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"This is still a great opportunity to buy," Larry Kudlow arglebargled on Fox Business this morning. The president's economic advisor has been singing this song for a month, as investors inexorably slide into panic at the realization that this coronavirus thing is not going to disappear "like a miracle."

Yesterday, the Federal Reserve announced an interest rate cut of a full point, bringing to near zero the rate banks charge each other for short term loans. Which sounds really boring, but is actually hugely important, since it functions as a benchmark for other lending. So maybe your mortgage is "prime plus three," or your credit card is "prime plus usury," etc.

Here's a really cogent explanation courtesy of CNN, but in general, the Fed lowers rates to stimulate the economy and get us to buy more stuff. The theory is, if you can put it on the Mastercard and not feel freaked out about the interest you'll hit the mall and SPLURGE. And if companies can borrow money, they'll go on a hiring binge. KA-CHING!

Can you spot the problem here?

HINT: What are you doing right now?


Are you at Starbucks with your girlfriends, sipping lattes surrounded by a pile of shopping bags after an exhausting morning looking for the perfect LBD? Are you at your desk, toiling away to Make Corporate America Great Again? Are you teaching school? Waiting tables? Tending bar? Cutting hair? Working concessions at a sporting event? Are you helping Becky and Karen find that perfect LBD at the boutique?

No, probably not. You're probably home, maybe with your kids. Are you signing those kids up for summer camp? No! Because, you don't know when life is going to get back to normal, but you probably expect things to get a lot worse before they get better. Maybe you don't have a paycheck coming in. Maybe you do, but you just ate the cost of your vacation. Maybe you're worried about getting sick, or maybe you're not worried, but you're doing your part to stop becoming a vector who spreads disease to everybody's grandmother. Or maybe you're an asshole who's pissed off that his chance to hit the bars and par-tay just got banhammered by gubernatorial decree.

In any event, aside from Amazon splurges, your probably couldn't boost the economy with extra spending even if you wanted to. Because you can't leave the house! (Although if you've been thinking about refinancing your mortgage, now is the time.)

And if you're an employer, looking at Mitch McConnell saying he'll vote on that emergency coronavirus plan to reimburse businesses when he gets around to it, you're probably not feeling so confident either. So how the hell do you think Sunday's announcement of the Fed plan to grease the skids by cutting rates and buying up US Treasuries landed?

Here, let the Wall Street Journal draw you a picture.

See that bigass 300 point drop this morning on the S&P 500? Despite Kudlow drunk-uncling all over Fox, that is not a huge sigh of relief. That's all the pent up SELL! SELL! SELL! energy from the weekend getting unleashed at once. And that little flat bit is the 15-minute trading halt after the precipitous drop triggered the automatic circuit-breaker to prevent market crashes.

Because the Fed rate cut is like throwing water on a grease fire while shouting "DON'T PANIC, I KNOW WHAT I'M DOING!" It causes little bits of fire to splash everywhere, while simultaneously confirming to everyone watching that you definitely, 100 percent, do not have a clue how to douse those flames. Plus, at the end, you don't have any water left!

The Fed can't just ease the money spigot and boost consumer confidence here, because confidence in the market is simply not the problem. Pretty much every restaurant worker in the country just got laid off of work yesterday, they don't know when or if they'll get paid again, and the entire country is locked in the house hiding from the plague. Thousand of Italians are dying, and those people have government healthcare that doesn't force them into bankruptcy. Ain't nobody spending any money, no matter what the government does to "assure" us that ALL IS WELL!

Instead, the Trump administration just made damn sure that we all know that there's nothing left in the cupboard to throw at the economy when this pandemic passes and we can all go back to work. Because they already cut interest rates to ZERO, so they don't have any rate cut left to make once we're all ready to whip out that Amex and go out to dinner and a movie again. Or they could, but negative interest rates are very much not a sign of a healthy economy. Do you want to pay the bank to hold on to your cash for you?

Sorry, this is just not a NiceTimes post. Luckily you can drink now, because where the hell are you gonna go, right? But before you get too hammered, REGISTER NOW FOR AN ABSENTEE BALLOT. Please and thank you!

[WSJ]

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Liz Dye

Liz Dye lives in Baltimore with her wonderful husband and a houseful of teenagers. When she isn't being mad about a thing on the internet, she's hiding in plain sight in the carpool line. She's the one wearing yoga pants glaring at her phone.

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