Either I'm stupid or Fed is amazingly stupid. I'm not sure which one is the case though I really hope it's me.<p>The reckless mortgage boom and the ensuing crisis was caused when the Fed cut rates to avoid recession and made borrowing so easy. Now to fix the mess caused by lowering interest rates, they're trying to lower interest rates?<p>If you're bleeding from your wrists because you slashed your wrist with a knife, you don't slash your arm higher up to stop the bleeding from the wrists. Well true, it does stop you from bleeding from the wrists but now you're bleeding from the upper arm! Of course, you can stop the bleeding there by slitting your biceps. Pretty soon you're going to have to cut off your arm to "stop" the bleeding.<p>How about they just let there be a recession so the organizations that were investing poorly lose money and go out of business while the investors who were smart and focussed stay in the game?
Ok, call me stupid. I am a coder, not an accountant. Besides, I am Brazilian so I don't even know how american economy works exactly. Can someone explain what's this fuss is all about in good layman terms?
Interesting chart that shows the market may be worse off than expected:<p><a href="http://img.photobucket.com/albums/v124/BCStud31/99problems_graph.jpg" rel="nofollow">http://img.photobucket.com/albums/v124/BCStud31/99problems_g...</a>
Banks can lend out 10 times their assets.
When they have to do a write-down, they are reducing their asset base (and the amount they can loan) Does reducing the interest rate help banks (because the way the Fed does it with T-bill purchases)?
I keep hearing the word "recession," but no one has exactly defined what that is, or if we're "in a recession" yet. Are there values that define when you can say we're in a recession?
Recommended reading for anyone interested in what's going on in the world economy. These are just starting points.<p><a href="http://www.marketthoughts.com/z20060921.html" rel="nofollow">http://www.marketthoughts.com/z20060921.html</a> (yen carry trade)<p><a href="http://en.wikipedia.org/wiki/Fiat_currency" rel="nofollow">http://en.wikipedia.org/wiki/Fiat_currency</a> (fiat currency)