Spot on all around. Paulson’s recent performance is shambolic. The man is in Wall Street’s pocket. See what Wolfgang Munchau of the FT had to say about this.

http://www.eurointelligence.com/Article.620+M5a8aaa4348c.0.html

Then, there’s Bernanke. He should clearly see that the Japanese have already tried this. You pointed out where it got them: 0.5%.

These people are obviously blind to the fact that more alcohol won’t sober the drunk up; it will give him alcohol poisoning. Bernanke is obviously a bartender who needs to find another job.

Whew, glad to get that off my chest.
Now, I’ll shut up!

Well, there’s a surprise! Hasn’t the BoJ rate been stuck at 0.5% for several years? There’s not much further they can cut it, really.

As to interest rate cuts being tantamount to “pushing a piece of string”, that about sums it up. Like, er, Japan has been doing so well recently*.

The subtext of all this is that Hank Paulson still mainained on TV this evening that the whole ‘crisis’ was caused by a house price ‘correction’, whereas it must be blindingly obvious that without a massive preceding bubble, we wouldn’t have a house price crash, oops, ‘correction’.

And what caused the house price bubble?

Choose from:
a) Low interest rates
b) Reckless lending
c) Taxing incomes rather than land values.

I’d go for c) every time! Low interest rates are A Good Thing, and without a bizarre house price bubble there wouldn’t have been so much reckless lending.

OK, the right wing conspiracy theorists reckon that the politically correct Community Reinvestment Act in the USA exacerbated things, that may or may not be true. I personally think it is true, but hey.

* Getting back to japan, one of the explanations I have seen for the recent rise in JPY is because their banks have got round to doing debt-for-equity-swaps and are thus much better placed to rise out the credit crunch.

I’ll shut up now.