Filed under: Other issues, Market matters, Economic data, Personal finance, Politics, S and P 500, DJIA, Housing
Odds are that the people who pushed down the Dow Jones Industrial average by more than 153 points last I checked are going to be hugely disappointed when the minutes of the Federal Reserve’s August 7 meeting are released later today.
Remember that Ben Bernanke just lowered the discount rate — the fee that banks pay to borrow — 11 days ago. Though that sent the markets shooting to the moon, the impact as I expected was short-lived. Investors eventually said that was nice but we need more, a lot more. But Ben Bernanke doesn’t seem like a major move sort of guy. He also wants to make sure that the markets don’t do anything that encourages sleazy mortgage lenders and hedge funds to repeat the actions that got the economy into its current mess.
If anything, the Fed may cut the discount rate again before reducing the interest rate. Even if it did cut the rates, the market is so jittery that the impact may be short-lived. Home prices had their steepest drop in 20 years and the market shows no sign of rebounding anytime soon. Though the economy continues to be strong, consumer confidence nosedived in August.
Ben Bernanke isn’t a magician who can wave his magic wand and make the dark clouds hovering over the economy change into sunshine and rainbows. Whatever decision he makes will disappoint people and give him grief from Democrats in Congress.
But as the expression goes, that’s why he gets the big bucks.
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