FED Way Behind Curve

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FED Way Behind Curve

posted on Oct 07, 2008 12:00PM

As global equity markets continue to crash despite a series of bail-outs, the FED's hand to cut interest rates will soon be forced. From past history of FED cuts, today's situation is quite ironic as noted below.

Heavy Au capping today - VHF

...Two wrongs don't make a right, but isn't it ironic that the Fed Funds Rate is currently one hundred basis points higher now than it was back in May 2004? Yesterday, the S&P 500 fell to price levels not seen since May '04, and back then the housing market was right in the middle of its epic boom while stock markets were right in the middle of a multi-year bull. Currently, home and stock prices are in free fall, but the Fed Funds Rate is at 2.00% versus 1.00% in '04.