Dave Rice 3:33 p.m., May 22
Federal Reserve Slices Interest Rates Three Quarters of One Percent, but Stock Futures Still Down
As I surmised last night, the Federal Reserve this morning (Tuesday) lowered its target on the federal funds rate by 75 basis points (three-fourths of one percent) before the stock market opening. However, Standard & Poor's 500 futures are stilldown 4.25 percent, Nasdaq futures down 4% and Dow Jones futures down 3.6 percent going into the opening six minutes away. That is some improvement from last night, but it looks like there will be a very weak opening. The scary aspect of this move is that Fed Chairman Ben Bernanke is now running monetary policy for the benefit of Wall Street, not for the general economy, as his predecessor Alan Greenspan did. This bakes inflation into the pie. It also suggests that bubbles will not be pierced before they get out of hand. Events of today are very significant in U.S. monetary history.