Het Neoliberale Geloof 91

Kortom: rente omlaag waardoor mensen nog meer gaan lenen en de ballon nog harder wordt opgepompt waardoor de klap straks nog harder wordt, maar wie dan leeft wie dan zorgt.

'Hard Times A-Coming
The Bush Dollar Trap
By DAVE LINDORFF

The first government response to America's sinking economy was denial. We were told as recently as a month ago by administration officials and Wall Street charlatans that the economy was robust and that there would not be a recession. Now we are told that the economy is in trouble, but that the government is taking decisive action to shore it up.
We saw how effective the first "decisive" proposal was. Bush announced a plan to give every adult taxpayer (no poor people, thank you) $800 in a tax rebate this April. The stock market responded to this idea by dropping a few percent. The idea, as I wrote in my last column, was stupid to begin with because, with the US no longer producing much of anything, all that bonus borrowed cash would end up getting spent on imported goods anyhow, doing next to nothing for the US economy.
So now the Federal Reserve has weighed in with a 3/4 percent cut in the Federal Funds rate. Even though commercial banks followed suit, lowering the prime lending rate by a similar 3/4 percent, the stock market showed how much good that move would do, dropping almost 300 points at the opening bell today--about what it had been expected to do even without an interest-rate cut.
There was one place where the Fed's action did have an impact though: the exchange value of the dollar in foreign currency markets. No sooner was word of the interest rate cut announced, than the dollar fell against major currencies like the British Pound, the Euro and the Japanese Yen.
And there's the rub. The Fed is in a trap. It cannot cut interest rates much more without causing a collapse in the dollar, which, because of the huge US trade imbalance, and all those consumer goods and raw materials--especially oil--that are imported--would lead to serious and politically dangerous inflation. And there is another constraint: with the current rate cut, the US now has the third lowest interest rates in the world. If the Fed makes another cut, as it has hinted it might in a week or so, only Japan would have a lower interest rate environment than the US. That makes the dollar a very undesirable currency for foreigner investors, which means they won't want to hold dollars, and they won't want to hold US stocks.
Yet if the Fed doesn't cut interest rates even further, the stock market will continue to plunge, which again discourages foreign investors from pouring their money into the U.S., which in turn puts downward pressure on the dollar.
This was all predictable.'

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