What do you guys think of Bernanke's latest move? [news article here]
Do you think it will go any further than simply bumping the market for a day or two? Is 3.0% the absolute lowest the rate should go? How does this affect the American economy internationally going forward?
My opinion: Too much, too fast. In a free market economy, there will be pain - people make bad decisions. You've got to endure it, at least to an extent. I feel Bernanke's rate cuts are devaluing our dollar too much, and really only setting us up for a greater fall when the time comes.
Other opinions?
i doubt this is what greenspan would do. bernanke began to panic slightly, and gave the market what it wanted. this opens to door for inflation. the rates are obviously still far away from post-9/11 levels, but let's remember what originated what is today the subprime crisis.
Bernanke is an idiot in my opinion. Cutting the rates way too fast. I don't believe other countries are cutting? Could be wrong. Our dollar is going down the drain, the economy is slowing. I smell stagflation. Great job Bernanke! Princeton graduate...just let the econonmy go into a recession! It is natural for it to occur, why make things worse and pummel our beloved dollar? What Bernanke and the fed is wrong. He is doing what the market (investors) want him to do. Hopefully everyone who has offers will still have them incase of anymore job cuts.
Moral Hazard
I'm not worried about a declining dollar, I think overall its a good thing the dollar is low.
Inflation risks seem low.
I like the cuts and expect to see it go as low as 2.5% before all is done.
I was long oil so I'm happy.
I got an interview for IBD tomorrow afternoon in London. So in case i get asked regarding this, ill just state my views on this, and if im wrong do correct me, or if theres anything else i need to know please let me know.
So Interest rates have got cut twice in two weeks, shows the Feds concerns with US economy going into recession. Lower interest rates, makes it more incentive for people to borrow (cheaper to get loans/mortgages) and cheaper for firms to invest (through borrowings) and makes it less of an incentive to save.
Also im kinda guessing as interest rates go down in US, it makes it less attractive for bonds, so US Dollar (forex) will get lower, making imports more expensive to the US, and exports cheaper (competitive). Less spending on imports means more spending in domestic economy (US).
All aspects trying to relieve any hopes of Recession but inflation may occur!
Lower dollar may lead to a potential cross border M&A into US from firms such as Tata (India).
Lower interest rates should also help those firms looking for corporate restructuring and those distressed LBO's, right?
Anything else i should know?!
Appreciate your time and input!
http://www.wallstreetoasis.com/forums/finance-minister-says-us-is-in-de…
http://www.wallstreetoasis.com/forums/equity-market
Feel free to disagree - it takes two to make a market.
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