Money for nothing

Those central bank interest rate cuts didn't work so well for Japan a few years back.

"Economists and former Bank of Japan officials say the biggest lesson they learned was that cutting rates alone has almost no effect when the financial system has fallen into a crisis as deep as the one Japan faced in the 1990s."

This article suggests that just injecting capital into banks isn't enough.  The federal regulators also need to audit the banks and find out which ones are overloaded with bad debt.  We have to hope that the next Secretary of the Treasury will do better at this than Hank Paulson has done.  Assuming there is any money left by January.

There is hope!

It turns out we really aren't out of answers.  The government can still do more to help the economy after cutting interest rates to zero.  

They print more money!  (Martin Wolf's article is worth reading just for the part about the government dropping cash out of helicopters.)

I hope this works out better for us than it did for Zimbabwe.

Ongoing economic meltdown

I'm not sure why the stock market would go up when the Federal Reserve cuts interest rates to zero.  To me, this is a sign that the economy is about as bad as it can get and the government is out of answers.  I take this is further evidence that stock markets are not rational, at least in the short term.

But don't just take my word for it.   Paul Krugman, economist and recent Nobel laureate says, "Seriously, we are in very deep trouble."