Tell Me, Are We In A Panic or What?
by James Glaser
January 23, 2008

Filed at 8:21 a.m. ET

WASHINGTON (AP) — The Federal Reserve, confronted with a global stock sell-off fanned by increased fears of a recession, cut a key interest rate by three-quarters of a percentage point on Tuesday.

Maybe they have, but I don't remember the Federal Reserve ever getting up early in the morning to drop the interest rate. Here is how the New York Times put it:

WASHINGTON — The Federal Reserve, confronted by deepening panic in global financial markets about a possible recession in the United States, struck back on Tuesday morning with the biggest one-day reduction of interest rates on record and at least temporarily stopped a vertigo-inducing plunge in stock prices.

I have to tell you it makes me wonder if the people at the Federal Reserve know what is going on. I also have to wonder why big business can't lose money. When the banks and large corporations start losing profits, they turn to Washington and say, "Do Something!"

This interest reduction isn't going to do anything for you and me, but it makes Wall Street investors think that Washington has things under control, but the truth is they are grasping at straws. If they knew what was going on, they wouldn't have had to get up early in the morning to announce this rate reduction. They would have done it before the world's other stock markets went into a tail-spin. The only reason for this reduction was to stop our stock market from taking a huge fall, but maybe a huge fall is what it needed. I don't know, but I do know that they don't know either. (I think Donald Rumsfeld started that kind of thought.)

It seems to me that big business should have its ups and down just like every small business does, and when Washington artificially tries to control the economy, things really get out of whack.

I seem to remember a lot of politicians talking about having a free market system. Wikipedia explains a "free market" this way:

A free market is a market in which prices of goods and services are arranged completely by the mutual consent of sellers and buyers. By definition, in a free market environment buyers and sellers do not coerce or mislead each other nor are they coerced by a third party. In the aggregate, the effect of these decisions en masse is described by the natural law of supply and demand Free markets contrast sharply with controlled markets in which governments directly or indirectly regulate prices or supplies, distorting market signals. In the marketplace the price of a good or service helps to quantify its value to consumers and thus balance it against other goods and services. In a free market, this relationship between price and value is more clear than in a controlled market. Through competition between vendors for the provision of products and services, prices tend to decrease, and quality tends to increase.

I think we should someday try practicing what we preach. Getting Washington and the Federal Reserve out of the business cycle would be a great first step in that direction.

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