I was reading briefly on their speech last night regarding the sub-prime crisis. Basically, every analyst who read the speech interprets it differently. Most however seems to think that the Feds will rescue them because they are "ready to act" when necessary.
The key point however, is that they are ready to act if it spills to the broader economy. That's the keyword. Another is that they will not bail out speculators and investors who undertake too much risks.
Translated, the share markets are not their concern. However, if they see a drop of numbers in the general economy, they will act. However, acting on it does not necessarily mean cutting of interest rates. In nowhere did they mention anything about rates. Meaning, it could be government policies (like our CPF changes), or injection of liquidity, or even formation of some agency.
I'm still firm on the belief that they are trying to undo the damage of "easy money", and they will not cut rates so easily. The general economy of the US on the contrary has been steady. Everyone has been too focused on what US was like, but did not look at where US is going to be in the future.
My general thinking is still the same. Economy will slow, but it will not lead to a recession, provided there are no "external" factors.
This year is going to be interesting... Next year even more.
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