Today's Blogs

Gray Tuesday

Bloggers analyze the Fed’s interest-rate cut and dish on the Oscar nominations.

Gray Tuesday: Fearing a U.S. recession in the wake of plummeting markets worldwide, the Fed cut interest rates on “overnight loans” by three-fourths of a percentage point—the biggest such cut in 24 years. Wall Street began the day in steep decline before rallying. Economic bloggers chart the course of a vertiginous day.

At Marketwatch, Herb Greenberg believes that the Fed Funds cut makes it official: “Things are worse than they seem with the economy. The Fed, pushed by shattered worldwide investor psychology, is pulling out all stops to shore up confidence. Treasury chief Hank Paulson went so far as to call this latest cut a confidence builder. Trouble, as has been pointed out here previously, is the ‘what if they give a party and nobody comes’ syndrome. In this case, what if they do a big-bath cut and it doesn’t help?” And at Maverecon Blog, Financial Times’ Willem H. Buiter  is also gloomy about the rate cut: “This extraordinary action was excessive and smells of fear. It is the clearest example of monetary policy panic football I have witnessed in more than thirty years as a professional economist. Because the action is so disproportionate, it is likely to further unsettle markets. … It would have been far preferable, particulary because the stock market decline is a global phenomenon, to have a coordinated modest rate cut of, say, 25 basis points, by all leading central banks at some later date, when this would not look like a collective knee-jerk response to a fall in global equity prices.”

“There’s nothing in there to justify a huge rate cut in the week before a regularly-scheduled meeting,” notesFelix Salmon, a financial blogger at Conde Nast Portfolio’s Market Movers. “Tighter credit for some households? Come on. There’s one reason and one reason only that the Fed took this move, and it’s the plunge in global stock markets on Monday, along with indications that the US markets were set to follow suit.”

Mark McQueen, the CEO of Wellington Financial, a debt fund based in Toronto, has advice for investors: The “message is simple. If you don’t have conviction, just sit tight. And if you don’t have any particular reason why your favourite stocks will be higher later this quarter—other than the tried and true ‘if you liked it at $36, you’ll love it at $19’—just keep that seat belt buckled.” Sitting on an adjustable-rate mortgage and worried about foreclosure? Alas, this move probably won’t help, explains Diana Olick at CNBC’s Realty Check: “[I]f you are facing a reset on your ARM, you’re in much better shape today than you were just six months ago,” she writes before addressing that other f-word. “So does this cut stem the foreclosure crisis? Maybe a bit on the margins, but not really, and here’s why: the bulk of the folks facing foreclosure because they can’t make their monthly payments have no equity in their homes and no money to put down on a refinance.”

Not everyone is panicking. Mark Thoma at Economist’s View writes: “So far so good, stock markets are recovering, at least for the moment, but the 75 basis point cut is aggressive and makes me wonder if there are things the Fed knows that we don’t. In that sense, I hope this move calms markets rather than reinforcing their worries.” And Megan McArdle at Asymmetrical Information keeps her cool: “This is very bad news for people at the large investment banking houses, who didn’t get much in the way of bonuses last year, and can probably expect the same disappointment again come next December 31st. Nor would I want to be an upper-level executive at Bank of America right about now. Anyone who invested money in the stock markets looking for a quick 5% return to make rent this month is in trouble. But everyone else should take a deep breath, have a cup of soothing herbal tea, and repeat to themselves ‘I am invested in stocks for the long term.’ “

Read more reactions to the economic tailspin. Crossing Wall Street live-blogs the news. And Abnormal Returns rounds it up and provides and analysis. In Slate, Daniel Gross reports on the panic at Davos.

And the nominees are …The Oscar nominations are out: Leading the pack were P.T. Anderson’s There Will Be Blood and the Coen brothers’ No Country for Old Men, both cerebral noir thrillers set in bleak American landscapes. The teen pregnancy comedy Juno also did well, earning a best picture and best actress nod. Left off the list were any films dealing with war or current events.

New York magazine’s Vulture blog highlights the low points: “Despite being behind two of the biggest, best-written, and best-reviewed films of the year, Judd Apatow couldn’t score a screenplay nomination for Knocked Up. Despite directing the movie he was born to direct, Tim Burton couldn’t land a nomination for Sweeney Todd. Despite being one of the biggest stars in the universe—and actually turning in a pretty spectacular performance—Angelina Jolie couldn’t overcome A Mighty Heart’s general end-of-year awards whiff.”

Roger L. Simon, a screenwriter, says audiences didn’t turn out for the nominated films “when they were released and—although some will get something of a bounce from the nomination—most will still not see them later. … This is yet another symptom of the overall decline of Hollywood as a force in our culture. If you’re looking for a reason so many of the stars continue to stick their well-formed noses in politics, maybe it’s because they’d be losing attention otherwise. What’s a narcissist without a camera?”

Defamer’s initial reactions: “Juno seems to be crowning at just the right time. Despite being shut out at the Globes a few weeks ago, America’s favorite anti-shmushmortion flick scored huge noms in Best Picture, Best Director, Best Actress and Best Screenplay (Diablo, whut whut?). Howevs, we are sad to announce that Jennifer Garner got straight up robbed out of a nomination.”

John at the Movie Blog is bummed that Radiohead’s Jonny Greenwood’s score for There Will Be Blood was disqualified from a “Best Score” nom because of its reliance on pre-existing music: “Well, as saddened as I am that the nomination didn’t go through … rules are rules. And if the soundtrack for Blood is out of bounds with the rules of the Academy, then it shouldn’t be included. Shame though … I loved that soundtrack.”

Read more Oscar nom reactions.