards. Buying a home will be very difficult, causing new homes to lose value. The housing bubble will pop, and so goes the nation.

Good luck on your 6%. When the "official" figure reaches 10% inflation, everybody´s goin´ down. How does bread at $4/loaf sound? Utility rates raised? Gas prices higher? Services higher?
Anonymous Coward
12/08/2005 10:16 AM
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Re: Oh Goodie, Feds say No End in sight for Interest Rate Hikes
The worst part for families is that most already have both parents working full time to be equivalent to the standard of living their parents had where only dad worked. Now what?
Anonymous Coward
12/08/2005 10:16 AM
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Re: Oh Goodie, Feds say No End in sight for Interest Rate Hikes
Cut waaaaaay back. If you budget, add 10% to all of your expenses. Cut out all but the essentials. Most people love their cable TV. OK, eat out less often in order to pay for it. Or rent movies. Get cheaper internet service. Learn to cook hamburger 100 different ways. Shop Family Dollar. Find a good thrift store. You know what to do. Gonna be tough, though, getting rid of things your are used to having. The teens are going to have a fit! Be prepared for that...tell them now what we are going to have to do in order to survive. No more Nikes or other luxuries.
Anonymous Coward
12/08/2005 10:16 AM
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Re: Oh Goodie, Feds say No End in sight for Interest Rate Hikes
The federal reserve is the problem.. fractional reserve debt based privately operated usury based banking systems are the problem. Take anything said by the fed with a grain of salt.
freaky
12/08/2005 10:16 AM
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Re: Oh Goodie, Feds say No End in sight for Interest Rate Hikes
this was expected since they cancelled your ability to go bankrupt. OK, you have 6 months to get out of debt. And a one, and a two... anyone want to buy a boat?
Anonymous Coward
12/08/2005 10:16 AM
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Re: Oh Goodie, Feds say No End in sight for Interest Rate Hikes
Am in the process of refinancing our home and consolidating or taking out a second mortgage to consolidate (not sure what to do yet because our first mortgage is at 5.25% and we´re not likely to see that rate again)

Anyway, it´s hysterical how all the brokers/agents out there don´t want anyone to believe the interests rates are going up. One broker condescendingly asked me what makes me think the rates are going up?

They´re trying to shove APR´s down our throats like the rates are going to stay low forever.

s226
Anonymous Coward
12/08/2005 10:16 AM
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Re: Oh Goodie, Feds say No End in sight for Interest Rate Hikes
Don´t shop Family dollar! That is the dead end, lowest of the low, suck´em bone broke, Chinese money trap.
Anonymous Coward
12/08/2005 10:16 AM
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Re: Oh Goodie, Feds say No End in sight for Interest Rate Hikes
Just so y´all remember - this was PLANNED!

1) Last June I think it was the govt tried to get all the libraries to pull their govt pamphlets on what your choices of recourse were when your property got confiscated by the govt.

2) Last summer I posted how a weird lady with a clipboard came to my house saying she was from my bank and was here for and appraisal or something, and after I got rid of her ass and posted what happened here y´all told me to do some digging. I did and she was NOT from our bank but a bank out of, shit where the hell was it, another state anyways. Maybe down Indiana Kentucky thataways. Since when do people pretend to be from your bank and show up unannounced to do an appraisal? And I have nothing desirable here either. House 100 years old needs major upgrades, on 5 good acres though, but it´s so bad we only paid 75 k for the whole shebang, needs new septic and entire remodel. So why would they send somebody pretending to be somebody else?

Yeah, shit´s going to go down. I don´t know what though. It´s like this bank from another state was scoping out properties in advance that they wanted when the time came. And I think it may be coming soon.
freaky
12/08/2005 10:16 AM
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Re: Oh Goodie, Feds say No End in sight for Interest Rate Hikes
govt pamphlets on what your choices of recourse were when your property got confiscated by the govt.


What government pamphlets??? I want to read them.
Anonymous Coward
12/08/2005 10:16 AM
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Re: Oh Goodie, Feds say No End in sight for Interest Rate Hikes
July 24, 2004 - The Boston Globe (MA)

Libraries Ordered To Destroy U.S. Pamphlets
By Sean P. Murphy, Globe Staff
Return to Drug War News: Don´t Miss Archive

The federal Government Printing Office has ordered libraries across the country to destroy five US Department of Justice pamphlets that provide how-to instructions on prosecuting asset forfeiture cases, invoking a rarely-used authority to order the removal of items the government routinely sends to hundreds of libraries.

The pamphlets are among the material the office sends each year to about 1,300 depository libraries. Those facilities, at least two in each congressional district, are designated by Congress to receive and make available copies of virtually all documents the federal government publishes.

Representatives of the 65,000-member American Library Association said they did not know why the pamphlets were ordered destroyed, and they pledged yesterday to challenge the order as an infringement on a century-old guarantee of public access to unclassified documents that the government publishes each year.

Patrice McDermott, the association´s deputy director of governmental affairs, said 20 to 30 instances have occurred since the middle of the 19th century in which the printing office, acting on behalf of a federal department or agency, has asked for documents to be returned or destroyed. Most previous recalls were for materials found to contain a factual error or determined to be out-of-date, she said.

Bernard A. Margolis, president of the Boston Public Library, said the Government Printing Office distributes documents with the approval of the Justice Department and other federal departments and agencies. Although the documents are kept in libraries, he said, ownership is retained by the federal agencies that produce the materials and they may ask for the materials to be returned.

For example, in the months after Sept. 11, 2001, the Government Printing Office ordered libraries to return a compact disc containing detailed information on the country´s public water works systems.

Still, Margolis said the e-mail order to destroy the pamphlets "came out of the blue" Thursday. He said much, if not all, of the materials-such as statutes on asset forfeiture-are "the law of the land" readily available online and in law books.

Margolis said the pamphlets will remain available at the Boston Public Library while he prepares a challenge to the directive.

Calls to the Government Printing Office seeking comment were not returned yesterday.

The office´s one-paragraph directive listed the five pamphlets, with titles such as "Civil and Criminal Forfeiture Procedure" and "Select Federal Assets Forfeiture Statutes," and instructed librarians to "withdraw these materials immediately and destroy all copies by any means to prevent disclosure of their content," according to a copy of the e-mail sent to the Boston Public Library and all other depository libraries.

The directive concluded that "the Department of Justice has determined that these materials are for internal use only."

Casey Stavropoulos, a spokeswoman for the Justice Department, said the pamphlets were written by Justice Department attorneys who intended them to be law enforcement tools for federal prosecutors.

She declined to discuss the content of the pamphlets but said "they were never intended for public distribution. They were developed for internal use."

Margolis said he sought an explanation of the directive from an official in the federal Office of Asset Forfeiture and Money Laundering, who told him that some information in the pamphlets could disclose legal strategy.

But he said the official conceded that much of the information has been publicly available for at least four years.

Lester Joseph, head of that federal office, could not be reached for comment yesterday.

McDermott said federal law allows government documents created for internal use to be included in the depository system if they are considered "educational" or serve another public interest.

"We are going to push the Department of Justice on this," she said. "This material is already out there. Some of these documents are merely compilations of federal statutes. You can find this stuff in law offices and law libraries across the country. We just don´t know the rationale for this."

The pamphlets contain detailed legal research on asset forfeiture law, including statutes and case histories on the legal means of seizing cash, cars, houses, boats, and other property of convicted drug dealers and other criminals.

The materials, dated from 2000 to 2004, include documents and instructions that take prosecutors from "the drafting of the forfeiture allegation . . . to post-trial phases of a criminal forfeiture case."

The pamphlets were written by the Justice Department´s Office of Asset Forfeiture and Money Laundering and seem to be a comprehensive resource for prosecutors handling forfeiture cases.

Margolis said the materials seemed very similar to the vast majority of other materials from the Government Printing Office.

"There is a precedent danger that if a handful of documents that appear innocuous-the forfeiture statutes-if these become subject to a casual or cavalier yanking, then what is next? Maybe it´s things that are really critical and primary to people´s livelihood, to their safety, or to their health," he said.

Margolis said he is particularly concerned about the process for determining which documents are excluded from libraries.

"I think at a minimum we are entitled to know the process, how these determinations are made, and whether excluding something is truly in the public interest," he said. "The public should get its day in court."




For the latest drug war news, visit our friends and allies below

We are careful not to duplicate the efforts of other organizations, and as a grassroots coalition of prisoners and social reformers, our resources (time and money) are limited. The vast expertise and scope of the various drug reform organizations will enable you to stay informed on the ever-changing, many-faceted aspects of the movement. Our colleagues in reform also give the latest drug war news. Please check their websites often.


[link to www.november.org]
Anonymous Coward
12/08/2005 10:16 AM
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Re: Oh Goodie, Feds say No End in sight for Interest Rate Hikes
A rising tide lifts all ships. When the tide leaves... well leaves fall
Anonymous Coward
12/08/2005 10:16 AM
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wait until you getta load of the fall food prices...remember- the cheap stuff needs to be transported by truck from places like mexico etc..pesticides, fertilizer comes from oil-going to also have to compensate for that too!- hoo-boy, prices have already jumped 20-30% for eggs, milk, bread, gas...it´s going to get worse, they say inflation is low but they include the cheap stuff we don´t need ( electronics etc ) and exclude the stuff we need every day when they tell you what the current rate of inflation is
Anonymous Coward
12/08/2005 10:16 AM
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Yep, food prices will go through the roof. On average all of our food in the USA travels 1400 miles to get to our supermarket.

Plant a big garden this year and can.
Anonymous Coward
12/08/2005 10:16 AM
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Well Gates and soroses want to give you daddys money to the poor, so there very smart an you left wing nuts will go to your grave to hirt bush, you need some pills man.
Anonymous Coward
12/08/2005 10:16 AM
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Re: Oh Goodie, Feds say No End in sight for Interest Rate Hikes
9615, I´m so glad to hear you came out of your coma after 9 1/2 years. And to think you´re posting on my thread! Wow!
Anonymous Coward
12/08/2005 10:16 AM
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Re: Oh Goodie, Feds say No End in sight for Interest Rate Hikes
they say history repeats itself...


"Throughout the years preceding the 1929 Stock Market crash, the Fed did just that. The Fed set below market interest rates and low reserve requirements that all favored the big banks. The money supply actual increased by about 60% during this time. The phrase "buying on margin" entered the American vocabulary at this time as more and more Americans over-extended themselves to take advantage of the soaring stock market.

So what went wrong? It was in 1929 that the Fed realized that it could not sustain its current policy. When it started to raise interest rates, the whole house of cards collapsed. The Stock Market crashed and the bank panics began."
Anonymous Coward
12/08/2005 10:16 AM
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15 years ago in VA i saw a farm go at auction: 50+ acres of bottom land, 3000sq/ft barn, 3000sq/ft 2 story house (that would cost 300K to build now), two car garage, several large outbuildings, 1200 feet frontage on clear running rear round stream, dirt low taxes. The gavel fell on 70K. The guy bought it on a 6 year note.

At the time land was bringing 2K per acre. He got the whole shootin match for the price equivlent of 35 acres of junk land.
Anonymous Coward
12/08/2005 10:16 AM
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Re: Oh Goodie, Feds say No End in sight for Interest Rate Hikes
bump
Anonymous Coward
12/08/2005 10:16 AM
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The Fed is likely raising rates to slow and control the rate of growth in the macroeconomy which will reduce the likelihood of inflation.
Anonymous Coward
12/08/2005 10:16 AM
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Re: Oh Goodie, Feds say No End in sight for Interest Rate Hikes
This spells trouble. Does the US even have adequate interest cover to service its enormous debt mountain?
Anonymous Coward
12/08/2005 10:16 AM
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Ever notice how they keep the price the same, but give you less at the grocery store? That is called inflation.

Breyers, for instance, used to package their ice cream in 1/2 gallon containters. That same container is now 1.75 quarts. You get 12.5% less for the same dollar.
Anonymous Coward
12/08/2005 10:16 AM
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Re: Oh Goodie, Feds say No End in sight for Interest Rate Hikes
stop buying ice cream and I guarantee you the price will fall.
Anonymous Coward
12/08/2005 10:16 AM
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"stop buying ice cream and I guarantee you the price will fall."

Haha! Not an option for me.
Anonymous Coward
12/08/2005 10:16 AM
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Here´s something I got in an e-mail yesterday.

This could be a BIGGIE and has been little reported:

Market Intelligence Report

Now, in the U.S., when the economy takes a downturn, consumers will be in a similar situation. And to exacerbate and speed this end, the government is forcing credit card companies to increase the minimum payments cardholders must make each month.

Because of a crackdown by the Office of the Comptroller of the Currency (OCC), most banks and credit-card issuers will ratchet up required minimum monthly payments over the next 12 months or so. In the future, the payments must cover all fees and interest and pay down at least some of the outstanding borrowing.

According to BusinessWeek, the new rules will hit consumers hard, especially on top of higher energy prices, rising interest rates, and record levels of overall household debt, now $10 trillion, or 87% of gross domestic product. American households, on average, possess nearly 8 major bankcards - - or 17, including store and gas cards. Either by choice or necessity, some 19 million households -- about 1 in 6 – now make minimum payments on their cards, according to card tracking service CardWeb.com.

So, while the bankruptcy legislation may have been a boon for credit card companies such as BAC, C, MWD, KRB, and JPM, the effects on the U.S. economy will likely be serious and long-lasting. And the timeline for when it all begins has just been moved up significantly with these two changes in government policy.

U.S. consumers, ask not for whom the bell tolls, it tolls for thee.

-END-
Anonymous Coward
12/08/2005 10:16 AM
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Re: Oh Goodie, Feds say No End in sight for Interest Rate Hikes
Feds
1rof1

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