The Fed is in a panic, and yesterday's markets are just a foreshadowing of a terrifying future
Rate cuts alone — even one as deep as Tuesday’s — are unlikely to provide a powerful enough fix, especially given the severe problems in the housing market. Rate cuts cannot forestall foreclosures, turn bad loans into good ones or undo the worse effects of the housing bust on consumer spending. At best, rate cuts may buy some time for the economy to stabilize without being derailed along the way by damaging market panics.
