One Salient Oversight on Rate Cuts

I’ve been out of town and away of teh internet tubes, so this post is a bit late, but
this is how One Salient Oversight described the decision Bernanke made about rates…

Imagine this situation: You have a friend who spends money like it is going out of fashion. All he does is buy things or invests them in crazy schemes. But in order to fund his spendthrift ways he needs to borrow money from his family and from friends like you.

One day your friend comes up to you. He is in a parlous state. He has lost all his money on failed investments. He owes so much money that some of his belongings have been repossessed already.

You shake your head at his story but you can’t help but feel as though your friend is entirely to blame for his situation. You knew the warning signs were there and you’re miffed at the fact that the ten thousand dollars he owes you may never come back.

You also know what he should do. He should cut his spending and live more frugally. He should divert most if not all of his remaining income into paying off his debt. You know that this process will be hard for him, but before you can say anything he asks you: “So, are you going to lend me money to cover my costs? Come on man!”.

What would you do?