Best Business Commentary

The Fed’s weak hand

No matter what the Federal Reserve decides to do about interest rates today, “it will not be able to thaw out the frosty financial markets,” says Irwin Kellner in MarketWatch. That’s because “the markets lack confidence,” not cash. For banks, “fear is stronger than greed these days,” and they won’t start lending to each other, “never mind to businesses or consumers,” until the value of mortgage-backed securities is more clear. It may not be enough to “force-feed liquidity into the economy,” but there’s “little else” the Fed can do right now. It has to “draw the line” at some point, though, or it will “create not only a new moral hazard, but the groundwork for a new round of inflation as well.”

The plight of being right

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“It’s fun being a contrarian but it’s damn hard to make money at it,” says James Saft in Reuters. That’s because even when they’re right, it doesn’t matter if “the crowd” won’t go along with you. People tend to “stick with what works and back what is popular,” and that has a powerful force in the marketplace. Besides, going against the crowd—correctly calling a bubble in the middle of one, say—can be a career-shortening “loser’s game.” So contrarians “can pat themselves on the back—but usually a pat is the most, or best, they can expect.”