Comments on: Dollar Falls on Rate Cut Expectations as High as 75 Basis Points http://www.nakedcapitalism.com/2008/10/dollar-falls-on-rate-cut-expectations.html Sun, 22 Nov 2009 23:47:30 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: wintermute http://www.nakedcapitalism.com/2008/10/dollar-falls-on-rate-cut-expectations.html#comment-23631 wintermute Wed, 29 Oct 2008 15:25:00 +0000 http://www.nakedcapitalism.com/2008/10/dollar-falls-on-rate-cut-expectations-as-high-as-75-basis-points/#comment-23631 It is really annoying to see charts exaggerated for effect. I recall the saying that "there are lies, damned lies and statistics".<br/><br/>Why does News'N'Economics start the y-axis as 0.5 not 0 ?<br/>Obviously for visual impact! <br/><br/>We don't need it. Their readership are intelligent people invited to interpret data for themselves. <br/>I don't like government interventionism in interest rates. But I also object to bias and distortion from both sides of the fence... It is really annoying to see charts exaggerated for effect. I recall the saying that “there are lies, damned lies and statistics”.

Why does News’N'Economics start the y-axis as 0.5 not 0 ?
Obviously for visual impact!

We don’t need it. Their readership are intelligent people invited to interpret data for themselves.
I don’t like government interventionism in interest rates. But I also object to bias and distortion from both sides of the fence…

]]> By: wintermute http://www.nakedcapitalism.com/2008/10/dollar-falls-on-rate-cut-expectations.html#comment-23629 wintermute Wed, 29 Oct 2008 15:14:00 +0000 http://www.nakedcapitalism.com/2008/10/dollar-falls-on-rate-cut-expectations-as-high-as-75-basis-points/#comment-23629 Exactly right - artificially low interest rates punishes savers. In a narrow deflationary context you can argue that people will save anyway because cash holds or improves in real value. But hen you might as well argue the virtues of storing banknotes in your mattress. <br/><br/>Low rates also deter lenders from lending. None of this is the basis for a large, modern economy to function properly. Exactly right – artificially low interest rates punishes savers. In a narrow deflationary context you can argue that people will save anyway because cash holds or improves in real value. But hen you might as well argue the virtues of storing banknotes in your mattress.

Low rates also deter lenders from lending. None of this is the basis for a large, modern economy to function properly.

]]> By: eh http://www.nakedcapitalism.com/2008/10/dollar-falls-on-rate-cut-expectations.html#comment-23611 eh Wed, 29 Oct 2008 11:57:00 +0000 http://www.nakedcapitalism.com/2008/10/dollar-falls-on-rate-cut-expectations-as-high-as-75-basis-points/#comment-23611 The prospect of the markets tanking HARD if they don't cut is I bet foremost in their minds. And with the price of oil less than half what it was in the summer, they've had an excuse handed to them. Also Uncle Sam has heavy borrowing coming up. You really have to wonder if kicking savers in the teeth like this is a good long term strategy. The prospect of the markets tanking HARD if they don’t cut is I bet foremost in their minds. And with the price of oil less than half what it was in the summer, they’ve had an excuse handed to them. Also Uncle Sam has heavy borrowing coming up. You really have to wonder if kicking savers in the teeth like this is a good long term strategy.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/10/dollar-falls-on-rate-cut-expectations.html#comment-23573 Anonymous Wed, 29 Oct 2008 05:04:00 +0000 http://www.nakedcapitalism.com/2008/10/dollar-falls-on-rate-cut-expectations-as-high-as-75-basis-points/#comment-23573 Like you, I read all of the numbers and try and make sense of them. But, I'm also a big fan of what Kedrosky calls drive by statistics.<br/><br/>This past Saturday I spent a wondeful day playing golf in the mountains of Northern Arizona with a group of "normal" people. School teachers, high school football coaches,a couple of UPS deliverymen and a rep for a shoe manufacturer.<br/><br/>The UPS guys told me that for the first time in their memory, UPS was laying off people prior to Christmas. The shoe rep said that Nordstrom's had sent out a directive to all of their stores to cut inventory by 30% immediately and the school teachers and coaches didn't want to talk about sports. All they had on their mind was the economy. The last time I heard that from them was in 2000 when they couldn't quit talking about their tech investments. I sold everything the next day then.<br/><br/>The point is that any rate cut is spitting into the wind. The Fed needs to save its bullets. Let the whirlwind have its way and then use your policy tools. Don't waste them now. Unfortunately, these guys are divorced from the real world. Like you, I read all of the numbers and try and make sense of them. But, I’m also a big fan of what Kedrosky calls drive by statistics.

This past Saturday I spent a wondeful day playing golf in the mountains of Northern Arizona with a group of “normal” people. School teachers, high school football coaches,a couple of UPS deliverymen and a rep for a shoe manufacturer.

The UPS guys told me that for the first time in their memory, UPS was laying off people prior to Christmas. The shoe rep said that Nordstrom’s had sent out a directive to all of their stores to cut inventory by 30% immediately and the school teachers and coaches didn’t want to talk about sports. All they had on their mind was the economy. The last time I heard that from them was in 2000 when they couldn’t quit talking about their tech investments. I sold everything the next day then.

The point is that any rate cut is spitting into the wind. The Fed needs to save its bullets. Let the whirlwind have its way and then use your policy tools. Don’t waste them now. Unfortunately, these guys are divorced from the real world.

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