The markets are tumbling. Investors are bailing out. And there are already fears that the plunge in equities is a sign that a recession is just around the corner in America. With a presidential election only a few months away, the Federal Reserve will come under intense pressure to bail out the market with a cut in interest rates as it has done so often over the last quarter of a century. So will central banks in the UK and the Euro-zone. This time around, though, it would be madness to cut rates: it will just make the asset bubble much worse.
The FTSE-100 has fallen sharply again this morning, and the brief rally experienced by the markets earlier this week has already run out of steam. In the US, the S&P 500 is down by 6 per cent over the last week, the tech-heavy Nasdaq is down by 8 per cent, while in Japan the Nikkei has lost almost 14 per cent over the last three weeks.
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