Hi FL, "...rate increases, intended to slow the economy, that put us where we are. So it's hard to imagine the cuts won't reverse it..."
Of course you are correct here, Greenspans actions should turn things around, but the question is when, 1-1.5 years out, may be sooner, maybe later. The recent two deep cuts and about face from tighten bias does make the Feds look like amateur economist playing follow the economy rather then leading it. (Imagine if he had given us the .75 as many had suggested and as you know still might as he stated a continued rate cut bias). Stocks would have spiked up, but I believe many investors would then say Gee, is it really THAT bad, which from his bias, suggests it is, causing further selling. At present his hands were tied and as I (and most here suggested), he went for the half point. Remember US doesn't live in a vacuum. Economies are tied together on a global scale. Yes it is not an understatement to say the US is the engine that drives the global economy, and so far at least we in Canada are still humming along in good shape, but I would predict that we and the rest of the US trading partners will be dragged down into a slowdown of our own, before these cuts take their desired effect. BTW last week Martin, Canandas Finance Minister, did drop rates by .25..... |
