Bernanke running out of ammo

By Julian Delasantellis

A well-worn bit of wisdom from rural America advises one that it is pointless to "close the barn door after the cows have escaped". By participating in yesterday's global round of short-term interest rate cuts, US Federal Reserve chairman Ben Bernanke cannot be said to have been guilty of this offense. Instead, what he has done is to close the barn door after the cows have escaped, been captured down the road by cattle rustlers, then sold, slaughtered and ground up into dog food chunks.

For the 10th time since August, 2007, the Federal Reserve has engineered an interest rate cut in order to counter the spreading effects of the now global financial and credit crisis. With twin 50 basis point cuts in both the Discount Rate, to 1.75%, and the Federal Funds Target Rate, to 1.5%, the Fed has now just about emptied its magazine of possible interest rate cuts.