AMEN !
I wish he were the head of the FED. We ABSOLUTELY do not need a rate cut. The market keeps begging for one.
Look at oil prices.
Look at overall inflation.
Wheat prices are setting records daily.
You are right. Those stupid rate cuts caused many people to become complacent about risk. It was the proverbial "put" under the market. Why do people think we can reflate our way out of everything ?
Everyone knows that is what caused housing to appreciate at an unsustainable rate over the past 6-9 years. The money managers and bankers and financiers need to be forced to take a step back a bit. The credit markets are doing what they are supposed to be doing. They are freezing up, until things become more transparent. Businesses, lenders, people involved with loads of money need to re-build their credibility. Why would investors/lenders make loans if they know there is a high probability it won't get paid back ? A lot of people went way to far, stretching with no doc loans, tranching and slicing and dicing with CDO's, creating vehicles and transactions that didn't exist only just years ago. They sucked Moody's and Standard and Poors and everyone else into believing there was little risk.
Sure some people are getting hurt right now because of the new credit dynamics playing out. But had it kept ongoing the eventual bust would only hurt even more people.
So yeah. Keep the rates up. Don't bail out these folks who knowingly took major risks, and tried to mitigate it with financial shennanigans.
Edited by nimblebear, 08 September 2007 - 09:11 PM.
OTIS.