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They get there is breaking news now on Fox News Channel is the final hour of trading on Wall Street and the markets are in an absolute.
The Dow is off 351.
Points it's dropped a good 75 in the last.
Five or ten minutes and it appears that at this moment there is no stopping it.
As we begin this final hour of trading that the answer to this is.
Is simple and the ramifications are widespread.
Every Dow Industrials stock is in the red today every single one.
The S&P 500 -- that and that NASDAQ were also down about 2%.
A lot of this has to do with fears of the ending of quantitative easing.
I hate that phrase let's bring -- some experts try to break this down -- Rick Newman is with -- he's a columnist for Yahoo! finance.
And Gerri Willis is the host of the Willis report on Fox Business Network what's happening.
Well the markets are afraid -- Ben Bernanke is gonna take its foot off the gas pedal that there's going to be no energy left for the economy the economy will go in free fall interest rates will rise.
You'll have that scenario that is horrible for American families out their people are fearful.
Of what happens when Bernanke -- out the Federal Reserve stopped supporting this market and this economy.
What they're doing is at the quantitative easing is printing of money.
They're putting more money into the economy when you're in a down economy you know one economic theory is.
You pump a bunch of money into it and the government spends a lot more money in and that allows the private sector to get its legs back under the government takes over when the people can't and then when that.
From the private sector gets its legs back under and then the government backs awful hasn't happened.
Well what the -- really been trying to do is push interest rates down and stimulate.
Borrowing and lending and that and it fat cats kept saying we are okay we acknowledge we're sort of printing money that we think we're going to be -- -- that money back when the time -- And that's not really the issue here -- I think the issue here number one.
This is a market over reaction to what Bernanke the chairman of the Fed actually said yesterday.
He did not ever gonna stop this program he he didn't even the program didn't even change in this in these -- the nuances of the wording that suggested.
That the program might begin to -- be curtailed sooner than expected.
I think on the markets were just seeing.
Some profit taking some selling.
A lot of analysts have been predicting this would be happening stuff for a while at 10% five or 10% correction is a college we're seeing it and it seemed a little bit unnerving it's quite possible the -- -- stabilized tomorrow next week.
There there's a big picture could change happening as well.
What we've seen in recent years and you're talking about this before -- here.
Is when people put money into bonds stocks go down when people pull money out of bonds they put it in stocks but that's not happening.
All the money is going into some black hole somewhere maybe in the bank accounts.
We'll find out and a little while but you're absolutely right about this that dynamic in the markets has changed -- what what happened in short for short for her last few years as.
Every time investors got nervous about something happening in the economy they put their money in these so called safe haven investments which is treasury securities and other things like that.
That's not happening we're seeing people's -- sell stocks.
And sell treasuries at the same time that -- that or ordinary people need to know about that is that interest rates are going up they're going up fairly quickly.
They could just level often come back down but this is already affecting mortgage rates.
It -- it directly affect the rich you pay for a loan to buy a car another type -- rates so that is that is going to translate into the real economy very quickly.
Gerri L I -- and I was gonna say quietly.
Mortgage rates have gone up and they've gone up a significant amount based on what we've seen in the last couple years and that could very well -- this housing market it could sell the housing market we're seeing mortgage rates up to 4% in some cases.
-- -- -- But compared to what we've seen lately you know your mom and dad paid double digits okay they might pay twelve for we were trying to get a house in the early 1970s and the interest rates -- above 18% -- Mortgage rates above 18% so mama -- a room and wait for a -- Well it's all about what you're used to and people are used to rates that are just barely above 3% -- -- tell you what happens.
Once you start broaching these new levels so -- 3.5 percent.
-- house it costing 208000 dollars with a conventional.
Beaten down payment would cost you 747.
Dollars a month with a 3.5 percent interest rate at 4%.
Suddenly it's fifty bucks -- -- more expensive so in another 194 dollars a month.
You think that's a small amount but to a lot of people it's not it a lot of people that's -- you've got to -- buying and not buying.
As you can play and this is what I'm gonna pay every year from now on 747.
There's a big difference between at 797.
Now imagine that if you're not just gonna hit a 4% imagine you're gonna go back to something that's more normal like 8% home.
Now we're talking real money is or I that's normal that's a normal interest rates seven to 8% I remember it at interest rates -- for mortgage -- to try to hit four point 5% if not a bit higher by next week as it takes a couple of weeks for to filter through.
But remember we're talking about a weak economy where a lot of people are pretty nervous about about buying something expensive like a house or car and they've been holding off and they're saying.
You know -- -- there are certainly some people for whom that extra 500050.
Bucks they're gonna say with a lower rate kind of makes the difference.
And this is gonna and it -- -- the same time home prices are going up -- so we've got both things going up home before affordability is actually getting worse very quickly people who do well in this -- -- so people who are retired.
Living on a fixed income -- got some savings she got in this CD those CD rates will go and they're saying finally because we -- -- expression 1% don't want him.
Older people need these rates to go up so get their money can make some money.
Our guys we're gonna watch this market throughout this final hour of trading down 341 at the moment updates as necessary.
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