On Why The Doomsayers Are Wrong And Other Links

  1. dansecrest says

    That WSJ article on “Why the Doomsayers are Wrong” was worthless, in my opinion. Of course, I’m a doomsayer. Still, “The Fed on Hold” argument seems ludicrous. The Fed is on hold because the economy stinks. Here’s an excerpt:

    “2. The Fed on hold
    Investors have been incorrectly trying to anticipate when the Federal Reserve will start raising interest rates for months now. At the start of 2010, The Wall Street Journal’s survey of economists showed that most anticipated the Fed would start boosting rates in September.
    That’s almost unthinkable today. Indeed, J.P. Morgan Chase recently changed its forecast to push the first rate move to the end of 2011, from April 2011. That means excessively low interest rates will remain a positive force for both the economy and the stock market for an extended period.”

    Do I need to explain why this is ridiculous?

    1. Edward Harrison says

      You know, Dan, I am one of those doomsayers too! After all, this site IS called Credit Writedowns – not exactly uplifting. But, I like to throw in a few articles that take a different view to keep us honest. If we don’t look at things from that angle, we’ll miss some of the data.

      On the Fed, I’d agree the Fed’s on hold. But it seems a lot more unpredictable as to what they are going to do. The political pressure is mounting from both sides and that puts the Fed in an awkward position. My sense is they will err on the side of less liquidity but keep rates low.

      1. dansecrest says

        Absolutely, I’m glad to see the contrarian references (contrary to the doom and gloom inclination).

        Also, I agree about the Fed. Whatever they do will be reactive more than it will drive the markets, in my opinion. For a couple of years (2007-2008), the Fed lowered interest rates as the economy slowed. The market always jumped at the prospect of interest rate declines, but the downward trend was the ultimate market driver, not the Fed’s actions which attempted to moderate the basic trend. I foresee more of the same…

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