Should the Fed 'Rescue' the Financial Markets?

Should the Federal Reserve come to the rescue of the financial markets by cutting interest rates?

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"The financial institutions took these risks at their own volition; they should bear the consequences of their foolishness. If they go under, so be it. It is not the responsibility of the taxpayer to subsidize irrational exuberance!" - Alex, Virginia

"The Fed is handling this as it should be handled. If the Fed were to put in a deep cut at this time it would only contribute to a financial panic. Interest rates at this time are quite low and to lower them could easily lead to inflation. Lowering the prime rate will not solve the subprime mortgage loan situation." - Fremont

"An ease is a given now after repo #3. Look again at what Kramer was saying last week when everyone thought he was off his rocker. This isn't about inflation any more. When WAMU and Countrywide can not sell their prime jumbo loans in the market at any price, well, they have no choice other than to stop making jumbo loans! That will put the final knife in the heart of the housing market. I am in the institutional bond business ... Not even AAA rated Agency securities trade now." - JP 

"The only people who can't see a depression are the idiot tax increasers of both parties in Congress and Ben Bernanke." - Truth Sayer in DC

"That's a very loaded question, to which my answer would have to be no, that the Fed's job is not to 'rescue.'  That being said, if you ask the question whether I think the Fed will lower rates in the near future, my answer would have to be 'yes.' My belief is that the credit situation has the macroeconomic impact of a large interest rate increase, as the cost of borrowing has gone up, in many cases dramatically, over the past month... I think they are trying at all costs to avoid cutting rates in what could be perceived as a 'panic' move, but I think the economy will unfortunately give them ample reason quite soon." - Richard C.

"No way should the Fed get involved. The free market will determine price faster than a bunch of theoriticians ever dreamed possible." - Larry D., Illinois

"Absolutely not... The subprime lending mess was caused by greed... I have 3 employees who make $500 a week gross and they are married and have kids. They have big credit card debt, car payments, and expenses, and yet banks and subprime lenders FOUGHT over them to give them loans. They should of never been granted loans, period. Who was the brain surgeon that fought over them? Give me a break!" - G.

"I don't believe the Fed should step in at all here, they need to let the market sort this out. For those of us on the sidelines, who didn't buy real estate during the bubble, will be further priced out of the market if the Fed cuts rates. We need to shake up the real estate market and burst the price bubble further to where home prices make more sense. Prices are still too high. The Fed should not punish those of us who responsibly sat on the sidelines." - Jeff C., California

"The Fed is interfering with normal business ups and downs. They will push inflation HIGHER down the road. They need to stay OUT!" - Larry S., Nebraska

"More corporate welfare from an organization that pretends to believe in small government? I think not. Stop wasting my tax dollars bailing out banks." - LZ, New Jersey 

"The most sensible cooler heads prevail. The Big Fries played too hard with risky assets, and what is worse, sold them to others and so they deserve to cook. What should IMMEDIATELY be restored is the shorting on an uptick rule. I detest the concept of short-selling anyway, but this gives short sellers an unfair advantage. In any event, in markets like these, real investors (as opposed to traders or those looking for a quick buck) ultimately will be richly rewarded." - Christopher, New York City 

"I just got off the phone with my mortgage lender here in Brick, NJ and with a credit score of 720 I cannot refinance into a mortgage that is not at least 2-$300 higher than what I am currently paying after my mortgage has adjusted upwards $200 each six months for the past 2 years. On top of that I own a small business selling medical supplies and pharmaceuticals to other distributors across the country and they are having more problems than ever with people not paying their bills. If the Fed doesn’t do something FAST there is going to be a whole mess that no one is going to want to clean up." - Gregory B. 

"'Most people are fools' - Socrates. 'There are two things infinite in this Universe, Space and Human stupidity" - Albert Einstein. 'There is no means to avoid the final collapse of a boom brought about by the expansion of credit' - Ludwig Von Mises.  Take note, there is no means, not intervention by God, not even the Fed, to avoid the ramifications of our foolish stupidity." - Ron P.

"The problem is not interest rates. They should not be cut as it would send a wrong message to the markets and tank the dollar. The problem is liquidity. I received a quote on a 10/30 loan on a NNN Walgreens 90 days ago at ten year Treasury plus 90 bp. Today I got a quote at plus 180 bp. That is a panic situation, not an interest rate situation. Attack the problem which is confidence, not interest rates." - Bruce F.

"Have one of your negative cut experts tell me what on earth would be hurt by a .25 basis point cut? I can't imagine what damage that would cause and nobody says anything about it. All they say is the Fed doesn't need to cut?"  - Kenneth H.

"I am furious that the Fed is injecting money to help credit markets. They are the ones who caused this problem to begin with and should not be recreating the problem of excess liquidity. If the credit markets got into trouble because of excessive greed, indirectly supported by the Fed, then it is NOT the Fed's job to save them. I am surprised that CNBC - which champions free market capitalism - is NOT criticizing the Fed move as another govt. dole out to help the greedy markets. With free market capitalism comes the risk of losing - which all these hedge funds and others should accept and suffer from. Don't expect the Fed to help." - Atul A.

"Now those who espouse unlimited greed want the government intervention they despise to rescue them! It turns out all those Wall Street cowboys are really Momma’s boys. Rescuing them from their own egregious decisions will only make them more foolish next time. Let the dispassionate market rule." - Ken L., Virginia

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