Interest Rate Cut - Over-reaction?

[deserat]

As an aside - boy am I glad I'm diversified, have a cash cushion and can control my lifestyle costs. As for the fed - hmm, yes, most of them are very bright people, but groupthink and emotional reactions can still afflict groups of smart people. I sense there is a real fear of the US economy in a recession or depression and a want to control it - however, complex systems are hard to control and unintended consequences can occur if one forgets a variable. The only thing I can control is being diversified, having a cash cushion and controlling my lifestyle costs. :-)

[Retire Soon]

The Fed may very well have reacted to a "false alarm" in the global sell-off that prompted the emergency interest rate cut Tuesday morning. A trader for the French Bank, Societe Generale may have triggered the meltdown with unauthorized trades. Consequently, it may be difficult for the Fed to convince the general public that it didn't overreact to the world market downturn.

Free Preview - WSJ.com

[ESRBob]

Yeah, I noticed that. But then they went and lowered it another half percent shortly thereafter. This can't be good for the dollar. Wonder when all those creditor nations are going to decide to give up on us and put their money somewhere that will try to maintain its value. If/when that happens in a big way, we could be in for some rough sledding.

In the meantime, I guess they're just using the cheap dollar as a chance to buy up America at bargain prices. One good outcome of this is that if everybody owns a piece of us, there may be fewer people prepared to bomb us Maybe we should be selling more of our Citibanks to the Saudis?

[Notmuchlonger]

Job number was not that hot today. Maybe they aren't over reacting.

Payrolls Drop for First Time Since 2003: Financial News - Yahoo! Finance

[aenlighten]

With housing dragging on the economy, and lower rates not about to revive it, the lower dollar will help the import/export balance to take its place. Since countries with funds have nowhere else to invest it, they may start moving into real assets. That would be a desirable rebalancing.

[FinanceDude]

Quote:

Originally Posted by barbarus He certainly does have a reason and it's not to benefit you or me!

You must have a lot in MM funds and CD's..........

I keep hearing folks lamenting the HIGH interest rates of the early 1980's........yeah that was a "great time" in the economy, stocks were stagnant, mortgages were 17%, unemployment was over 7%, we still were feeling the effects of the oil embargo........BUT you could get a 10-year CD for 12 % at some banks...........