Mish made some comments here that jibe with what Cody and I have been thinking.

All the talk by Cramer and others about the "saving" of homeowners who will now avoid foreclosure is missing the point, and is what I get from lots of "experts" on wall street -- people who have no mortgages, or at least none that they ever need to worry about, and who also don't have any clue what the cost of living is because they don't even pay their own bills -- about such things.

If you're one of the millions of people who took out an interest only option ARM with a low 1-2% "teaser" rate that is resetting to a market rate, it doesn't matter much whether it resets to 6% or 6.5%. You're still going to see a 3x or greater increase in your payment, and if you're one of the people who took them out -- people who mostly are not employed as Wall Street "experts" -- odds are you don't have the cash to handle that, no matter how much the fed cuts. The only thing that can save you is higher prices than you paid, and in many places those are now out of the question.

Even people with regular ARMs resetting are going to find themselves in trouble. And if you're on one of the coasts where you pretty much need a jumbo loan to buy anything, then none of this matters because the rates on those loans, even if they come down, will still be a lot higher than they were a year ago.

This cut, ultimately had nothing to do with homeowners and everything to do with saving banks and hedge funds. Remember that the fed is ultimately run by and for the bankers. Which is part of the reason it should be abolished. Our global capital markets are larger than any economy and more than capable of providing all the financing the world needs without artificial government money creation.

-btc