"I think Fed Chairman Greenspan's swan song, a quarter point hike in the Fed Funds rate, was a mistake. Enough already! Uncle!
With housing starts slowing, the GDP slowing and with last year's wage increase the lowest in percentage terms since 1996, I would suggest that there was no need for a rate increase, which only means that the odds of further deceleration in the economy increased today with the superfluous rate increase."
With housing starts slowing, the GDP slowing and with last year's wage increase the lowest in percentage terms since 1996, I would suggest that there was no need for a rate increase, which only means that the odds of further deceleration in the economy increased today with the superfluous rate increase."
I agree with MMM, he is not an economist (neither am I). I also agreed with him on his point about Greenspan's last rate change. I cannot make a persuasive economic argument like MMM but I considered the Greenspan's move from a leadership and transition stand point.
Making significant decisions on the eve of a leadership change isn't good form. In this case it probably forces Bernanke to sit on his hands and wait for a crisis as Greenspan tightened one last time - "Uncle." Bernanke may not have a chance to make some small moves before he faces more significant challenges. His ability to lead out of the gate was weakened by Greenspan's final call.
Comment Preview