Seattle Bubble Forum Archive

The Fed's decision to lower interest rates to 1% on October 29th is yet another sign that the economy is going to get worse. None of the rate cuts over the last year have helped, and this latest one is unlikely to do any different.

More bad news today, as well. Consumer spending dropped for the first time since '91. The nimrods on wall street reacted by running up stock prices.

I am thoroughly convinced the psychology of the market is now completely out of sync with reality.

Yeah, the overall levels are still down, but we've had about 1200 points in the DJIA in the last two days.

Today's reaction was especially odd to me.

1) The fed cuts their rate 1/2 percent, to 1 percent, meaning there is almost no wiggle room remaining before we end up like Japan where the fed is paying people to borrow money. This is bad.
2) Consumer spending was announced down 0.3% for July - September. For a country whose economy is largely driven by spending, this is also bad.
3) Apparently commercial paper transactions are up about 8%. This is a good trend.

Nothing else really happened.

1 + 2 + 3 should not equal a rally.

Of course, yesterday was plain silly.

I am one of those who will keep contributing bi-weekly to my 403(b)(7) account--at about $20K per year (as I am over 50-years-old)--purchasing shares in two mutual fund index stock funds. At least until early next year. Then, if the market continues to still act wildly and going lower and lower, I will then contribute to my 403's money market fund until further notice.