The Fed cut the funds rate another half-percent today.
My take: the stupid vs. panicky is about 50-50. Bernanke can obviously be easily stampeded by Wall Street, which reflects on both stupid and panicky for him.
And, since the European Central Bank didn’t follow the previous rate cut, the dollar will slide more, which argues in on the stupid side, especially with a half-point, not a quarter-point cut.
This will not, repeat not, restore serious liquidity to the housing market, either. Chalk up more panicky for Bernanke, at least; if this part of the equation also falls under stupid for him, he really is a putz.
The only other people to like it are likely in Beijing, which will probably see this as helping slow down Chinese inflation.
Wonderful. After exporting our jobs, we’re now exporting financial help.
And, we’ve once again proved that “free markets” is a myth. At least Adam Smith, or more so, a stereotyped distortion of his more modest claims, gets another smackdown on the playing field of theory.
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