The fed announces even more stimulus via securities jiggering but aren't sufficiently upbeat in justifying it. The markets head for the doors
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Ah, but that's the whole point. There's both financial and psychological crises here. Try as they might to shore up the financial issues, the psychological issues are left to simmer each time until they boil over and affect the financial side of things again. There's no cure for a crisis of confidence, except for people to just wake up the next day and try to be a little more optimistic. The Fed cannot make people do that, but if the Fed goes about what it does do as if there's something really wrong, then no matter what they do it will be counter-productive.
That's why Fed chairmen tend to be very bland and cryptic in what they say.
Regardless, some read lots into it. A slightly not so bland statement and investor sentiment goes nuts.
And people wonder why they don't "tell the real story". ;)
It reminds me of the old Kremlinology of the cold war. There was no real data, so people would try to read the tea leaves of who was standing where on top of Lenin's tomb on Mayday.
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Ah, but that's the whole point. There's both financial and psychological crises here. Try as they might to shore up the financial issues, the psychological issues are left to simmer each time until they boil over and affect the financial side of things again. There's no cure for a crisis of confidence, except for people to just wake up the next day and try to be a little more optimistic. The Fed cannot make people do that, but if the Fed goes about what it does do as if there's something really wrong, then no matter what they do it will be counter-productive.
Reply
That's why Fed chairmen tend to be very bland and cryptic in what they say.
Regardless, some read lots into it. A slightly not so bland statement and investor sentiment goes nuts.
And people wonder why they don't "tell the real story". ;)
It reminds me of the old Kremlinology of the cold war. There was no real data, so people would try to read the tea leaves of who was standing where on top of Lenin's tomb on Mayday.
Reply
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