[finnman69]

Which jobs? These cuts will not turn around the housing market which still has 2-3 years to deflate.

http://globaleconomicanalysis.blogspot.com/2007/09/righting-economic-ship.html

Bank of America (BAC) and Wells Fargo (WFC) both lowered their prime rate to 7.75% from 8.25%. In other words they have given up 100% of benefit of the drop in rates by passing it all on. But how many qualify for the prime rate, and more to the point who really wants to borrow in a clearly slowing economy unless they have to?

It’s going to take a lot more than 50 basis points to “right the ship”. And the ship I am talking about is the economy not just homebuilders. besides, the medicine is wrong. It was panic moves by Greenspan (with Bernanke voting with Greenspan every time), that created the credit bubble. Panic moves to lower interest rates can hardly be the cure. Bernanke has proven the inability to distinguish problem from solution. I talked about this in Bernanke Proves he is a Complete Fool.

Micromanagement by the Fed in response to every economic ill just creates bigger and bigger bubbles until it all blows sky high. It’s high time to abolish the Fed an give the free market a chance.

Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com/

[RockinRight]

Abolish the Fed? If so, then we wouldn’t have this discussion. Since it hasn’t been abolished, I’m thankful they cut the federal funds rate.

[AndyJackson]

I am curious, what happens when all of those European funds with lots of US$ demonminated CDO's get wind of the fact that Bernanke is willing to tank the $. I can see a few possibilities. One, the easy one is that they simply stop buying any more of the stuff, which in itself will tighten credit. Second, they try selling what they can which will tank the dollar even more. Third, they hedge their holdings by selling $ futures, which will also tank the $. If I sit in Europe and want to sell $ futures denominated in Euros, who is going to be the counterparty?

Unless of courese, the ECB wants to avoid this all by selling Euros and buying dollars. Can they buy enough $?

[Orange1998]

End of October is when we will see the disaster from the decision. The funds will close the books with cash in hand and never look back with all hell breaking loose. I would be out of the market by October for sure and into commodities.