Half Point Cut in the Federal Funds Rate Will Be Both Good and Bad for Consumers

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Open Question: Why is the US Dollar getting stronger and stronger?
Does that make sense in light of the fact that USA is headed the way of California -- hundreds of trillions of unfunded obligations, no way to pay for them, four trillion out the door this year, with no results whatsoever (any from the TARP? -- no, andy from the TALF? -- no, any from the Stimulus Bill? -- heck no, and from the Quantitative Easing? -- no, how about from the Mortgage Refinance Bill? -- heck no. Any results of any kind from 4 trillion down the toilet? Nope, nary a one) We are about to go into double digit unemployment -- and there is no indication that any of the lost jobs will ever come back. Auto showrooms empty. Malls Empty. Fast food stores -- mostly empty. Supermarkets -- getting empty. Lowes and Home Depot -- empty. So the Dollar gets stronger and stronger and stronger. As what a refuge currency? Where's the refuge? Why isn't the dollar getting weaker and weaker. Why isn't gold getting stronger. In the last 3000 years it has consistently provided a haven against hard times and chaotic/turbulence in the financial zone. In the last 3000 years paper fiat currency has never provided any reliable haven against economic turbulence. So, now, all of a sudden, for the first time in 3000 years paper US dollars that are not backed by anything, except the California-like word of the US government, are the supreme valuta in the cosmos, above gold, above diamonds, above platinum, above rhodium, above every other thing. Those scraps of paper, which the Chinese have got landfills full of bales of, are the most highly valued highly prized thing on planet Earth, and you tell me this species is sane, rational, reasonable? One need not be a Junior Mogambo Ranger to see that something is grossly out of whack here. How long do you think it will stay that way? read more...

Open Question: How much for refinancing fees using Amerisave?
I'm trying to refinance my house through Amerisave at 4.375% APR but they want $8900 at closing to cover all the fees. My wife and I think this is an absurd amount of cash for this. The lender says I will get back $2600 in escrow, and won't have to pay mortgage for 2 months, so a lot will come back, but we'll still be out around 3K. Has anyone here dealt with these guys, and are they legit? Thanks in advance, John read more...

The Federal Reserve recently lowered the federal funds rate to 1 percent, dropping it by half a point. The new rate, which has not been this low since 2004, is intended to strengthen the faltering economy by encouraging consumer spending. The Fed also hopes to bolster sagging confidence in the U.S.s financial markets overseas. The cut in the federal funds rate was the latest step in the Feds and Treasurys efforts to restore the economy to a state of moderate growth and to improve the credit situation.
The rate cut followed on the heels of a surprise half point cut that took place only three weeks prior, and was preceded by several other rate cuts that lowered the federal funds rate from its late 2006 and early 2007 high of 5.25 percent. The latest rate cut was not a surprise to financial analysts, but they were not certain how much farther the Fed would be willing to go in trimming interest rates that were already close to the bottom.
The rate cut should be a boon to borrowers. The Feds interest rates strongly influence lender set interest rates, leading consumer rates on mortgages, auto loans, credit cards, and similar types of debt to trend downward when the Fed cuts rates. Mortgage rates are especially prone to react. They tend to rise or fall in tandem with Fed managed bank rates, and are therefore in a prime position to benefit from rate cuts. The most recent drop in the interest rate means good news (and more affordable rates) for consumers who have variable rate lines of credit such as adjustable rate mortgages, home equity credit lines, and variable rate credit cards.
The drawback is that rates may also stay low on investments that pay interest based on federal rates. This will likely include bank checking and savings accounts and certificates of deposit (CDs). In the current market, it is more important than ever to comparison shop and choose carefully before investing in an interest paying account.

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