tarakela, pretty much agree with your post cept for the effect...

tarakela, pretty much agree with your post cept for the effect of a rate cut. I agree that in the medium/long term (2-3 months) a rate cut will not forestall the seemingly inevitable drop. However, in the short term it may well lead to a rally especially if it is linked to ongoing increases in the money supply. I believe we've already seen the effects on this last rally - it was too far too fast. Couple a rate cut plus increased money supply plus the massive amount of disinformation being pumped out by the business media - the cheerleaders of the bulls - and its possible we'll seee a price spike up on an announcement. Thats my biggest fear really.

The rate cut seems pretty much inevitable. The questions are when and how much. Given that the usa fed made their last reduction, in the interbank rate, outside of normal FOMC meeting times, I believe that it is quite possible the next cut may be announced this week, ahead of the fomc meeting on the 18th. To do so may seem like panic, but may also seem like the fed is willing to act. The bbankie put. The spin doctors will all say the fed has done the right thing, that its showing solid leadership, blah blah, so the major effect will be to boost the market (just like georges speech and bbankies liquidity injection). It doesn't matter if its all bs.