Can the Fed Help Us?

No they cannot.

I saw on CNBC that Lehman Bro's is predicting a 50 bp cut to the fed fund rate, and Goldman Sachs is calling for 75.

I liked Rick Santelli's match with Krazy Kudlow the other day. R.S. was claiming that this won't help the economy. K.K. was disagreeing, in that it *will* help Goldman Sachs. They are both correct.

Fed is taking care of its members and widening their spreads to help them cover their Hedges, LBOs, and MBS. But the banks won't lower their rates. They can't. They need to be profitable. The big boys know that there are allot of foreclosures coming down the pipe and have to prepare.

R.S. is correct that Harry Potter can't magically put the pieces back together. Houses will sell for MUCH less in the coming years. They already are. People over bought. Those of us left at the curb are not going to chase the car anymore. Sorry.

But these foreclosures are still a problem. The auctions will pass with NO takers. The banks will sit on them for as long as possible eating at their cash reserves. Their LTV's are way too high, and poof one day they will all agree to kill the Comps and dump them, MARKING THEM TO THE MARKET!

Video: R.S. v. K.K.