The Fed’s Oh, S%^& Moment
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Until today, I don’t think I was all that concerned about the economy. Yes, it was slowing. Yes, we’re probably headed for a recession. But these are natural business cycles. Even all the talk about stupid tax tricks didn’t have me all that concerned.
Then I heard that the European markets dropped 7-8% yesterday (I was trying to get back home after my car froze) and that the Fed was reacting by cutting the overnight rate by 0.75% one week before its regularly scheduled meeting.
If the Fed had made that cut next week at the regularly scheduled meeting that would be one thing. But to do it in response to the Euro markets and only one week before the scheduled meeting makes me think there is something to worry about now. The economy must be tanking (and quickly) for the Fed to react the way it did to try and shore up confidence. Of course, in my mind that has the opposite effect.
We’ll see what happens, but I can’t help but think this is the “Oh, S$%^” moment we haven’t been waiting for.