Discount Frenzy

Discount Frenzy

Discount Frenzy

The latest chatter in cyberspace.
Aug. 17 2007 5:52 PM

Discount Frenzy

Bloggers react to the Fed's surprising decision to cut lending rates, and bid farewell to jazz great Max Roach.

Discount frenzy: The Dow Jones zoomed up 233 points Friday after the Federal Reserve announced its decision to cut its discount rates—the rate for banks to borrow from the Federal Reserve Bank—by half a percentage point. Though not quite as significant as a reduction of interest rates, the move hints that that might be next. Econobloggers try to get inside Fed Chairman Ben Bernanke's head.

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The money-focused Bonddad Blog thinks that "Bernanke has continued the 'Greenspan put' tradition. When financial markets screw-up and make a ton of bad loans, the Federal Reserve will bail them out." Mike Shedlock at Mish's Global Economic Trend Analysis agrees, albeit more scornfully: "[O]nce again the Fed refuses to let the free market work. Bernanke is no better than Greenspan. He proved it today. And the moral hazard of the Fed's actions are if anything likely to accelerate. But they won't work. Here is the key: There is both a decreasing demand for credit and a decreasing willingness to extend it. But there is a hell of a lot of pent up demand for cash."

Frank James at the Swamp, blog of the Chicago Tribune's Washington bureau, points out: "The Federal Reserve must be exceedingly worried about a possible recession to make this move now. Virtually every recent statement made by Fed officials, including Chairman Ben Bernanke, had indicated that the central bank's greatest worry was growing inflation, not slowing economic growth."

Joseph Lazzaro at AOL's BloggingStocks.com writes: "[T]he Fed's action today, while both addressing liquidity and providing what many view as necessary psychological support for the markets, does not eliminate the major unanswered questions which many economists and analysts believe are at the root of the market's recent extreme volatility and slide: namely, the scope of subprime mortgage defaults, and their impact on the institutions / funds holding bonds/assets backed by those mortgages."

Great, great, but how does this affect me? Josh Mullineaux at Tech Zi recommends "keeping an eye on foreclosed houses. Here in the near future there wil be a lot of money to be made flipping or renting foreclosed homes. Also, don't spend too much time worrying about the stock market. Just make sure you have a balanced portfolio that is adjusted for the amount of risk you are willing to take, and stick with it. Give your financial advisor a chance to do his job. He has you investing for the long term and you should commit to this. The stock market will go up and down however, over time will continue to go up."

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Read more about the Fed's decision.

RIP Max Roach: Master jazz drummer Max Roach died Thursday at age 83. Bloggers remember the contemporary of Charlie Parker and Dizzy Gillespie as the man who revolutionized the skins.

Gary Susman at Entertainment Weekly's Popwatch remembers: "Roach wasn't the first drummer to play bebop (that would be Kenny Clarke), but he was the first to explore its full rhythmic and harmonic potential, which is why he's recognized today, along with trumpeter Dizzy Gillespie and saxophonist Charlie Parker, as one of the architects of that 1940s musical revolution."

David Greenwald at the Rawking Refuses To Stop! says that one of his favorite jazz albums is a trioeffort "with Roach, Duke Ellington and Charles Mingus (!) … It's a bit of a rare thing to find Ellington not backed by his orchestra, and as much as I love the swing era, I'd rather hear a small combo than a big band. But jazz is a democracy: this is not an Ellington album any more than it is a Roach album or a Mingus album. Everyone deserves top billing here, and they certainly earn it: take the title track, where Mingus goes nuts with desperate high-fret machine-gunning before slipping back to the lower register and letting Roach take center stage."

And Mark at the Oak Room was impressed by how Roach "continued to stretch his boundaries throughout his life, working with a full-blown percussion ensemble, a brass quintet, a string quartet, gospel choirs and hip-hop artists. It's also worth noting how effectively he used his music and his celebrity to advocate for civil rights in the 1950s and 1960s."

Read more obits for Roach.

Michael Weiss is the director of communications at the Henry Jackson Society, a London-based think tank that promotes democratic geopolitics. He is also the spokesman for Just Journalism, which examines how Israel and the Middle East are portrayed in the U.K. media.