3
What can the Fed possibly do now?
Allan Sloan is a senior editor-at-large at Fortune
To view this content, Javascript must be enabled and Adobe Flash Player must be installed.
TEXT OF INTERVIEW
Scott Jagow: I'm sure the Federal Reserve has more tricks up its sleeve, but it seems to be out of moves. Last week's interest rate cut to about zero leaves little room for anything else.
And so we turn to Allan Sloan from Fortune Magazine. Allan, we've been talking about the Fed all year. What else can they possibly do?
Allan Sloan: Well, years ago, in a speech that got Bernanke the unwelcome nickname of "Helicopter Ben," he talked about combating deflation by throwing money out of helicopters. I don't think we've chartered the helicopters, but they're throwing money now at everything. I wish they would throw some to me -- you know, could get a helicopter and have several big bricks of currency land in my backyard, because that may make me whole for the year, considering how much I've lost in the stock market.
Jagow: Right. Well, we did see that the interest rate cut seem to spill over into the housing market, the lowest mortgage rate on 30-year fix since the 60's. So maybe we're starting to see the ice break a little bit?
Sloan: That would be nice, but you and I have been having this conversation now for 16, 17 months. I really want this to work, because we need to stabilize the system and get these genius banks who've lost hundreds of billions of trillions of dollars doing things they didn't understand, to get them lending again. But we've done so many things, sooner or later, something will work -- I just hope it's sooner.
Jagow: But we're heard numbers from the Fed itself that the bank lending is at a record high. And based on some of the e-mails I've gotten from bankers, they're saying, we want to lend, but there just aren't enough people who are creditworthy, because we don't want to slide back into that situation we had before.
Sloan: Well that may well be, but you wonder how they're defining "creditworthy." Because right now, based on what I hear, it's becoming very, very difficult to finance a car. And that's the whole lifeblood of the car business. There are endless anecdotes of borrowers who are very sound saying the bank is telling me I have to repay, and they won't rollover my credit, because I'm sound, and they can get me to pay, but they can't get other people who aren't sound to pay. So the banks claim that they're doing this, they claim that they're doing that, I don't know. Sooner or later, it'll work out, because it always does. It's just that it's taking a long time and there's been a lot of pain.
Jagow: Allan Sloan from Fortune Magazine. Thanks.
Sloan: My pleasure, Scott.
Believe it or not this is the first, after ten minutes, place that I found to respond to Allan Sloan's 2009 November 9 article in TIME. [Please redirect if a better path is available.] Don't shield from your scorn the enablers [535+1] who bask at Davos and Aspen in the reflected glory of "the biggest and the baddest" [Wall Street] global financiers and spend the largesse which they subsequently receive to hold on to their gerry-mandered seats. Remember the Pakistani Cabbie who reportedly asked his American fare why Goldman Sachs runs "your country"?
I've been listening to Marketplace (both morning and afternoon) for several years now. I have yet to find Allan Stone's comments to be useful, insightful, or even merely informative.
This morning, for example, Mr. Jagow asked him, [After lowering rates to nearly zero,] "what else can the Fed possibly do?" Mr. Sloan didn't answer the question. He did say that he doesn't think that the Fed has chartered helicopters, but he hopes that they drop money into his backyard because it might help him become whole for the year, considering how much money he's lost in the stock market.
In response to Mr. Jagow's comment that we have the lowest 30-year mortgage rates since the 60's, and it seems that we're starting to see the ice break, Mr. Stone says, "That would be nice." He said that he really wants this to work because we need to stabilize the system. He said it would be nice if the banks started lending again. He said that the Fed has done many things that should work sooner or later, he just hopes it's sooner.
In response to the statement that banks want to lend, but cant find credit-worthy borrowers, he tells us that's he's heard that it's becoming very difficult to finance a car.
Sooner or later it will work out because it always does, it's just that there's been a lot of pain.
Summary:
1. Mr. Sloan hopes that the Fed drops money into his backyard.
2. Mr. Sloan thinks that it would be nice if Fed interest rates were causing mortgage rates to drop.
3. Mr. Sloan says that we need to stabilize the system.
3. Mr. Sloan thinks that it would be nice if the banks started lending again.
4. Mr. Sloan thinks that the things the Fed has done should work sooner or later, he just hopes that it's sooner.
5..Mr. Sloan notes that there has been a lot of pain.
Conversations with Mr. Sloan are a waste of time. It time to dump this guy. Surely you can find better use for the 2-1/2 minutes that comprises 35% of your program.
