Although the subject is worth writing an article, I just write shortly as my schedule is killing me. Nevertheless, FED is fighting against the credit crunch by lowering interest rates as expected. This short term relief boosts equity markets but is only a temporary relief. The chain reaction has begun as liquidity increases rapidly i.e. in addition to lowering interest rates new carry trade positions are opened etc. <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

EUR/USD X-rate is already unbearable and probably forces ECB to lower interest rates and therefore let the inflation to increase. Lowering interest rates in <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Europe will set currencies to balance but let inflation to run reflecting by increase in commodity prices. We are probably going to see oil breaking 100$ soon.

Would you pee in your panties if you would be freezing? Probably not, but FED does.

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