Quote:
Originally Posted by Axeman
The expectation in fact is next week for the Feds to cut the rate. Which why the stock market had a bounce today
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Yup, and cutting the interest rate in theory will ease the credit crunch, but it will once again put MORE pressure on the US dollar downwards.
One of the thing that most people forget it that you need to look at the stock market in relative values. With the US dollar dropping, all US based investments are losing money. The Dow would have to go up an additional 30-40% just to recoup the net worth loss in the US dollar. Effectively, you would need a Dow 17,000 to be the same as Dow 13,000 was 5 years ago, ignoring any inflation in between those points.
I am sure that some people are concerned that a Japanese style bubble pop may be in the US future.