Economy go down the hole~!

I remember watching “Tiny Toons” when I was younger and remember what the young Plucky Duck always says when he was playing golf.

“Ball go down the hole~!”

If you don’t remember or unfamiliar with Tiny Toons, Plucky Duck was supposed to be a green, younger, childish and spunkier counterpart to Daffy Duck. One version of Plucky Duck was a 6-year old version who always makes cute catchphrases that involved objects going down the hole.

Some examples include

“Snake go down the hole~!”

“Rabbit go down the hole~!”

And you get the idea.

Well today was the day when the Federal Reserve decided to send the interest rates, and the economy, down the hole, by cutting it at 25 basis points. Instead of creating that short-term surge, Wall Street reacted by dropping 300 points, which nearly wiped the gains made from the week before. Because the Fed has cut the rate, the dollar is again debased and will again lose its value against the Canadian dollar, the Euro and the Japanese Yen. We should all be aware by now that the foreign currencies aren’t gaining strength, but the US dollar is actually loosing value relative to these currencies. Economic weakness in America certainly does not help the US dollar in the case either.

With that said it looks like the “Economy is going down the hole~!” It has been said that the extent of the rate cut is an indication of what investors should expect from the 4th quarter results on Wall St. and it looks like the results are grim to say the least. On the other hand, many investors seem to be selling off in response to the seemingly weak rate cut and expected much more to boost their holdings. Either way, the rate cut did not work towards Wall Street’s expectations and this is one reason the DJIA decided to shave off 300 points from its index.

Debasing the dollar to meet short-term demands from Wall Street certainly have not worked to Ben Bernanke’s expectations and the only people who will suffer from his actions are those poor pensioners who depend on their CDs to maintain their quality of life as their cost of living becomes ever more unsustainable.


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