Papa chill. Big Ben is on the case. Step back. Here's the quandary How do you cut 50 BP without (a) spooking the market and (b) decimating the dollar.... Well you have an inordinately long period between meetings here I will most certainly be expecting an inter-meeting move of another 1/4! That will be the first time you will have heard of this plan but the dollars strength in the face of just a qtr allows another qtr to be slipped in as soon as 1 month from now and the combined effect taken in a two month slice is 50BP and no dollar sell off. Stocks are asking for too much, now it's not about trickery, it's about saving the system. But of course Ben's trickery will get us there.~ stoney
My argument has nothing to with a 25 50 or 100 pt cut, what I am saying is no matter how cheap money gets, it will not solve this particular problem. this is not like recent slowdowns/recessions, there is no more room for avg joe consumer to borrow. take the fed rate to 0. Credit card rates are going up and risk spreads are as well. assett values are declining and we are very near a start of rising unemployment. We used up the firehose of money to put out the last recession, and that doesn't work twice back to back, especially when the assetts cannot be sold for a profit now by most. January will see a total collapse of market as the masses that will not sell equities for tax purposes will have a very itchy trigger finger in the new tax year.
Well this is the key to your argument and we are very near a start of rising unemployment. And I agree January will be ugly! It's just that between now and then, well the 18th and then.... is a week and a half of furious upside.Stupid upside. Ben will be looking like a rose. Today's actions with other central banks is old school economics it's a " LIBOR Buster Missal " lets see what happens I bet rates come down finally within 2 weeks. ~ stoney PS- One thing to remember is when the dollar stabilizes and turns up there will be a rush into the US stock market with foreign money they can buy at a two for one sale right now the only reason they are not is our earnings salowdown/ recession scare and they are too busy buying our real estate especially the Irish God Bless em'!
Well I don't know if Landis is an idiot (that's your call Pops) But I admit I must be an IDIOT! because while i do think the Fed played a major role in the current mess by easing too much in 2002, I , complete idiot that I am, think that Fed policy is not fundamentally at fault here. Rather I think it is our penchant for going to faraway places and killing people we don't know that has created a permanent war economy and unsustainable deficits. And this, I foolishly think, is the root cause of our present, shall we say, unsavory condition. We, like all modern, fun loving, democracy-building (If i hadn't of had to kill you, i just know you would have enjoyed the hell out of democracy!), profligate-spending, debtor-nations are playing a game of chicken with our creditors to see who will flinch first. Our goal of course to to inflate the debt away by expanding the money supply. That is we are monetizing the debt, at least until our creditors say "Uncle." It is traditional in these circumstances for the Treasury Secretary to give continuous assurances to banqueting gaggles of businessmen that He and the Country (i.e., We) favor a Strong Dollar. Of, course, we do! (wink, wink!) P.S.: We might find our attempts to spread democracy greeted with more enthusiasm if we were to demonstrate its effectiveness at home by electing our president by popular vote. Just a little suggestion.
I am leaving now to have cocktails and dinner, but i'll be thinking all the while of how wonderful it is to be free and simultaneously ALIVE!