Here's an interesting take on the (in)signficance of the Fed's move that was posted over at Mish's Blog
Lee makes the case that the Fed is much tighter than anyone thinks. Let's take a look at the key snips from Throwing a Bone To A Starving Dog.
The Fed had to do "something" to give the world the impression that they were actually "doing" something. What did they actually do? Not much. The Fed did not lower rates. It didn't even increase the monetary base. It just put on a show designed to keep the public con going. All Friday's move effectively did was to lower the premium for these emergency loans to problem children by 1/2%. And right now Countrywide is the Fed's seriously delinquent teenager in big trouble with the law.
As of Wednesday of last week the total outstanding [discount window]was $294 million. Not billion, million! Compare this with the total size of the Fed's asset base of over $800 billion, and you get some idea of how truly insignificant the Fed's symbolic ploy was.
Not to be nit-picky, because you're right that foreigners will get out of dollar based investments, but why would this push them into US real estate and infrastructure.
Gee, my T-Bill is losing value against the (any currency), so I'll buy real estate priced in dollars. That makes no since, because real estate is falling against the dollar and the dollar is falling against everything.
If I'm a foreigner, I'm buy utilities in China or something.
On a related note, I wonder how profitable it would be to simply pick up and move to Dubai. I am sure real estate is quite profitable there and will be for some time. The weather there should be nice and warm, too.
Comments
Gee, my T-Bill is losing value against the (any currency), so I'll buy real estate priced in dollars. That makes no since, because real estate is falling against the dollar and the dollar is falling against everything.
If I'm a foreigner, I'm buy utilities in China or something.
I really really doubt you would want to live in Dubai.