he Dow Jones Industrial Average is up 0.18% for the month of August...Just another ho-hum month.
Let's just ignore the fact that the Dow tumbled nearly 1,200 points between August 8th and August 16th – that happened BEFORE the Federal Reserve waved its magic wand and made everything better.
The wand that the Fed waved was a half-percent reduction in short-term interest rates. The stock market responded immediately with a robust rally...and the magic continued yesterday, as the Dow added another 145 points.
But the Fed's magic is not all that magical. Like a warm cup of cocoa on a cold winter day, it makes you feel better. But when trying to cure serious economic maladies, rate cuts and warm cocoa provide identical efficacy.
The nation's bankrupt mortgage-holders aren't any less bankrupt today than they were before the Fed reduced shortterm interest rates. And the nation's almost-bankrupt
mortgage-lenders aren't any less almost-bankrupt. But the Fed's magic makes everyone feel better; it makes them believe that everything's going to be okay. And so share prices go up...for a while.
5 comments:
咣当，连千户也不看牛了。
的确是这样，天天听NPR，觉得问题很严重呢。看看， Gangs Find New Source of
Revenue: Mortgage Fraud。 呵呵。
hehe, bobby, 整个今年的长期是不错的，
但是这一个月还得谨慎。
Fed is in a tough spot. Rate cut or not, something gets hurt. The covering up of the current problem would only result in a future disaster. However, it is likely to happen, given the history of the street and the government, which is not a bad thing for the market, at least for a while. My 2 cents.
adam, you are cool hehe
to hooper,
yes, I agree on your opinion to some extend.
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