Great Quote: On The Economic Stimulus Plan

LOLOLOL...I love it!

Readers with ARMS, this is a great time to consolidate your debt with your banks - do not refinance -

Banks allow a one time possiblity to refinance, they may charge 500-600 bucks just to keep your loan -

this is the kind of thing you would be learning from a real broker like me!

Not an equities trader with a passion for real estate, like Noah!

hey smart a$$, why would you advise clients to do this now, when you have between 25-75 bsp of rate cuts coming in the next few months?

I've been advising my clients to wait another month or so, especially since we have a cut coming tomorrow. However, it wont directly correlate with lending rates, as this is a world of credit risk. Credit means a way lot more today than it did in 2002-2006.

But hey, Im just an equities trader and your a super broker advising clients to refi

Love, how you answer your own question:

However, it wont directly correlate with lending rates, as this is a world of credit risk. Credit means a way lot more today than it did in 2002-2006.

anon - you dont get it. Two dynamics at work here:

1) Its a new world. The world we knew in lending environment from 2002-2006 is gone for a looong time. Credit is especially important and with tight underwriting standards, actually being able to back up everything with docs is a must to get a loan committment. Rate is more correlated with credit score as quality is now king. In this sense, any fed move will have a LESS impact on lending rates as a whole. If the fed cuts 50 bps, maybe rates will trickle down by 1/8, or 3 teenies as a whole before credit score takes over for the unique loan request

2) Macro. There are so many uncertainties. Housing nationally is getting worse, not better. Defaults are rising. Billions in more write downs are coming from banks (look at UBS today). No one knows if worst has come or if expectations are too low or too high. Uncertainty. Plenty of risks to US economy given this is a housing based / financials problem (otherwise US/global economies are doing very well!!)..Now, because its housing fueled, leverage was used to inflate the bubble and now you have people walking away from their homes. Its becoming socially acceptable to do so or go into foreclosure rather than pay bills on a house whose loan is more than the value on open market. This is the main problem for our economy: solvency, housing, toxic holdings on books of financials, credit spreads widening, resets, overall debt problem!

This is why you have seen so much cash injections, liquidity added, aggressive rate cuts, bailouts, buyouts, and economic stimulus from gov't even BEFORE we are in a recession! The fed will continue to cut and we may go down as low as 2% or lower if need be. Problems are not gone, they are bubbling under the surface waiting to resurface. So, why would you advise clients to refi now, given this environment.

In a month or two, we should know more about the economy and how aggressive the fed may have to go. But if he cuts another 100 bps in next 6 months, refi'ing now is just plain dumb. Might as well wait and see if the fed will truly inflate us out of these problems; which brings up major inflation problems later on that we will have to deal with. Another story for another day. But mark my words, after housing is stabliized, credit markets functioning properly, and financials get through this mess, fed will take back many of these cuts very fast!

never said refinance - I said debt consolidation.

Noah...who is this Anon idiot? Anyways, thanks for posting that quote, as I was trying to figure out who had said it to site it appropriately. Sorry this ended up turning into a forum completely unrelated to the quote thanks to this d-bag Anon.