fed凭什么再降息！

after a record of global market, many noise started to come out to expect further rate cut from fed. followed by which, more volatility and plunge appeared. but is the rate cut neccessary?

my points: no solid reason to cut.

1. previous rate cut is clearly helping the relief the tension in credit crisis which was triggered by US morgage issue. but now is the credit market as bad as that time? and look at the unemployment rate, CPI, are there any significant deterioration?

2. talking back to the market plunges recently, the reasons are mostly due to the so called "lower than expected earning" from the corporates. this is pretty more related to a normal market correction or even recession if we think this into its worst implication. if so, cutting rate is sufficient to stop it?

3. standing in the shoe of fed, cutting rate has many negative impacts the US economy, even the world. now let's compare the pro's and con's.

lower rate will benifit those borrowers, who are usually the financial institutions like banks, and surely also the stupid ppl taking morgage loan and credit cards. however, neither will be good at the end: banks and funds simply need the cheaper cash to cover their butts that were seriously burnt in aug; on the other hands, lower rate for layman means both lower interests for repayment and also more aggresive in loan and consumption. out of these two, perhaps the latter will have more pain in long term.

ok that's enough for those appearingly good. now let's look at the negative impact. as we know, US$ is getting lower and lower. the cause, i think, is mainly due the morgage and credit crisis, as more and more foriegn investments getting out of US. definitely the previous cut also contribute in certain extent. so now, how? even lower? which makes more investors loss favor in US, make goods from import even more expensive, foreign exporters cut productions...etc. those at the end will help more depriciation in $ and faster into recession.

Conclusion: i do not believe that further rate cut will be reasonal and logical, at least not at this point in time.