The ripples of financial crises are never limited to the speculators. Collateral damage is always borne by the largely innocent bystanders. Take a look at the capital markets headlines in today’s FT.com:
Or this article (subscribers only) that notes 100,000 mortgage industry jobs are at risk. It’s not just the speculators. Mortgage industry jobs. Real estate agents. Title examiners. Contractors. Rough carpenters. Plumbers. Electricians. Bricklayers. And everyone else, who works for a company from whom these affected people previously purchased goods and/or services.
I think we’re probably looking at another rate cut from the Fed, but I’m not convinced that it can help in the long-run. It can only delay the inevitable, and necessary correction that follows a decade of recklessly loose monetary policy.