WSJ on the Fed:
online.wsj.com
"When the Federal Reserve raises interest rates, as it is expected to continue doing tomorrow, trouble usually follows. In 1987, the stock market crashed. In 1994, Orange County went bankrupt and Mexico devalued its peso, ravaging its economy. In 2000, the Nasdaq Stock Market bubble burst.
For months after the latest Fed tightening cycle began in June, everything seemed fine: Treasury-bond yields declined, stocks rose and volatility throughout markets fell -- the opposite of what happened in 1994, the last time the Fed reversed a prolonged period of easy money.
But in mid-February Fed Chairman Alan Greenspan declared low bond yields a "conundrum" and warned about "complacency." Since then, bond yields have shot up, closing at 4.51% Friday, and stocks have wobbled. The Dow Jones Industrial Average shed 144.7 points or 1.3% last week to close at 10629.67.
Are markets due for some kind of crisis?
"It seems likely," concludes a report from ISI Group, a New York economic-research firm.
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