Who would want to bet that Bernake will try to resuscitate the lagging CPI by lowering interest rates starting this month?
There has been such a spin on the health of the economy the past six months that a well planned out media blitz is what the Feds have on their mind. If they could pump up the S & P, DOW and NASDAQ, investors and consumers would turn around and start pumping more savings into all sectors of the economy. Irrational exuberance all over again. Noam Chomsky has been watching this play out with politics since Kennedy. Shiller shows that this exuberance doesn’t disappear, only reappears in another setting. It’s smoke and mirrors. Move from one investment asset to another. Real estate will be in demand again due to consumer confidence and falling prices. Sure there is going to be a lot of write-offs, but with cash rich banks, they’ll afford it. Heck, even the Feds will play into it by saving the day. We’re only two years from elections and the Republicans want to win – right? I don’t think we’ll be seeing the same type of speculation as in the past with real estate. I think we are going to be in for a shock my follow Piggintons. Get your check books out, line up a discount broker and get ready to play.
They can spin all they want. Bloomberg today reported that inflation is climbing while consumer spending is going down. Fed lowers rates, I am ditching my CD’s like a rock and dropping the dollar like all smart people will do.
I’m not sure the fed *can* lower interest rates; it would kill the dollar. Most other centralized banks have been increasing interest rates lock-step with the feds, because they have inflation too.
As was discussed in another thread here, dropping the fed rate at this point will not save housing. We’ve already reached the point of no return.
Who has any savings to pump into the economy? the consumer only has money borrowed from their houses, the government has money borrowed from other countries. The stock market is toast, rocket man. There will be a couple rallies after the pause, by the bulls who do not understand the situation. Cash is king. Stocks are heading downhill, and gold is overpriced.
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