Kona Kohala Blog

The Fed made history last night, reducing the Federal Funds rate and the Discount Rate by 3/4%, 75 basis points.  The stock market reacted by dropping, what's up with that?

Money is cheap and getting easier to borrow.  There's talk about all the new restrictions based on the subprime mortgage mess but for people with good credit, money is still readily available but the media doesn't have space for both good and bad news and bad news sells.

Yesterday's cut should be a breath of fresh air but it's not being seen that way.  The Fed is bending over backwards to stimulate the economy but instead of taking the money and running, our large financial institutions are just taking the money.  They say they need the cash in case there are more problems but bottom line is, there are more problems and will be for the foreseeable future.  How do we turn this around?

Let's start by looking at all we've got going for us.  We have international businesses that have no trouble finding soveriegn money, many billions.  This money is invested in various institutions like Merrill Lynch, MBIA and others who need the cash to bolster their accounts that are liable to be attacked by failing mortgage related industries and collaterals.

If we get back to normal, buying, borrowing and saving like we have in the past our financial vehicle may be back on all four wheels and moving again.  While keeping an eye on the potential for loss we also have to keep an eye on the potential for gain.

There's an old saying that says, "fake it until you make it."  It doesn't mean turn a blind eye to reality but it does mean choose to live with the good news and do what we do best, initiate new ideas.  We have thought and fought our way out of many seemingly terrible situations in our history and there's no reason not to believe we can do it again.  aloha