On Monday, the Dow Jones Industrial Average plummeted over 500 points because of the failure of Lehman Brothers, severe cash troubles at AIG and an announcement that Bank of America is buying Merrill Lynch. The Federal Reserve is feverishly pumping $50 Billion into the system to help these companies find the financing they need to keep afloat.

The events that are unfolding are truly remarkable and it just goes to show how shortsighted the majority of these corporations were in the unfolding of the real estate bubble. Unfortunately, their missteps are causing a ripple effect across the entire country and world economy for that matter.

The Federal Reserve is set to meet today to determine if an interest rate cut is necessary. Given the recent events, many analysts are calling for and/or predicting a cut of 25-50 basis points, but I find this to be a very unlikely scenario. The Fed has warned time and again that the economy is sound (how they get to that conclusion is beyond me) and that inflation is a prime concern and lowering of the fed funds rate would only fuel inflationary pressures. We’ll just have to wait and see what they do.

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