A temper tantrum for a rate cut

Alisa Roth Oct 31, 2007
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A temper tantrum for a rate cut

Alisa Roth Oct 31, 2007
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TEXT OF STORY

Doug Krizner: The Federal Reserve wraps up its two-day meeting on interest rates today. Markets are hoping to be treated to a rate cut. Partly because Wall Street’s been demanding it. Who’s calling the shots here anyway? Alisa Roth has the answer.


Alisa Roth: Most people are putting their money on a quarter-point rate cut. Though a few think the Fed could go as high as a half point, and a few think it might even do nothing.

Jim Paulson is an investment strategist at Wells Capital Management. He says the Fed’s been forced to consider a rate cut because Wall Street’s been acting like a spoiled toddler.

Jim Paulson: We have passionate pleas by a brat Wall Streeter flailing their arms and legs, yelling that “You must ease, you must ease.” And not only that, but they’re threatening like a small child would do, “If you don’t ease, I’m gonna hold my breath ’til I die.” In other words, if you don’t ease, I’m gonna take the Dow down 1,000 points.

Paulson — no relation to Hank, by the way — says Wall Street’s having a tantrum because it’s afraid the economy will fall in to a recession if the Fed doesn’t step in.

But he says the situation’s really not so dire. Unemployment’s still low, earnings reports aren’t that bad, and the economy’s still chugging along.

In New York, I’m Alisa Roth for Marketplace.

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