What IS the Federal Reserve's Job?
The Fed's job is to ensure long-term economic growth and price stability.
It is not the Fed's responsibility to bail out lenders or borrowers in the subprime mortgage mess or any other mess businesses and consumers may run into. If the truth hurts, well so be it, but let's not forget this basic fact.
The Fed would prefer that market mechanisms, even though messy, correct the subprime problems.
The recent decline in the stock market, which still leaves the S&P 500 index up about 3% on the year, is not going to drive Fed policy decisions any more than the fact that the bond traders, mortgage brokers, builders and realtors are making less money this year than last year.
If the Fed does not cut rates next time the board meets, do not be surprised, it's the market.
I keep my ears on the market so you don't have to.
E-mail me at info@p2funding.com
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