Eventually I'll get into who I am and all that jazz that might make me sound like someone with a bio that kind of, sort of knows what he/she is talking about.. explain the name of the blog and all that good stuff that people find so gosh darn interesting.
But seeing that the past few days have been a policy maker/analyst/dork's either dream or nightmare, I figure I might as well chirp in—that is after all what I set out in my mind to do.
There's a ton of articles and blogs out there waxing on and on about what's going on down in D.C. and along Wall Street. They're all saying the same thing in this order:
2) Who knows where we'll go from here.
3) This is what happened.
4) What to do next?
But here's one thing I'm not hearing—what Federal Reserve chairman, Ben Bernanke did today (not cutting interest rates) should have been the policy months ago. You'll have to believe me when I said that inflation was a bigger cause of concern than bailing out Wall Street, but I've been saying it for months. The reasoning was simple: the worst had yet to come to Wall Street. Cutting interest rates was a short sided, 300 yard Hail Mary pass. Banks weren't going to be saved by lower interest rates since the housing bubble had already burst and it was probably too late... they could try to pass the buck on their bad investments, but who wanted them? Apperently only Bank of America... at way less than what the firms were worth a year ago.
Meanwhile, inflation was something the Fed could attempt to control. It's not as sexy, but it does matter. I know, inflation slowed in August (yay! finally!), however if the Fed had cut rates today I would have fully expected that inflation would be back on the rise even with lower oil prices. That hurts more Americans than keeping (Enter Wall Street Firm Here) afloat, or more percicely, keeping money cheap so that these Wall Street firms can live another month or four on their own before the go all Lehman on us.
I am no financial expert... I don't know where to put your money right now (short oil? Pray that the Volt really is the next big thing?) But I do know that from a policy stand point, inflation has been too high for too long—and it didn't need to be this way. The problems on Wall Street were obvious six months ago, but instead of getting inflation under control back then, the Fed hoped that they could kill two birds with one stone.
Unforutually, they missed both birds with that stone.
10 Wednesday AM Reads - My midweek morning train reads: • No One Wants Your Used Clothes Anymore (Bloomberg View) • Follow the Money (Of Dollars And Data) • The Antitrust Case A...
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