Wednesday, October 08, 2008

Coordinated rate cut plus In praise of Bernanke

Of course the Fed Cut rates early this AM. As part of a multi-central bank move to stem the spillover from the liquidity induced meltdown. Most would agree that such a cut was only a matter of time and definitely needed (I would have gone a full point at least), but

First the News: From NY Times.
"In an extraordinary move that reflects the gravity of the financial turmoil, the world’s central banks on Wednesday announced coordinated interest rate cuts as they try to restore confidence in the economy.

Included in the move to cut rates were the Federal Reserve, the Bank of England and the European Central Bank as well as those in Canada, Sweden and Switzerland."

Yesterday I was asked what I thought of Bernanke's handling of the situation. I said while I may disagree about some small items, the worst I can say about him is that he has done things largely as I would have done. Thus, I liked seeing others (yeah I am biased) agree with my assessment at a time when it is all too easy to criticize him. Again from the NY Times.

In Praise of Bernanke - Economix Blog -
"The Federal Reserve’s rate cut — part of a coordinated international effort — has put Ben Bernanke front and center for yet another day. Over the past couple of years, Mr. Bernanke, the Fed chairman, has come in for a fair bit of criticism. Some of it has been justified, I think.

But it’s also worth taking a moment to consider how well prepared he is for his current task. He spent his career studying the lessons of the Great Depression and, to a lesser extent, Japan’s 1990’s slump. (And his fellow economists have enormous regard for him and his work.) He now finds himself having to put those lessons into practice. His qualifications by no means guarantee that he’ll succeed. But it’s hard to imagine anyone who is more qualified to try to minimize the damage from the current crisis."

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