Point acknowledged on the 'Fed telegraphing its intentions' part. Makes sense, and it also adds strength to the chains tightening around BB to cut.
However, as we near this blessed event, I remain biased toward the 'no cut' scenario as his better choice -- not cutting here would represent at least an attempt to control the domestic inflation rate as well as a defense of the USD exchange rate. IOW, let the recession happen and get the malinvestment out of the equation before it chokes the whole system to death. Of course, what I think has absolutely NADA to do with what the Fed thinks (or is under pressure to think), and I don't need to be re-elected.
It should however be obvious by now to even a Congressman that if the US housing industry needs help, it's going to have to get it from something other than a return to easy mortgage money -- that just puts you back where the bubble started. Maybe the builders should have stored a few nuts in the good times. Maybe BB is a realist and sees that housing wouldn't respond much to rate cuts at this juncture anyway, i.e. the psychological part of the collapse is still underway (hence it's too early). Who knows what BB thinks?
At the end of the day, it once again comes down to, "Whom does the Fed serve?" -- a question I'm not about to try and answer here.
BTW, if BB springs a coupon pass on us separate from the interest rate decision, better get your running shoes on down to the gold pit -- of course, if he cuts 50 bps I suspect you'll be getting in my way with your own wheelbarrow anyway |
