Gee whiz what a shock Crude hits new record above $95 in after-hours trading and other commodities will not be far behind. Can't wait to see what gold, sugar, and even water will cost as the dollar becomes more worthless. I have written many recent pleas to leave the rates alone because it was fairly obvious what would happen if rates were cut yet again. In a 9 to 1 vote the Federal Reserve Board voted to cut rates by a quarter point to 4.5%.
Only Thomas Hoenig, president of the Federal Reserve Bank of Kansas City opposed the increase. He preferred no change in the funds rate. Let's make him chairman of the board. Better yet, maybe he would make a good write-in candidate for president. I wonder what he thinks of federal spending, the war in Iraq, health care, education -- He has certainly peaked my interest and I do not know him at all, but he has made a good impression so far.
In Europe the Dollar is falling, while gold passes $800. Where will it all end? It cannot end well if nobody wants to "pay the piper". When you consider the reasoning behind the Feds rate cut you have to be concerned. The rationale behind the cuts is that the lower borrowing costs will induce consumers and businesses to boost spending, energizing economic growth.
We should not be spending to induce anything! We should be investing. And we should be investing in things that increase productivity or equity and little else without keen frugality. Lowering rates implies borrowing -- so as the Federal debts go on a rampage they want individuals to follow their stupid lead and do the same thing! They fear a slow down in consumer spending will cause a recession.
I say spending foolishly will cause a recession and the longer we mismanage our Government and personal finances the worse a potential recession may become. It reminds me of the little kid that is going to pull a prank and talks a friend into going along -- this is our government.
To find potential opportunities and verify my track record, read Chasing Value or Serious Money.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.
Dr. Doom Nouriel Roubini believes the bubble is about to burst
Cramer on BloggingStocks: Investors are rethinking their snap judgments 
Lions Gate Entertainment: Still waiting for cash flow
Reader Comments (Page 1 of 1)
11-01-2007 @ 6:32AM
hal c said...
It seems to me that this rate cut was not an effort to boost spending by consumers. The intent is to prevent a scenerio of incredible proportions that is looming in the near future. That scenerio is the damage that a huge number of foreclosures might foist on our economy. They seem to be doubling every month.
The Fed knows that current inflation is too high (the actual inflation rate is probably in the 6-8% range) to justify a cut , but I think they have greater fear about what might happen if they do not cut rates. We are definitly in uncharted waters here and the entire World economy might be at stake.