Earlier today I wrote: "...I'm also against doing 'too much' to bail out financial institutions because it gives entirely the wrong incentives for the future. I don't want to seem like a raging populist, but these rate cuts seem to be more about helping Wall Street than they are about helping Main Street."
And now the Wall Street Journal blog has Bye Bye Bond-Market Vigilantes, Hello Stock-Market Crybabies:
And now the Wall Street Journal blog has Bye Bye Bond-Market Vigilantes, Hello Stock-Market Crybabies:
...Now it seems market players are demanding that the Fed pull out the stops to buoy the stock market and keep the economy rolling. Last Tuesday’s three-quarter-point Fed rate cut came on what was poised to be an ugly day in the stock market. Earlier, credit-market problems prompted the Fed and other central banks to action.
Fed officials are widely expected to end this week’s regularly scheduled meeting with another rate cut on Wednesday – amid speculation that last week’s stock market turmoil may have been caused more by Societe Generale unwinding trades made secretly by a 31-year-old trader than by generalized angst about the global economy. “There is a kind of tantrum going on – help is never enough,” says ING Investment Management economic advisor James Griffin. Investors’ attitude seems to have been “the Fed is behind the curve and doesn’t get it and we’re going to be morose until we get our way.”
Comments
I agree – I’m not sure what kind of good these rate cuts are going to do for sagging sectors of the economy. Housing is in a slump because of over-supply, and no amount of liquidity can fix that in the near-term. Perhaps it is a move to strengthen the export sector by making sure the dollar remains weak for the next few years – as if it needs any help?