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The Federal Reserve sliced interest rates by 3/4ths of 1% before the opening this morning, but U.S. stocks initially plunged, following two days of mayhem in Asia and Europe. The Dow Jones was down as much as 465 points after the opening, but closed down 128.11, or 1.1%. The Standard & Poor's 500 was also down 1.1%, but Nasdaq was down 2%. After the close, Apple reported that first quarter earnings were up 58% from a year ago, but the company gave a so-so forecast for the second quarter and the stock plunged 13% in after-hours trading. That may cast a pall on tomorrow's opening. The market expects another interest rate cut from the Fed, which is now dancing to Wall Street's tune, as it did under former Chairman Alan Greenspan.

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Comments

Don Bauder Jan. 23, 2008 @ 1:57 p.m.

Response to posts of 1:46 and 1:47 p.m. You are arguing for longer term low interest rates. I have no problem with that. I am arguing that right now, a shot of lower rates is the same as giving a hair of the dog to an alcoholic. Consumers can't afford to spend more. They need to save. If inflation were low, I wouldn't mind. But by lowering rates in response to a lending tightening and stock market slump -- it's not even a bar market yet -- we are setting ourselves up for high inflation (it's already between 4 and 5 percent.) Best, Don Bauder

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Anon92107 Jan. 23, 2008 @ 1:46 p.m.

Don, I have refrained from further discussion of your anti-interest rate reduction philosophy out of respect for what you have contributed San Diego through your columns over many dedicated decades. Your latest career has required you to spend most of your time meticulously exposing the Matterhorn of corruption that exists throughout San Diego politics which is a relatively simple task under current conditions of government and judicial failure. Again, I respectfully recommend that you need to spend more time on the far more difficult task of giving detailed advice to The Reader’s X & Y generations on their personal economic survival and growth. Considering the latest Fed moves I find circumstances force me to challenge your low interest rate ideology.

The first fact about America’s economic wealth today is that times have changed completely and forever in America where we are no longer the manufacturing goliath that dominated production for the entire world after WWII. We must therefore find new ways to grow economically. Under present conditions of recession and inflation we must have low interest rates to support economic rebuilding and growth by producing new ways of producing income and wealth for the middle class and lower economic levels of our society, with the most important first goal being to get as many Americans out of poverty as possible, so all can share in building the new wealth of America.

As we all know now what America’s economy is suffering from most today, besides the destructively greedy practices of all of our institutions, is the fact that usuriously high interest rates have caused far too many people to go bankrupt, causing them to bail out of far too many homes and all other loans. One of the strengths of the economy that America has left is home building and owning. (Cont'd below)

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Anon92107 Jan. 23, 2008 @ 1:47 p.m.

(Cont'd from above) Thus it is most important today that we focus first on critical issues like health and growth of the new American economy to provide that highest levels of employment and wealth for all Americans, sell off the existing housing stock and build more housing to provide jobs and meet the needs of all Americans, and provide opportunities for increased investment saving for all Americans.

Under current economic conditions the fact is that unscrupulously high interest rates did nothing to control outrageous consumption. And if you continue to insist of high interest rates then far too many Americans and institutions will increasingly remain in grave jeopardy as they are today.

First, low interest rates are absolutely necessary for renewed economic expansion and growth, first by selling off the incredible stock of house we have available for far too many people who need homes to raise families in. For that we need lower home prices which are occurring and lower interest rates that far more Americans can afford to achieve the American Dream.

Lower interest rates also make more investment money available for savings and retirement for the future of all Americans that is currently in grave jeopardy.

Meanwhile economists are always divided because that is an unwritten law of economics, and economists have just plain failed America, along with most other academicians and our Degenerations. So we must forget economists whose heads are in the past and focus on whatever it takes to rebuild and expand the wealth of America for generations X & Y. We owe them that legacy.

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Anon92107 Jan. 23, 2008 @ 2:59 p.m.

Don, the facts are:

INFLATION: We already have out of control inflation with fuel, food, health, education, and up until recently housing and usurious interest rates.

RECESSION: On the recession side of the ledger already are jobs, exports, manufacturing, building, savings, and retirement.

“Consumers can't afford to spend more.” You got your wish on that one, because of usurious interest rates.

“They need to save.“ Again, usurious interest rates eliminate this as an alternative for most.

And then because of all the above we have “stock market slump.”

Sure hasn’t done much good to keep rates high has it.

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Don Bauder Jan. 23, 2008 @ 5:44 p.m.

Response to post of 2:59 p.m.: Interest rates have hardly been high. When the Fed drove short rates down to 1 percent post-9/11, it kept them there too long, and the result was the housing bubble, along with a moderate stock market recovery. The worst legacy was excessive consumption and debt, and a savings rate that is still below zero. We must encourage savings and discourage debt. To do that, we can't let interest rates go too low. Bernanke has erred. Best, Don Bauder

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Anon92107 Jan. 24, 2008 @ 11:22 a.m.

Don, the main problem is political. Washington politicians have been letting mortgage and credit card predators get away with usury for far to long.

There is a lot more corruption in Washington than just Cunningham who was the role model for corruption, and both political parties are totally responsible for the crises we have today, with no end in sight.

We have absolutely no leaders in Washington, no cooperation in Washington, and none of the candidates who are members of Congress today have shown any leadership in the congress at all. My own representative Susan Davis and our Senators are totally useless, enabling the fleecing and destruction of the American Dream for everyone but the obscenely wealthy.

So we have no candidates who will fight back with aggressive leadership to force cooperation for the future of X & Y, just more of the same B.S. rhetoric we have been hearing for the decades that it took to get this bad. I still remember the first days of televised campaigns where politicians would go to W. Virginia coal mines every four years to visit the worst poverty in America, and then go away and do nothing to control out of control poverty in America, which now threatens more and more of the middle class and X & Y generations.

The FED had to take extreme measures because the special interest powers that be who own our politicians have been out of control for far too long.

We must have low interest rates to get out of the Bankruptcy and Default era.

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Don Bauder Jan. 24, 2008 @ 12:28 p.m.

Response to post of 11:22 a.m.: You are right on the endemic corruption. The 2005 bill (reported by the Reader) that gave credit card companies a hammer to apply to the head of debtors was reprehensible. I disagree that low interest rates will get us out of the bankruptcy and default era. They may push us it deeper into it. Remember that savers do not benefit from low rates. There has to be a balance between the interests of borrowers and savers. We want to encourge a saving society, with much less personal and governmental debt. Low rates just encourage more of the cancer now plaguing us. Best Don Bauder

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Anon92107 Jan. 24, 2008 @ 12:39 p.m.

We must give Americans a break first, to get out from under the financial hardships created by Washington so they can buy up the outrageously excessive and recessionary foreclosed housing stock we have that is wasting away.

Do not punish Americans who can still afford rational rates, but were allowed by Washington to make brain-dead stupid decisions with the same mentality as our brain-dead stupid (and corrupt) congresspersons.

It is a criminal, total waste to our economy to allow foreclosed housing units to go unoccupied by people who can afford lower interest rates.

And it is also imperative that we must get back to building more housing units for the long lines of people who need them to raise families to restore the American Way of Life and American Dream that have been trashed by Washington.

Don, this is no time to practice the economic idealism of high interest rates that caused us to get us into this hideous combination of recession and inflation we are experiencing today.

Besides, X & Y gens need to have enough money to buy what The Reader advertises.

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Don Bauder Jan. 24, 2008 @ 3:44 p.m.

Response to post of 12:39 p.m. It was an excessively long period of low interest rates post 9/11 that got us into recession and inflation, not high rates. Best, Don Bauder

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Anon92107 Jan. 25, 2008 @ 5:47 a.m.

Don, let’s admit that our Degenerations (generations that came before X & Y) set up X & Y for the fall because we allowed corruption to get out of control and destroy their future.

The paramount fact is that our Degenerations allowed every American institution (government, judicial, business, banks, academic, religious, Fourth Estate, basically all except military, police and fire protection) fail us, so much that we have sent X & Y into bankruptcy before they have a chance to achieve The American Dream like we had.

That’s a hell of a legacy we are giving X & Y Don – Poverty, Pollution, Violence and Disease.

The only option we have at this point is to vote every politician out of office in Washington, Sacramento and San Diego and replace them all to force our elected representatives to restore honor, integrity, morals and ethics to American Democracy, but that can never happen now. The current presidential debates and congress for decades have proven that America has no leaders, no one who can bring us all together to provide an acceptable quality of life future for X & Y.

So as members of the Degenerations we continue doing what we do best/worst, watching and doing nothing to help X & Y avoid the consequences of our hellacious failures to take advantage of all the opportunities we had and screwed up, so X & Y will never have what we had and failed to protect.

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Don Bauder Jan. 25, 2008 @ 7:36 a.m.

Response to 5:47 a.m. post: I don't know why you are so bullish on the military, police and firefighters. The Pentagon and its Congress/lobbyist relationships is a cesspool of corruption: see Duke Cunningham, others. Police? How about the refusal of the SD police chief to carry out a judge-approved search warrant in the Sunroad case? Instead, the mayor was immediately told of the search warrant by the police. (The mayor was very close to Sunroad brass, who were big donors.) Look at the number of police and fire employees enjoying illegally-attained pension benefits, and unwilling to even discuss a solution that might help the City stay solvent. Best, Don Bauder

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Anon92107 Jan. 25, 2008 @ 12:16 p.m.

Don, I am “bullish” on anyone who risks their lives for me and my family and community and country 24/7/365, that makes all the difference in the world. In point of fact, military, police and fire personnel are placed far too much in Harm’s Way by the consequences of corruption far too many times, like Iraq, like Viet Nam, like Korea, like San Diego’s never-ending firestorms all due to out of control military (civilians) -industrial-government-academic corruption. Now we have out of control violence in the streets where too many monsters have better weapons than those who keep us safe. We owe them everything, today they are the last champions of American Democracy, because the corruption is producing far too much hate, poverty and violence that they have to protect us from. As long as my family and friends and community and Americans feel safe I’ll continue to champion those Heroes and Patriots who protect us from traitorous politicians and special interests without any hesitation without question.

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Anon92107 Jan. 25, 2008 @ 12:18 p.m.

Response to post of 3:44 p.m. Jan 24, 2008: “It was an excessively long period of low interest rates post 9/11 that got us into recession and inflation, not high rates.” I disagree totally.

CORRUPTION is the number one root cause of post 9/11 recession and inflation, and failing economic, political and social institutions. It is a gross oversimplification to blame it on “low” interest rates, especially since economists themselves disagree on this.

We must lower interest rates ASAP to levels that revitalize the extremely important housing sector of our economy, especially now that the corrupt politicians and special interests have betrayed America and exported most of the rest of the Wealth of America to communist china, etc.

Don, we must give X & Y a break, a chance to achieve the American Dream, a chance at bat now that Degenerations have struck out and damn near lost everything.

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Anon92107 Jan. 27, 2008 @ 4:46 a.m.

Interesting straw man Don, but the French story is almost irrelevant as far as the American economy is concerned, we have more than enough of our own home grown problems to deal with first.

The fact remains that interest rates must continue to be reduced to restore our home buying and construction sectors for the sake of stabilizing our economy and the American Dream for X & Y.

Ironically, in spite of your protests against low interest rates to stimulate the economy, it’s the overwhelming corruption of the kind that you report continuously that is our greatest problem.

The real turnaround will be when we start sending corrupt politicians, judges and establishment businessmen to jail until they expunge their corruption based cultural values. In the past that could never happen because corruption is part of capitalism.

However, now that Obama overwhelmed Hillary and Bill for their corruption as usual politics in SC yesterday, it is time for X & Y to make a difference for themselves by kicking all Degeneration politicians out of federal, state and local offices to reboot our Democracy for the X & Y generations.

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Don Bauder Jan. 25, 2008 @ 10:05 p.m.

Response to post of 12:18 p.m.: Corruption is reprehensible, but it was not the root cause of the real estate bubble, the ongoing crash, and current credit crisis, unless you think unbridled greed and corruption are one and the same. I think the former leads to the latter. And excessively easy money led to the former in the post 9/11 period. Best, Don Bauder

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Don Bauder Jan. 26, 2008 @ 8:31 a.m.

Response to post of 4:04 a.m.: One plausible story making the rounds is that the French bank whose rogue trader had lost $7 billion started secretly dumping assets on the market Monday, setting off a worldwide quasi-panic. The U.S. Federal Reserve overreacted to that one-event scare and sliced interest rates too deeply. Best, Don Bauder

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Anon92107 Jan. 27, 2008 @ 11:59 a.m.

Response to dbauder 7:03 a.m., Jan 27: It is getting difficult to tell incompetence from corruption at times isn’t it, but American corruption has most certainly metastasized throughout the world, and incompetence most certainly enables corruption.

Now that Obama has momentum to deal with the sleazebag Clintons (Bill and Hillary give new meaning to “carpetbaggers”) the X & &ers must vote the Degenerations out of office during the 2008 elections.

Most importantly, X & Yers must make the right things happen during the 2008 elections or they shall most certainly be screwed, so anti-cultural values like those of Bush-Cheney and Clinton Degeneration era politics must be exorcized this year.

In the meantime, to provide long term solutions to job exportation betrayals by both political parties we must create job replacement opportunities for X & Yers that will result in fast track economic rebooting. These solutions must include public works projects to repair increasing infrastructure failures caused by decades of corrupt and incompetent republican and democratic Degenerations politics. To support this we must also provide incentives for housing construction and small businesses.

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Don Bauder Jan. 27, 2008 @ 6:46 p.m.

Response to post of 11:59 a.m.: Yes, it looks like it is a generational battle for the Democratic nomination -- the youth and liberals backing Obama, the moderates and older people backing Clinton, along with a good percentage of women. The difference between incompetence and corruption? That goes back to the age-old question: Is he a knave or a fool? Best, Don Bauder

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Don Bauder Jan. 25, 2008 @ 10:01 p.m.

Response to post of 12:16 p.m.: I agree that the military, police and firefighters put themselves in harm's way. I agree that most military personnel, including officers, are underpaid and grossly mistreated when they return injured from war. This is a disgrace. But at the same time, the corruption at the top of the Pentagon is most disturbing. Brave as they may be, police and fire personnel must realize that their excessive pay and pension/health benefits are helping drive San Diego into bankruptcy. Best, Don Bauder

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Anon92107 Jan. 26, 2008 @ 4:04 a.m.

Response to post of 10:05 p.m., Jan 25, 2008: OK Don, I'll modify my root cause statement to read "greed and corruption" to be more comprehensive.

But there was no such thing as "easy money" considering the price the American economy is now paying for the out of control greed and corruption that resulted in usurious interest rates that are trashing the American economy today along with our political and social systems.

At the top of the list of America's greediest and most corrupt acts that are the real cause of the "crash" and "crisis" are Bush's war, spending, exporting jobs, failed government, etc. that have resulted in the current state of financial turbulence.

Conventional economic wisdom as of yesterday was that Bernanke "risks sparking inflation" if he pushes rates “too low” but there are a lot of other greed and corruption factors that are much higher level causes of the crash and crisis.

Our imperatives today are to kickstart economic growth and send stock prices higher.

The good news so far is that corporate loan rates for the most creditworthy companies are "starting to move in the "right direction."

Now we must restore the health of our housing sector by making it possible for X & Y to achieve the American Dream with lower interest rates for buying up existing surplus housing and rebooting the building industry.

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Don Bauder Jan. 27, 2008 @ 7:03 a.m.

Response to post of 4:46 a.m.: The younger generations certainly turned out to help Obama in South Carolina, as well as in Iowa earlier. This may be a watershed. Don't dismiss the French catastrophe, however. All the world's major banks are interlinked through trillions of dollars of derivatives. The experience with the French rogue trader shows how incompetent this bank is. The experiences of Citigroup, Merrill Lynch, et al show the stark incompetence of America's largest banks. A worldwide cascade of derivative defaults is possible. Best, Don Bauder

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Don Bauder Jan. 28, 2008 @ 7:32 a.m.

Response to post of 2:29 a.m.: I do know some older people backing Obama. Polls show younger people backing him. Thus, he is bringing in new people to the Democratic Party. Best, Don Bauder

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Anon92107 Jan. 28, 2008 @ 2:29 a.m.

Hopefully the best interests of the X & Y gens will be served, and that the X & Yers make the right things happen for their own future.

As for "older people backing Clinton", I don't think so. Times are changing even for us geezers.

The age of sleazebags in the White House oval office has to have ended while Hillary looked the other way for the sake of her 2008 presidential bid. They are the reason that Bush-Cheney were given the opportunity to mess up the oval office carpet.

It is time for X & Y to win the "generational battle" for the White House and Congress, and kick the corrupt and the incompetent Degenerations politicians out of Washington forever.

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