That is the big question. Right now the cut has had little effect. Dow futures initially spiked 200 points, but now they are back down only +50 from before the cut. That is BAAAAD.
Why BAAAAD?!
All we’ve heard for the last 24 hours is how our markets would PLUNGE today...all doom and gloom. May still happen, but I don’t see it right now.
The +50 figure reflected that analysts anticipated a move by the Fed and probably figured it would come early...as has now happened. In other words, the cut was already factored into the futures market.
If world central banks follow the Fed, I hope things will settle down. We’re not out of the woods, but we’re not completely in them either.
That’s a matter of perspective. BAAAAAD to me would be a 600 point plunge which would likely have happened like our overseas friends relative stock market plunges if not for the rate cut.
Futher, the Fed, Wall St. and Washington are still only talking about treating the symptoms, not the cause. Want to solve the credit crunch problem (you may as really call it a lack of investor confidence problem)? Ask the two or three dozen of the above group that actually KNOW the real numbers behind door number three and disclose them. Then, as ugly as those numbers are, investment might just simply stagnate instead of fleeing America until managers with integrity, balls and brains step up to fix it.
Unfortunately, those who can disclose the real numbers might face hard time at worst of international embarrassment at best so we’ll keep playing this charade. That is until this fiat economy inflated by decades of consumer/government overspending collapses.