December 11, 2007
Fed Cuts Rate a Quarter Point; Stocks Dive
The Federal Reserve cut a key short-term interest rate today by a quarter of a percentage point, to 4.25 percent, signaling its concern that the credit crisis might be gradually damaging the broader economy beyond housing.
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Investors reacted by sending stocks plunging and by bidding up Treasury bond prices. The Dow Industrials fell more than 200 points in a matter of minutes and kept sinking through the afternoon, closing off more than 294 points, or 2.1 percent, for the day, according to preliminary figures. Broader indexes like the Standard & Poor's 500 and the Nasdaq Composite fared even worse.
In an unusual statement after the meeting, the Fed’s policymakers declined to say whether they were more concerned about inflation or the outlook for economic growth. Their statement said that “Recent developments, including the deterioration of financial market conditions, have increased the uncertainty” about what will happen next.
Well Ben, maybe you need to go somewhere and lie on a beach for a while, because you have now become the reason for all that increased uncertainty about what will happen next. Not that it matters much.
Uncertainty is the only certainty of markets. This one had already discounted the effect a half-point cut might have when you meekly offered up a quarter.
That's OK, you're a theorist and theorists are more likely to kiss their sisters rather than run off with the local good-time girls. One could make the case that you are far less dangerous to the economy than Henry Paulson, a swashbuckler who's actually seen Paree.
The moneyed oil sheikhdoms have been waiting and their time is now. You and your board futzing with quarter points is meaningless when oil quadruples in price and Washington continues to slander Hugo Chavez. Buying their way into western banks by picking up earth-shattering losses made no sense at twenty bucks a barrel, but is essentially a giveaway at $80.
Bush stripped us of assets and enabled the enemy to embarrass, then buy us--lock, stock and (not a pun) barrel.
That a single administration could so devalue and eviscerate America in a scant seven years seems almost inconceivable. But the combination of tax giveaways, unfunded wars and a historic destabilization of producer-nations combined to do the trick.
And you, Ben, were naive enough to walk through the door and pick up Alan Greenspan's keys from the desk, smile at the sight of that rump-sprung chair and actually sit down as though you had a chance.
Didn't anyone tell you it was over? Didn't anyone in academia let you in on the fact that when interest rates are already in the low single-digits and the roof is caving in, the Fed has no tools to right the wrongs? You've been made the patsy, the fall-guy, the bag-man--the guy who moves the sets when the lights dim and old Alan tap-dances his way off to applause, stage-left.
This currently terrified market, wetting its pants and hoping the house in the Hamptons doesn't swan-dive off the balance sheet, is now in the hands of a portion of the world we have abused for over a century. Those we decried as rag-heads and camel-jockeys are standing at the well as we beg for water. The drought's been a long time coming, but memories are very long indeed in that part of the world.
It's difficult to know just where this disastrous Bush administration has damaged us the most. But if the hand of Osama bin Laden had controlled every play of the game since 9-11, it could not have possibly known how to act so efficiently in its own interests.
As one jaw-dropping revelation follows another, I become each day more convinced a second terrorist event will not happen on American soil. It doesn't serve terrorist interests to wake us when we're down.
The Bush Bunch have taken this proud, free, envied nation and turned it to a whale washed up on the beach. We are a rotting pile.
No sensible terrorist would disturb that insistent decline. The White House is emptied of its perpetrators. They have slunk off or waved from news conferences--gone to write books or think in tanks-- and the man who stole two elections will be the last to turn out the lights.