Thank you Cramer… er, Mr. Bernanke
August 18th, 2007 by Grant in: Economics, InvestingLast Friday, the Fed cut the discount interest rate by a full 50 basis points in an attempt to difuse the summer’s credit debacle. This led to a complete reversal of the overall weeks market decline. I have to wonder how long this support for an ailing market will last.
At the beginning of the month, market guru Jim Cramer had an on-air breakdown that the Fed just absolutely has to do something about this fallout in the market…
Of course, the more skin in the game you have, the more self preservation is required… if you know what I mean.
Now that the Fed cut the discount rate, Cramer all but took credit for the action, without saying it in so many words, and then backpedaled. Of course, economists basically laughed at this notion.
Evidenced by the latest cut, I believe the Fed is taking more interest in the credit woes, but also additional factors relating to the economy (jobs, pay scales, retail sales, etc) which may lead them to cut the key funds rate sooner than I had thought.
It’s evident the Fed is willing to step in and support the markets, but is it for the right reasons?
Originally, my thought was that funds that gambled on sub-prime credit and lost should be allowed to dissolve. However, we’ve got some big players that are being bit by some major lending institutions that dramatically affect pensions and retirement accounts.
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August 19th, 2007 at 1:51 pm
Sell rallies, or buy SSO and TWM…more shoes have yet to drop…