Palliative

The consensus is that the Fed will likely cut interest rates anew. I don't really think this is something to cheer about, because the previous rate cut, which was bigger-than-expected, proved to be a palliative, rather than a cure to the sub-prime crisis. The additional rate cut only means the US economy is in deeper trouble.

And what seems to be an anomaly here is that it is the low-interest rate scenario that may have started the sub-prime mortgage to burst to begin with. Clearly, the Fed's intervention is meant to preempt any signs of recession.

By the way, I think the peso is already over-valued. When exporters and OFW families start getting hurt, you know that the optimal point has been reached. Unfortunately, the last quarter is seasonally the time when the currency is at its strongest.