Henry, I hope the Fed's are not miscalculating. They may flood the market with liquidity because of the rising "dfear of lending', but if that money finds its way in equities rather then in lending, they will have to fight the liquidity trap from lower interest rate plateau, where, as Japan has shown, it becomes less and less effective.
I think they should let a major bank that took unnecessary risks go down in flames. That would set the stage for a much healthier environment. Patching never works too well. Right now, however, you got to go with the flow and assume that the Fed's action will have its desired effect, namely, repump the failing aggregate demand Greenspan is fearing.
Zeev |
