The FED didn’t screw up anything. They did exactly what they had announced WELL in advance that they were going to do. People overreact to nearly everything and since people make the decisions that send the market where it ultimately goes, the market overreacts to everything. The market got TOO bullish because the people trading it got too bullish. The temptation to squeeze shorts was just too good to pass up once the market became overextended. The market had to pay the price for its excess. Then, like a bunch of crying babies, the participants started whining for the FED to extend it an olive branch. The FED’s mandate is NOT to support the stock market. The FED did what it had announced it would do. A few years ago, the market started whining about FED surprises. The FED responded with a greater amount of transparency and started telegraphing its moves. The funny part of all this is the notion that higher interest rates are destined to kill the market. Historically, we are not even close to prohibitively high interest rates. And the market has a history of RISING (regardless of exceptions) with rising interest rates because the demand for money increases as the economy strengthens. The players got spoiled by rates at of near ZERO for so long they forgot what normal rates even look like. Once a lot of states and local governments start going belly up because the historically low interest rates killed their pension assumptions, you will figure out one of the reasons why the FED did this.
:: The FED didn’t screw up anything. ::
I reject your assertion that I said or implied such.
The monster created by A. Johnson has become a neo-Communist institution.
I agree the Fed’s official mandate is not and should not be the equity markets; however, that is how it has acted since the Clinton years. It provided rock bottom interest rates for one single reason. To support the equity markets.