Wednesday, March 19, 2008

Fear And Its Consequences 

The Federal Reserve is flooding money into the financial system like a dam bursting its wall. Wall Street firms and banks are channeling it into capital reserves but aren't lending. Everyone is staring at the foreclosure rate and paralyzed. We are living in fear. We don't know yet the consequences of it for the nation, but we do know they won't be good. The world is awash in dollars that are declining in value by the day. At some point, the Federal Reserve will have to rebuild the dam and stop the flow. What then when interest rates begin to rise?

Meanwhile, a chorus of critics has arisen against what the Fed is doing. Let banks fail, they say. Maybe so, but fear is driving the Fed too. How then does one communicate the concept of stability? The earnings reports yesterday from Goldman Sachs and Lehman helped lift some of the gloom, but no one at this hour knows whether it will turn things around. It is a day-by-day event with an eye to world-market reactions as well, and a pervasive tension has settled over offices throughout Manhattan.

Fear is a strange emotion that seems sometimes to be beyond words and persuasion. As a communicator, I feel powerless.


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