98% bet that Fed will lower fed funds rate 25bps tomorrow

Quotes From Fed Officials on Economy

Hopefully they will surprise again with a 50 bps cut. The bursting of the housing and credit bubbles, compounded with China's "irrational exuberance," according to Greenspan, will hopefully inspire the Fed to be more aggressive, but the comments above suggest otherwise. If there is no cut, the market will fall. The 25 bps cut is already priced in. People may take profits if this happens. If it's a 50 bps cut, the market will rally.

$20 billion down the drain. just wait for the blowback.

Merrill, Citi, Bear Stearns, and JPMorgan write off a massive total of $20 billion
Click the link for details-- don't mind the ads.
Another reason to raise interest rates in the coming years and stick it to the middle class.

They're all just treading water right now...

I wonder if Bernanke will wait until a democrat is in office before he starts raising rates.

Trichet, Dodge, King May Follow Bernanke in U-Turn on Policy
September 2007 Rewind: Bernanke's Emotional Rescue
Why Bernanke might need India to'Do a China'

I keep thinking of this quote:
"Double digit is something that is likely to happen for a short period of time," from Greenspan.
Greenspan sees double-digit rates

Inflation level, but food & energy up

From Bloomberg TV:
Since Feb/Mar 2007, when Bernanke said we should watch inflation, prices have gone up:
24% oil
10% gold
75% wheat
Yes, they are not in core consumer price index, but still, in march 2007, the CPI was .1. The last reading was .2.
If inflation is the main risk to the economy, and the cpi has gone up as well as oil and wheat, which are not in the cpi, and oil affects many parts of the economy, how can we not be experiencing inflation?

Well, the fed cut rates

Fed Cuts Key Interest Rates by a Half Point - Sept 18, 2007 - NY Times.
Federal Reserve Press Release September 18,2007

Fed's surprise move: Flip the discount and raise the fed funds rate?

I'm researching the viability of the Fed flipping rates & raising the fed funds rate today. Why would they do this? To prevent against inflation while still offering liquidity to banks. Here's the Google Search.
And some results:
Fed holds rates steady - June 28, 2000 - CNN Money
Fed cuts discount rate, stands ready to do more - The mess that greenspan made
Fed Funds Target vs. Effective Funds Rate - Calculated Risk
The T-Bill Message for Bush & Bernanke - August 16, 2007 - Kudlow's Money Politic$
Some Wall Street Journal definitions:
How does the fed keep rates near its target? A primer - August 16, 2007 - WSJ
Explaining the Discount Window - August 17, 2007 - WSJ
And here's a result which may give a clue about what happens when the discount window is lower than the fed funds rate:
Economists React: 'Lifting the Wizard's Curtain' - August 17, 2007 - WSJ

"Prior to 2003, when the discount rate was lower than the funds rate, cutting the discount rate was the most powerful tool in the monetary policy toolbelt. Indeed, prior to 1994, when the Fed began announcing changes in the funds rate target, a discount rate move was the ONLY move that was explicitly announced. Many market participants will think of the discount rate cut in those terms, which is not the correct way to consider it. Instead, this should be thought of as another (indeed, probably the last) intermediate step short of an ease. –Stephen Stanley, RBS Greenwich Capital"

Bernanke's the new sheriff in town-- when he lowered the discount rate after Bill Poole said only a catastrophe would cause the Fed to change monetary policy earlier than their September meeting-- his actions showed his new tactics. Where Greenspan would have lowered the fed funds rate-- the famous Greenspan put, Bernanke may be reverting to the past, when the discount rate was more important.
Will Bernanke revert to considering the discount rate the most important rate? This is a new boss-- the Greenspan era is over-- no more Greenspan put, the book is out and he's coasting. Bernanke is an academic. He may not be in it for the short term like Greenspan. He may not want to be popular and enjoy the public eye. He's less impressed with his public image than his predecessor. It's not all about ego, but-- Greenspan enjoyed the limelight. He liked speaking in riddles and being the most powerful man on the planet. He didn't follow the advice of the group-- sometimes he lowered rates even if the others on the board didn't want to. He followed the Federal Express stock price to feel the pulse of the economy. He made instinctual decisions and most of the time he was right. Bernanke is an academic-- he listens to the group, he uses models. Most likely, he will not follow the historical pattern and make his mark today.
So, with 25 minutes to go-- will Bernanke raise the fed funds rate 25 basis points to 5.5% and lower the discount rate 50 points to 5.25%?

The Fed Will Not Lower Rates

The Economic Outlook--speech by Jeffrey Lacker of the Federal Reserve Bank of Richmond to the Charlotte Risk Management Association in Charlotte, North Carolina on Aug. 21, 2007 at 12:30pm.
Basically, he said don't look for the fed to cut the federal funds rate soon.
However, that may be just as believable as William Poole's comments that only a "calamity" would justify an interest rate cut, the day before the Fed cut the discount rate.