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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.

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JohnnyVegas Jan. 22, 2008 @ 7:52 a.m.

When your car is going over a cliff a little rubber band is not going to stop it.

I will say that I am surprised the DJIA is not off as much as most expected (-186 @7:30 AM PST). I think it is possible to recover to less than a 100 point loss.

Of course the days ahead will see the market tank to where it should be at, correcting itself if you will, which makes todays actions irrelevant.


Don Bauder Jan. 22, 2008 @ 9:35 a.m.

Response to post of 7:52 a.m. Bernanke's Fed is now a prostitute for Wall St. The timing of the move proved that. Trying to get consumers to spend more by lowering interest rates is like giving a snort of cocaine to a dope addict or a hair of the dog to an alcoholic. Consumer spending is more than 70 percent of the economy. Capital spending (except abroad) is insignificant and residential construction is a disaster. Ergo, jack up consumers so Wall St. can flower again. But consumers are too deeply in debt and have a negative savings rate. Consumers should be saving, not spending. We are headed for a crackup but I don't know when. It could be a long time off, as the Fed and the federal government are the enablers keeping the addict on his fixes. Best, Don Bauder


Anonymous Jan. 22, 2008 @ 10:03 a.m.

The Fed can drop interests rates to 0%. That won't lower the huge trade deficit, or create any domestic manufacturing investment, or reduce oil prices or the lock-step energy inflation or end the endless occupation of foreign countries.


Don Bauder Jan. 22, 2008 @ 11:20 a.m.

Response to post of 10:03 a.m.: You have a good point. The Fed may not have the power that it believes it has. Obviously, it has given Wall St. a temporary jolt today, based on emotion; the Fed chased the shorts off the street. But after 9/11, when the Fed lowered interest rates to 1 percent and kept them there far too long, the economy did not boom. It recovered moderately. The stock market didn't boom; it enjoyed a moderate bull market which is now reversing. I will argue with you on one point: lower rates will wallop the dollar and that will help lower the trade and current account deficits. Best, Don Bauder


Anon92107 Jan. 25, 2008 @ 5:35 a.m.

Don, let’s admit that our Degenerations (generations that came before X & Y) set up X & Y for the fall because we allowed corruption to get out of control and destroy their future.

The paramount fact is that our Degenerations allowed every American institution (government, judicial, business, banks, academic, religious, Fourth Estate, basically all except military, police and fire protection) fail us, so much that we have sent X & Y into bankruptcy before they have a chance to achieve The American Dream like we had.

That’s a hell of a legacy we are giving X & Y Don – Poverty, Pollution, Violence and Disease.

The only option we have at this point is to vote every politician out of office in Washington, Sacramento and San Diego and replace them all to force our elected representatives to restore honor, integrity, morals and ethics to American Democracy, but that can never happen now. The current presidential debates and congress for decades have proven that America has no leaders, no one who can bring us all together to provide an acceptable quality of life future for X & Y.

So as members of the Degenerations we continue doing what we do best/worst, watching and doing nothing to help X & Y avoid the consequences of our hellacious failures to take advantage of all the opportunities we had and screwed up, so X & Y will never have what we had and failed to protect.


Don Bauder Jan. 25, 2008 @ 10:08 p.m.

Response to post of 5:35 a.m.: It would be nice to vote all the rascals out of office, but since the corrupt back them with so much money, it is a rather faint hope. Best, Don Bauder


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