We need the rate cuts to discourage people from saving and encourage investment. That's considered good fed policy during deflation.
I'll explain. You are most likely bullish because you have seen that the last 5-8 days have been very bullish. 5-8 bullish days in your opinion is good enough to bet that the market will continue in this manner. Unfortunately your timeframe of price action study barely goes beyond 5-8 days. If you actually looked back further than again you would not be making this prediction if you have knowledge of price action. Beyond your 5-8 days of bullish momentum you have behind you over a year of bearish momentum. Merely trying to call a bottom after one weekly upswing without even making a new high is absolutely naive and the absolute fastest way to lose your money.
I agree that government can't force, but they can very strongly affect the market. Backstopping all types of securities and firms certainly changes the risks associated with different investment options. Rich
The short term treasury rates are just about zero so there cannot be any more rate cuts that will affect the markets. Fed Funds are pretty superfluous to the equation once Treasuries are at zero. However, the next big thing that the Feds will do to reverse the direction of the economic downslide is to provide support to Bair's home mortgage refinance plan. Hopefully that begins to turn around the situation on the home front, which is crucial. I have no idea why Paulsen simply spends all of the money bailing out his friends on Wall Street and Goldman. Well, maybe I do. What myopic idiots. I am glad that competence finally won the White House.
I think it is very easy to be Bullish based upon expected fiscal and monetary policies. Shorts will be fighting some tremendous headwinds, The one thing going for shorts, is that the Feds have done very little to forestall foreclosures. This will probably change as soon as Obama and the Democrats take control Bair's plan, if adopted, should have a positive affect on the market. Together with job creation, the economy should be on firm footing within a year. However, growth will be muted, so probably no new highs for some time to come - unless foreign funds begin to buy up U.S. landscape.