The Nation: US Fed slashes its primary discount

[NewsBot]

The US Federal Reserve yesterday lowered its primary discount rate by a hefty half of a percentage point to....

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[K2]

Lunacy - lets prolong the original problem of easy (cheap) credit - oh well another rally to sell.

[LivinLOS]

Too much money.. Lets add more..

Volker where are you ??

[K2]

Got to enjoy these guys Seft .... I wonder if the FED will open a Bubble Gum factory

[JayBee]

Originally Posted by K2

Lunacy - lets prolong the original problem of easy (cheap) credit - oh well another rally to sell.

Originally Posted by LivinLOS;

Too much money.. Lets add more..

Volker where are you ??

Well said, guys, my reaction exactly.

I was at the office early, when a gal came in with a big smile on her face, virtually beaming, and said, "Have you heard? Fed cut the discount rate 1/2%! Isn't that great!"

No, I don't think so, said I.

Although she was unable to stop smiling, she combined that with a look of disbelief, and added, "But it's good for our business. And don't you own stocks? How can you say that?"

"Yes it is, and yes I do, and I say it simply because it is the wrong thing to do."

Still grinning, she then looked at me as if I was just some poor crazy mad person, not to be chastised, but to be pitied for my obviously eccentric way of thinking.

I merely added, "Printing more money is not the cure-all for every economic woe that it's cracked up to be!"

I looked at her and she at me, and silently we thought the same thing, "He/she just doesn't get it!"

[LuckyB]

The last 25 years of my professional life have taught me to question both facts and my assumptions, leaving me both cynical and humble. I agree 100% with what has been posted so far by my fellow and esteemed board members; the FED made the wrong move. And yes, we need a cigar-chewing curmudgeon to give a dose of medicine.

And yet, this problem in liquidity could (a twenty- percent chance?) get very, very ugly, before it is over. I just don’t know the scope of the problem. When I read about a run on the banking arm of CFC (Countrywide Credit, and maybe I am too close to it as I can walk to their headquarters from my home), complete with lines of customers withdrawing deposits ala “It’s A Wonderful Life”, I get a chill.

And yet it is OK. Capitalistic systems need a good recession/depression every now and again to get sanity into the system.

[JayBee]

Originally Posted by LuckyB;

And yet it is OK. Capitalistic systems need a good recession/depression every now and again to get sanity into the system.

I agree. Recessions are nature's way of giving those who unwisely overextend themselves(usually as a result of greed or profligacy in their spending habits) a good kick in the pants, and nature's way of rewarding those who exercise prudence in their business dealings. It is the economic equivalent of Darwin's theory of survival of the fittest.

The current approach of the economic regulators is to avoid recession at all costs, with the attitude that it can be put off forever. They seem to believe that they have become so adept at their manipulations that there need never be a recession again. In doing so, they commit the sin that ultimately does in the hero in every one of the Greek tragedies, that being the sin of hubris. They put themselves on the level of the Gods in thinking that they can somehow permanently alter the course of nature.

Let's just hope that they don't create an economic tragedy to rival those of ancient Greek dramas before this economic cycle is played out.