WRONG !!!!!!!!!!!!!!
Whether the rate is too high or too low is a relative idea . Comparing to Japan's 2.5%
rate, even the US rate cut to 3% , the US rate is still high comparing to the Japanese rate. This means even the US rate cut to 4%, the hot money from Japan will still
stay in the US for the relative higher rate.
FED should cut the rate by 0.5% in the next cut and followed by another 0.5% cut
to stimulate the economy .
By cutting the US rate further, the consumers' confidence will be reversed, and people will continue to spend again, this will move the economy. By cutting the rate,
it will reduce the cost of capitals for the US companies, and improve profit margin.
By cutting the rate , this will help push the Dollar further down, and will help the
export of US corps, especially those High Tech companies, and will also improve the profit margins in term of exchange rate.
As to Japan, the major problem is the bad loans, however, with the deep pocket of Japanese government, the problem is not whether they can resolve the problem, but
if they will like to resolve the problems. The bad loans of banks is not a crisis to the Japanese economy at all, nowadays, most Japanese big Corps are the banks themselves. Those big corps export lot of goods to overseas helped by devaluation of the Japanese currency, and most big corps held billions of Dollars oversea, this will continue to hold the Japanese currency low and will continue to help the export of
Japanese companies. Once , those big Japanese corps start to buy Japanese Yens with
those dollars held overseas earned from export, we will see the Japanese Yen started to rebound, and that is what is happening now, and pretty soon, we will see the Japanese market starts to rebound.
As to the US market, we are the world biggest pool for funds, the 401k, the retirement funds ...etc, so we are not short of money for our stock market at all. |
