Bernanke and Rate Cuts

I particularly enjoyed this read today. Its message, in part, is a simple one, which should only be a review even to casual market participants: The Fed’s job is to ensure stable economic growth and price stability, not to ride to the rescue of particular industries and firms, at least not when the general economy is relatively healthy. The opinion begins:

And so did a cry of lamentation arise from the multitudes unto Bernanke: Spare us, Oh Lord, from the wrath of subprime.

From the House of Countrywide wailing was heard, from the land of Dodd and Schumer there was gnashing of polls, and from the Kingdoms of Bear, Lehman and Cramer the rending of fine Italian garments: Set your righteous hand, glorious and merciful Fed, against our enemies among the rating agencies, the risk-averse and short-sellers. In your power and majesty, you need only say the word and interest rates shall fall, liquidity like manna shall descend from the skies, and easy credit shall flow once again across the parched and barren land.

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