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Politics : Ask Michael Burke
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To: kahunabear who wrote (34023)10/15/1998 10:20:00 PM
From: Knighty Tin  Read Replies (1) of 132070
 
Whipster, But the problem with easy credit is that the banks also need the Fed to change the rules like they did with Latin American loans in the 1970s. If they want them to loan to more speculative hedge funds to rejuvenate the bubble, they have to put rules in place that state that losses on these loans are really profits. Otherwise, the banks will still be averse to making them.

My guess is that the interest rate gambit is so much pushing on a string. No more than 10% of the impact of the cut will go into productive capacity. The rest will be spent on more financial flim flam. In other words, the stuff that got us to this point in the first place.

So, I expect the foreign reaction to be underwhelming and Wall Street traders to short to the individuals who were taught not to fight the Fed. The upside should be pretty much dissipated by Tuesday and then we start the slide back to new lows.

Of course, everything takes longer than I expect. <G>

MB
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