11/08/2008 05:12 am ET | Updated May 25, 2011

Coordinated Rate Cuts A Big Help

So will coordinated rate cut do the trick?

Probably not, but it's a big help. The world's major central banks, laboring to avoid the mistakes that their predecessors made in the run-up to the Great Depression, joined together to cut interest rates to fight a virulent and spreading panic that is endangering the flow of credit and the world's economies. The one-half percentage point interest rate cut by the Federal Reserve, European Central Bank and Bank of England - joined by the Swiss and Swedes and blessed by the Japanese, whose rates are so low they cannot cut -- cannot cure the epidemic. Lower rates do help offset the unwelcome tightening of credit caused by banks reluctance to lend even to each other, and will lower the rates that the central banks themselves charge on the growing loans they are making to the financial system.

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