Suspicious Stimulus Package found in Capitol
The more I look at the recent, drastic 75point rate cute by the Fed, the more I miss the cryptic Alan Greenspan. Bernanke is a little too transparent. A cut that steep was surely meant to be a quick fix for the folks that need it least. If he’d planned to put investors at ease, he failed.
If this massive slash in rates was meant to help the sub-prime mortgage crisis, it won’t. Most sub-prime mortgages are tied to the LIBOR, and not the Prime rate.
Greenspan aimed his more measured rate cuts at stimulating the housing market. They worked a little too well, fostering the mortgage bubble. Now, the Fed here makes a reactionary rate cut that took the Greenspan-led Fed nearly an entire year. The closest the Fed cam before this was a half percent cut after 9/11. This sharp move is likely to slow growth when other major markets like the Euro, Pound, and Yen are not following Mr. Bernanke’s example.
It looks like the stage has been set for President Bush to come save the day with his “stimulus package” (soon to be an adult film title). After all, Bernanke is Bush’s guy, like “Brownie” or Donald Rumsfeld. He’ll play ball to make the team look good.