Zelfs de oorlogseconomie trekt het niet meer. En dan is er een echte crisis.
'NEW YORK (CNNMoney.com) -- With Wall Street hit by a crisis of confidence, many are hoping the nation's central bank can save the day.
The Federal Reserve's main weapon: Cutting interest rates, and most economists expect a big slash of three-quarters of a percentage point on Tuesday.
But even those economists in favor of such a move concede it will do little to calm investor fears.
"It doesn't address the fundamental problems, which is that financial markets are just scared," said David Wyss, Standard & Poor's chief economist. "The Fed is trying, but they don't have a magic wand to wave and make everyone confident again."
In the past week, investors have come to expect even more aggressive action from the Fed.
The sudden collapse of investment bank Bear Stearns sparked fears that other Wall Street banks could be at risk. Shares of Lehman Brothers (LEH, Fortune 500) plunged more than 25% in morning trading on Monday. Concerns that another institution could collapse is one reason that the Fed will probably deliver another big rate cut.
But Rich Yamarone, director of economic research at Argus Research and a critic of the Fed's rate cuts, argues the Fed is feeding current market fears with emergency moves like Sunday night's decision to make loans directly to Wall Street firms instead of just banks.
"Anytime you act on a Sunday night during '60 Minutes,' if you don't think that will engender fear, I don't know what does," said Yamarone.
He added that the Fed should not be trying to prevent failures by Wall Street firms.
"It was almost naive to think this wasn't going to happen to someone," he said. "You don't have a credit crisis of this magnitude and have every player sidestep calamity." Issue # 1: America's money.'
Lees verder: http://money.cnn.com/2008/03/17/news/economy/fed_response/index.htm
The Federal Reserve's main weapon: Cutting interest rates, and most economists expect a big slash of three-quarters of a percentage point on Tuesday.
But even those economists in favor of such a move concede it will do little to calm investor fears.
"It doesn't address the fundamental problems, which is that financial markets are just scared," said David Wyss, Standard & Poor's chief economist. "The Fed is trying, but they don't have a magic wand to wave and make everyone confident again."
In the past week, investors have come to expect even more aggressive action from the Fed.
The sudden collapse of investment bank Bear Stearns sparked fears that other Wall Street banks could be at risk. Shares of Lehman Brothers (LEH, Fortune 500) plunged more than 25% in morning trading on Monday. Concerns that another institution could collapse is one reason that the Fed will probably deliver another big rate cut.
But Rich Yamarone, director of economic research at Argus Research and a critic of the Fed's rate cuts, argues the Fed is feeding current market fears with emergency moves like Sunday night's decision to make loans directly to Wall Street firms instead of just banks.
"Anytime you act on a Sunday night during '60 Minutes,' if you don't think that will engender fear, I don't know what does," said Yamarone.
He added that the Fed should not be trying to prevent failures by Wall Street firms.
"It was almost naive to think this wasn't going to happen to someone," he said. "You don't have a credit crisis of this magnitude and have every player sidestep calamity." Issue # 1: America's money.'
Lees verder: http://money.cnn.com/2008/03/17/news/economy/fed_response/index.htm
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