Posted: 4:31 am
October 9, 2008
OK, everyone take a deep breath and hold it for a few seconds.
Now repeat that process. Do it as often as necessary to clear your head. We all need to get a little extra oxygen these days.
Notice that you are still breathing. And your kids are still healthy. And even if your finances are tattered, you still probably have more than enough in assets to appreciate that you really are living the "American Dream."
Take a look around your house. You see television sets - plural? Food in the fridge? A car out front?
You are more than fortunate.
It's hard to appreciate what we have with all the bad stuff that's been going on lately. You probably don't need me to tell you that the Dow Jones industrial average dropped another 189 points yesterday and is now officially in territory that we in the financial news business refer to as scary.
I wanted to start this column with some perspective because now I'm going to revert to the inevitable bad news.
The big drop in the Dow yesterday was particularly troublesome because it came on a day when the stock market got what it wanted - a big cut in interest rates.
And not only a cut from the Federal Reserve.
This drop in borrowing costs was one of those rare worldwide events - a case where the financial leaders from a bunch of countries got together and agreed that, yes, things are bad. So they cooperated like they seldom do.
Still, the stock market took a beating. Why? Because what the central bankers decided to do with interest rates is irrelevant.
Under normal circumstances even the hint of a rate cut from Federal Reserve Chairman Ben Bernanke would have had Wall Street popping the corks.
But in case you haven't noticed these are not normal times.
First off, the reduction of the so-called federal funds rate yesterday to 1.5 percent was really meaningless since the financial markets had already taken it upon themselves to unilaterally anticipate that move.
And a drop in the so-called discount rate - which the Fed charges banks to borrow directly from the government - is also of little consequence. Washington already has the spigot opened all the way for any financial institution, American as well as foreign, that needs dough.
Rate cuts by the Fed are mostly symbolic anyway, an exertion of the government's influence over the money markets. But this time Wall Street got a different message from the Fed - it could sense that the folks who make our monetary policy are nervous and desperate.
Investors don't like nervous leaders.
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