The Federal Reserve’s recent surprise decision to lower its short-term interest rate target by three-quarters of a point has received much attention. Most commentary has focused on the idea that the Fed is trying to stimulate spending in the hope of preventing a recession. Over-looked, and equally important, is the fact that lower interest rates raise asset prices, which is something Wall Street desperately needs to prevent a systemic meltdown. (more…)
Archive for January, 2008
Welfare for Wall Street, Federal Reserve-Style
Friday, January 25th, 2008Investing in China: Fool’s Gold?
Tuesday, January 15th, 2008Americans tend to disregard history. Henry Ford declared bluntly, “History is bunk,†while Gore Vidal calls the U.S. “the United States of Amnesia.†Usually, this disregard has few consequences, but sometimes not. That may be so with investing in China, where history suggests profits will be far below expectations, possibly making those investments fool’s gold. (more…)
The Subprime – Trade Deficit Connection
Monday, January 7th, 2008In recent months the U.S. subprime mortgage crisis has been rippling outward affecting other countries. British banks have made large loan loss provisions and there has been a run on the Northern Rock bank. German banks have incurred similar losses and Germany has suffered two large bank failures. European banks have also become leery about lending to each other, forcing the European Central bank to infuse emergency liquidity. Now, Japan’s banks are feeling the heat. (more…)
Democrats and the Meaning of Change
Wednesday, January 2nd, 2008Many people now believe the United States cannot afford to continue with the policies of the Bush-Cheney administration. Those policies have undermined global support for America – a key part of national security – and have produced an economic expansion that has bypassed working families and looks as if it will bequeath years of house-price pain. (more…)