The Fed’s worst nightmare

The reason we need Wall Street-types for Treasury Secretaries is that P T Barnum died in 1891, Charles Ponzie died in 1949, and, amazingly, Dare-to-be-Great’s Glenn W Turner lied on his application.

Good news on the Street is that Lehman Bros “met expectations” which means it hadn’t folded as of Tuesday noon.

And I’m glad to know that as an American taxpayer who didn’t particpate in the Liar-Loan Industry, that I’m now the proud owner (indirectly of course) of $30 billion of these babies courtesy of “Bail-Us-Ben”. Of course, this is only for 6 months (unless there’s an extension), and the goal here is to get out of this bad paper by severely loweringrates on the massive amount of resets on variable-rate mortgages due during the remainder of 2008. Hmmm…, is the next Bubble going to be residential real estate, or can we really get Back-to-the -uture with Dutch tulip bulbs ??

Really good news from Big Ben and FED as they lowered rates by three quarters.

Shares traded on Warsaw Stock Exchage have bounced back and resurged enormously today above 5%). Maybe this bold and so alleviating move will restore confidence in emerging economies. This lack of confidence was really terrifying and umdermined not so liquid markets like polish market, regardless of their economic strong basis. Such a frustration was triggered off by fear of US market to collapse. Since that binge started I have strongly belived that it would came to an end with US support. I belived that strong emerging economies would pluck stock exchanges from obscurity sooner than in United States, but essentially the strong consecutive tremors (shocks) was required from US – like cutting rates. So cheering this FED’s move, I expect another drop which would equalize half percentage point or one more time – three quarters; but no sooner than next scheduled meeting. Don’t make markets too anxious Ben!

But what worries me in the long-haul is weakening dollar, whose stability for decades was substancial for developing world. Now plummeting of greenback fuels fears for future of exports from emerging markets, of course, in the long-haul.

I believe this was all planned to screw the baby boomers out of their retirement. Oops your money is all gone. Sorry

The Fed is simply destroying the dollar. The Swiss Franc was actually more valued than the dollar last week. This is indicative that the spending party is over, now we will have to pay the price through tremendous inflation created by the Fed.

When Secretary of the Treasury Paulson talks about “a strong dollar policy”, his nose must be getting longer! For crying out loud, the federal government alone bears outstanding liabilities in the 60 – 73 Trillion dollar range! We’re on an economic Titanic headed for an iceberg.

None of the candidates for president have dealt publically with the serious issues we will soon be facing. Ethinol produced from food stocks is a joke and is a reason why food prices are climbing.

More importantly, it seems that our so-called leaders are asleep at the switch as we will soon face the great uncertainty of global peak oil production. This event could bring havoc to the world economy unlike any other. Why? It means that we cannot grow an economy anymore with petroleum production. Should oil availability fall, due to geologic limitations, we will fall into a problem with no known solution. Some oil fields are falling in the double digit percentages per year and will some countries will no longer have crude available for export.

Why should oil producing countries boost production and depress prices? After all, they can sell every drop they pump.

Why would OPEC or non-OPEC nations ship the US oil if our currency is collapsing and may be rendered worthless over time if Chairman Dr. Bernanke has his way.

Historically, Arab oil producers have reinvested much of their oil proceeds in US investments and US paper. Why would they want to continue this practice if the currency is on the road to distruction?

America is reach with it’s own resources: gas , oil and forest. start using own lumber,instead of buying from china, start opening resource and fire the stupid environmental “Sierra” group, who handled and ruled by Holliwood stars and it’s management. Those people are too paranoid with environmental idealism and they are easy fulled by “green House Effect”-a way to solicit more money from the government due to climat changes. They
don’t realise that the planet is overpopulated and overheat, but it’s only adjusting and we will adjust as well. Don’t panic,just vote to chane rules about conservation of own land,
resources, change media to positive attitude, lower the LTV standards to
make loans that supported economy for so long, Don’t switch investors from housing business to stokes.( Bush’s plan doesn’work again). And, Stop the stupid war!

Who loaned 115% against all those houses while arranging interest only or worse still less than interest only loans?? Who borrowed this money on these terms?? It wasn’t me, So, Why then should my tax money bail either of them out?? I think the banks should pay for their own mistakes, Fail if neccesary, and the greedy idiots who borrowed that money should lose their house.. CORRECTION is the key word. Correction in housing prices driven up by these under-priced loans, Correction in consumer personal responsibility, And correction among the lenders,, I say, Let’em fail!! weed out those so stupid as to make such a loan to begin with.
If it takes $5.00/gal. gas to “correct” So Be It. As best I understand it,, this is how capitalism works.

From an earlier post (please see below since there are no relative reference numbers on the individual posts; that is a suggestion to CNN for improvement).

My reaction to the post first — followed by the excerpted posting I am reacting to.

I don’t know what good it would do to know what is going to happen. If things turn out worse than we expect, the only “good” thing that might come out of this is to have the academics and intellectuals write more papers at the FED to rationalize why it is not the FED’s fault.

The Austrian School the writer is referring to has been saying for a century, that for every ‘joyous’ artificial boom created by so-called easy credit, there will be an equally ‘painful’ bust, as the credit artificially injected into the financial system is unwound.

I agree in principle with the many writers below that perhaps this time, easy and looser credit standards will not help, and may make things materially worse. As Paul R. La Monica’s article suggests “Time may be the Fed’s only ally.”

But time may be all of our ally in this struggle and not in the way Mr. La Monica intends. This time it may really be different. This time, only time and not any of the Fed’s short-term interest cuts, nor any of its other interventions, may be what will help.

The allusion to drugs is appropriate. In the 1920’s when Benjamin Strong of the Federal Reserve, boasted to a French central banker that he had goosed the U.S. economy with a “Coup de Whiskey” (of easy credit) he thought he had done a good thing. That was part of the Roaring Twenties and its mentality. It led directly to the Great Depression.

Today, easy money seems to be the only drug the FED can administer. It is the only “weapon” in its arsenal. Of course the FED can apply this first-aid in many ways, some quite “unconventional” by its own admission. These include the direct purchase of “assets” — where otherwise such assets are not worth much to anyone, like the now gone-bad MBA’s (mortgage-backed assets) and other types of credit “paper”.

What all these methods have in common is exactly what got us here in the first place — more easy (paper) money. The bailout of Bear Stearns will be followed by many more such bailouts “as circumstances dictate”. What the FED has many times in the last decade encouraged all of us to think — and it has changed popular mentality in so doing — is that the FED stands ready like some Super Hero, a Zorro or a Superman, to create ‘liquidity’ when and where it is needed. The ultimate financial moral hazard.

The FED says it will never bust a growing asset bubble, but it will “mop up” after the bubble explodes. This is because it believes that “no one can recognize an asset bubble in the making”. But it says the asset bubble can be recognized once it blows up and blows a lot of the rest of us up with it.

The FED’ policy is ludicrous. The Economist magazine has written many cover stories over the last decade from the Technology bubble through to the Housing bubble warning of the perilous state of such bubbles and the likely, very damaging, outcomes from the eventual natural bursting of such bubbles.

As many have indicated in this web log, the last thing the consumer needs to be encouraged to do is to take on even more personal debt. In the “good old days” bankers and politicians would encourage us to save. What went so horribly wrong?

For a Central Banker, Mr. Bernanke has said some really bizarre things. The European Central Bankers for example are probably too polite to say it in public, but for them Ben Bernanke is not a bona fide Central Banker. When Mr. Bernanke wrote in 2002 for his now famous (or infamous) “Helicopter Ben” speech that any determined government and central bank can force the people to spend more of their money, he did not sound like any bona fide central banker that the Europeans could recognize. Please see the link for the text of his full fascinating speech: http://www.federalreserve.gov/boardDocs/speeches/2002/20021121/default.htm

Ben Bernanke in essence said that if the American people were not prepared to spend enough of their own money — or other people’s money, in the case of that part of the population who had no money to spend and would have to borrow — he could force them to do so. He had at his disposal an invention called the ‘printing press’. Mr. Bernanke was prepared to destroy the currency to save the economy (but in so doing, he would of course destroy them both).

He claimed in his speech that by threatening to so debase the American Greenback, no one would want to hold it, and would naturally spend it for anything they could buy. Thus came to be born the “Bernanke Machine to Increase Aggregate Demand at Any Cost and By Any Means”. This is part of our Modern World and its morals.

And this guy is the head Central Banker of the leading nation in our world. Is this somebody’s idea of a joke?

Sad to say, Bernanke is reflecting popular attitudes. Who created those attitudes is a subject for sociologists, but let’s just say that this type of thinking is exactly what prevailed in the Roaring Twenties. And we know how and what changed those attitudes. That may be what it takes this time — although this is a ‘lesson’ that I would not wish on my worst enemy.

The other thing is that Bernanke operates within a system that is faulty. The paper money system is open to abuse, far too easily. It has few checks and balances. It is man-made and can be man-unmade. The fiat money and fractional-banking system, along with the modern financial system, with its creative ‘geniuses’ who strive for ever-newer financial instruments and techniques, with little or no oversight from regulators and regulations, have to take their share of the blame. Any paper money system is open to just so much such abuse and artificial manipulation. The incentives are just too strong to resist.

If we could just recognize, as an example, that huge money is made from Foreign Currency Trading, or Bond Trading, activities that at their core add nothing to our mutual lives, and employ people who could actually be doing useful things with their lives and helping to solve society’s pressing problems. Why do these activities (and many more like them) need to happen today? Because we use paper money and different national governments choose to inflate their currencies (that is, debase them) at different rates.

As far as easy-money goes, if that was the answer to our current problems, then Zimbabwe would be the poster child of how to solve one’s economic problems with its “printing presses” running “red-hot” as the writer below mentions.

One defense that should be made for the FED is that it has an almost impossible mandate. The European Central Bank does not have its hands tied by such a mandate. Namely, the FED has not only the value of the U.S. currency to defend as one of its primary mandates. It also has as an equal and polar-opposite objective — namely, to keep the American economy humming to ensure full employment. This is laudatory as far as the statement of such goals could be faulted by no one. But these conflicting goals may unachievable in reality by a single institution. The other Central Banks in the developed world do not shackle their Central Banks with these 2 conflicting “job descriptions”.

Modern economic experience has shown that a Central Bank operating with a paper currency can only realistically hope to achieve the maintenance of its currency’s purchasing power, and even that, probably not very well. When the FED is asked to both ensure that the economy operates at full employment and then is also asked to maintain the purchasing power of the U.S. currency, it will at times, be in conflict with itself. It cannot achieve one goal without jeopardizing the achievement of the other. It may even be reluctant to burst obvious economic bubbles, because then it will be going against one of its mandated objectives.

As well, in ensuring that a bubble is maintained over a long period of time, it can be setting itself up for future failure. That is the situation we appear to be in at the present time in history. The FED does not know what to do. If it puts the pedal to the metal it can ignite inflation; if it doesn’t it will prolong the mess we are in. My personal take on it, at this time, is in agreement with the writer below — we’re really in it, and it is going to take a long time to clean off our collective boots.

The other more germane question to be asked, is whether a Central Bank, can realistically even achieve the modest single goal of monetary stability. Milton Friedman argued that it could not. He would have used a mechanical rule (a computer in essence) to control the money supply. He saw that no humans could ever be free of conflicting emotions and reasoning, and free from political pressure, and that therefore no human or humans could do the job better.

We first abused and ultimately, over time, destroyed and threw away a good, not perfect system, under the gold standard. Return to that regime is not going to happen. In the long run we might be stuck with our Central Bankers.

“Where have you gone, America, a world turns its lonely eyes to you.”

(Apologies to Simon and Garfunkel and to Joe DiMaggio).

“History shows that Fed easing will eventually work their magic.”

Good Luck America, our health depends on yours!

Recipe for our recovery:
1)NO further rate cuts – further cuts help accelerate devaluation of the dollar & accerlerate inflation; it also assists big corps./wealthy folks who take advantage of cheaper money to make more money which leads to further disintegration of the middle-class thru inflation and overall decrease in purchasing power(sounds like a third-world economy – (the haves and have nots) – destablizing & polarizing !
2)Live within our means
3)Live with the consequences of our actions (lenders & borrowers alike)- I can’t believe that we are actually going to let well-educated lenders & borrowers off the hook for their excesses; but the poor people may have an excuse for not understanding terms.
4)Hold our gov’t & corps. accountable
5)So, let’s suck it up and adjust to our new global world that we live in.
6)Remember, greed, power, excessive behaviors, predatory practices got us here, so let’s learn from this by regulating those entities and holding them accountable.

Fire The federal reserve president……before he wrecks the country……………………

The FED is a one trick pony. Once they crib the interest rates one way or another thats it. The real danger here is Stagflation; potentially worse than in the 70s. Once started Stagflation is a self perpetuating nightmare. Anyone up for 10 years of it?

The Fed needs to quit tinkering with the economy. Its efforts are about as effective as fine tuning a sun dial. For the first time in my memory every facet of our economy is in turmoil and banks do not have the tools or the cash to change the course of our listing ship of state. We’re watching our national wealth migrate to OPEC in the east and China in the west while the dollar becomes the peso of this century. All the talk about the trade benefits of a weak dollar seems to ignore the fact that, short of food, we’re not awash in products desired by the rest of the world. That leaves America itself as our ante in this international game. Perhaps one day we’ll sell Kansas to Dubai or maybe trade New Mexico back to Mexico for a flowing Pemex pipeline.

Militarily we continue to control our destiny. But our futures won’t be decided on any battlefield. Our national destiny is in the hands of a people who produce less and consume more each year.

Then, there is the Economic Stimulus Act of 2008 (the IRS letter arrived today.) I’ll be pleased to accept the check but find it hard to believe that being able to buy a tank of gas each month through the end of the year will do much to excite the marketplace.

Ignoring inflation bears the risk for a recession to become only worse.
Interest rates should be increased moderately to keep inflation under control. It would send a positive signal to the world, stop the collapse of the dollar and stop oil prices’ appreciation, which helps us all.
Sure, a few large financial corporations will/would go down, but they deserve it. Such a selection process would remind us all that reasonable controls need to be in place when lending money.

Okay, someone tell me why our government is bailing out people and companies who were causing this whole mess? Are some of the present administration involved in this thing? Hmmm!!! seems like a relevant question to me. Let’s see, the Stock Market goes down, who has the most money invested? I believe Big Businesses do.
Who has made more off of the Stock Market, is it the individual regular kind of Joe who is trying to save for retirement, or is it once again Big Business? My guess is that it is Big Business. How much do C.E.O.’s and other Big Business executives make on an average per year plus retirement, and other perks? How much of the good old U.S.A. has been sold out to other countries, and how much “work” do so-called U.S. businesses export to other countries each year? Who pockets this money that is being made by using low wage earners in other countries?

Am I supposed to feel sorry for any so-called U.S. Big Business and the so-called U.S. Stock Market? Hey, suck it up big boys, and earn your money for a change. That is what is being told to American workers trying to make a living. The only difference that I can see is that you Big-Timers will have to start shopping a Wal-Mart, and buying less expensive toys. You are the ones who keep telling us lower-level workers to live within our means, well now it might just be your turn to feel a little bit of what we live with day in and day out. You can run, but you can’t hide, and your time is coming to see what a lot of people have been living with due to your excesses.

Get a grip, and see what you are doing to the working class in this country. Spread the wealth, or suffer along with us, you snobs……….

I ain’t gonna invest another cent in your markets, until you start giving the working man a fair share of the profits. You are way to greedy, and self centered, and have no respect for the common person. We need a new President, and a new vision for this country. The way things have been handled for the last 5-8 years really sucks.

From a CNN Article today on Bear Stearns:

The Fed’s role in the deal suggests federal officials fear a systemic collapse of the U.S. financial system were Bear Stearns to fail. The fear stems from Bear central role in a multitrillion-dollar web of interconnecting derivative contracts.

Now we’re talking trillions!

But the CPI came in today at 3-4% per annum. So inflation is at bay! Count on the FED to cut interest rates by 50-75 basis points next week. The dollar will drop a bit more and the experts will continue to tell us that a weaker dollar is good for US. We’ll just have to limp along a few more months before the ecomony turns around and happy days are here again! Keep the faith!

The FED has embarked on a “buy time” strategy that will prostrate the economy after a Democrat is elected in November for years to come. Then the fiscal crisis will necessitate the “gutting” of Social Security and Medicare, completing the emasculation of the New Deal once and for all.

I know this won’t happen… will it?

I am from India. We are following US with 6 month lag (and are still in a self denial on recession..!)

This recession is not too much different than the other recessions. An the last one was just six years back.

Central Govts got to do two things at same time :-

- have people spend more
- at same time hold priceline

Key success factor: Govt should not hesitate to actively intervene to hold priceline. Controversial move but necessary to get over stagflation fast.

And we are facing the same issue. I am very very curious how the US/ Fed tackles this. Great learnings for us.
————————–
Check out a detailed analysis and an active discussion at my free blog.

“India : from a slowdown to a recession – and what it might imply”

taxationindia.blogspot.com

You can’t stimulate an economy by throwing monopoly money at it. The problem with this article is that it looks at the health of the economy and inflation as two seperate issues. The best way to stimulate the economy is to let the recession happen and let the economy recover afterward. The FED’s current policies are only throwing gasoline on the fire, and ensuring a much worse recession than would have already happened naturally without their intervention.

A significant percentage of Americans have lost their ability to produce hard goods, since corporate America has opted for cheap labor overseas. The corporate creed has, for decades, been “destroy American wages across-the-board” in favor of Wall Street profits.

Risking more inflation will only prolong or make worse the inevitable.

The government has allowed millions of illegal immigrants to overrun this country, providing a cheap boost to housing sales and retail spending. Now it’s all crashing down and we’ll all pay the price. Left alone, the financial markets will be forced to suffer the spoils of their gluttonous gambling – they deserve it.

We cannot continue to exist as a soceity without producing hard goods that we can sell amongst ourselves for a profit.

Wall Street, it’s WAL-MARTs, and China are the problem. The solution is to abrogate all of the _AFTAs and become America again.

Stop the rate cuts. Destroying the dollar will just cause people to shrink back from spending even more. What business is going to borrow money when people have little money left to spend after gas and food? Bernanke is either not very bright or has no integrity, but as long as he protects his rich banker friends with cheap money that is all that matters.

Why cant the banks make the loans in default become assumable instead of just foreclosing? The interest rates are in many cases becoming unaffordable because they went from 1% to 5 or 6%, which are quite reasonable to someone who actually qualifies. As for recession, if we hear in the news every day that we shouldnt spend money, we wont. And if the democrats want to raise taxes, as they voted yesterday, we better save our spending money to pay for it.

The Feds are out of their minds… thinking that only pushing the stock market higher will solve USA financial troubles.

Yes Feds bring the interest rate down to 0% like Japan did, which then took them 10 YEARS for recovery from what the USA Feds plan to do… not very smart for those who think they are so smart.

Bill Adams

Oh yeah, and by the way, why doesn’t the media ever remember that GW Bush’s brother’s Silverado Bank was caught up in the S&L fiaco, and that little brother had lent himself a tidy billion (paid by the bailout, i.e. me and you) BUT he had to pay a $50,000 fine….haha. Not a bad return on investment….

Now, Big Brother Bush will bail out these new crooked large bankers (same problem, much larger scale)with OUR tax dollars (opps, sorry, BORROWED DOLLARS WITH INTEREST, from the FED).
Only, this time, it will cost the TAXPAYER TRILLIONS of dollars.

When do we wake up? When does the best Congress money can buy get a backbone?

maybe the Fed should print 10,000 trillion dollars, make all americans millionares, reduce the value of the dollar to say 10 cents, then put all americans on a training course in financial management and tourism. sure, a loaf of bread would cost 5 dollars, and no one would drive anymore as gas would hit 50 dollars a gallon… but maybe that would create a greener world, and help americans lose weight by walking everywhere… this is the only credible solution the fed can offer right now. A 100 point rate cut would only fan the flames of inflation and destroy any credibility still held by the american financial institution…
America will have to accept that it is no longer a driving force in world finance!

….when will Joe Six Pack get it? It’s not the price of oil going UP, it’s the value of the Dollar going DOWN. IT’S NOT THE ARABS, IT’S THE US GOV’MINT, printing dollars 24/7 since Bush (check M3, if you can find it) took office to pay his buds and for his Oil War2.
It’s the illegal and immoral FEDERAL RESERVE BANK. ‘Lending’ money to the GOV’MINT, when the GOV’MINT could print it’s own money. (without ‘borrowing’ the money…hey, what an idea! Send citizens envelopes stuffed with $1200 CASH, instead of BORROWING $160B from the FED)
The FED is unconstitutional, check it out.
IT’S THE POLITICIANS, BOUGHT BY CORPORATE CONTRIBUTIONS, eliminating oversite and turning a blind eye to the moral hazards of banking. End this, no more PAC, only individual contributions, up to $100.
ENACT TERM LIMITS, eliminate the need to stock a war chest. Good enough for the Presidency, why not Congressmen?
..and DON’T lower the FED rate, it cheapens the Dollar internationally…

I don’t think your heads are screwed on straight. How can consumers spend money they don’t have? The national income has migrated to the top one % of wage earners and they aren’t spending it. Go talk to them. The middle class is broke, and current policies are causing huge increases in food and energy, on which people cannot cut back spending.

Lowering Interest Rates will only prolong the misery. It will lead to more unemployment over longer years. I believe it is in the best interest to review and change current Credit Laws and start punishing the really guilty ones: The Banks who made Credit so easily available to persons who they KNEW will not be able to repay their debt. THAT is were the crisis began. Simple solutions for simple problems.

We retired when interest rates were in the 8 to 9% range and since we live off interest income and a small social security, we are being hit hard by the interest rates dropping now to 3% range.

Naturally, this is causing us to cut down on spending so how can this help the economy?

THE FED IS LOSING SIGHT OF IT’S PRIMARY PURPOSE, WHICH IS, ((THE KEEPER OF THE DOLLAR)), NOT! THE PROP OF WALLSTREET

Fed should stop with rate decreases.
start up massive infastructure programs in projects that foster growth. Airports,sewage treatment, university. Finance by selling bonds with the interest their giving away.back up everytyhing with full faith. Major Tax credits or tax incentives for all investments @ least 6.5%. 100% write off for energy efficiency improvement investments. Insure every mortgage but only allow
20% down and 15 and 30 yr. fixed payment. tax credits and tax incentives for health care and retirement accounts. abolish AMT immediately. start up wpa type work programs where people withoout jobs can work and pay would go directly to mortgage. Raise taxes on off shore companies that do not reinvest 25% of their profits back into US infastructure and economy

It all comes down to energy and the insane prices people have to pay to heat their homes ($500 a month) and drive their cars ($3.29 a gallon). How can anyone afford anything else. The energy conglomerates are all having record profits year after year in everyone else’s time of despair. It’s time that the Federal Government started spending our money on our infrastructure, new alternative energy and putting our best interests as a country in front of pride and greed. The last eight years have been a methodical destruction of a once great nation.

The FED should hold rates steady and make sure that the markets are liquid. To boost the dollar the Federal Gov’t needs to slash spending for FY 09 and onward. Serious discussions are required for all agencies.

General speding – Farm subsidies cuts of 40%, eliminate tax subsidy for wall street, oil, international companies, discretionary spending cut to 0 (no new projects).

Taxes – corporations bring profits home (tax free) and invest in US – Boeing, Intel, Catepillar, etc.

Defense – excellerate base closures

Why is Bush Not letting go of the underground oil reserve. Not bad enough yet? Maybe @ $5.00 a gal for gas and $10 for a loaf of bread.Will it be too late then??

No more rate cuts. Focus on the inflation.

Baby boomers were getting ready to retire and now have to rethink the process. While we (baby boomers have earned this right) inflation will have us thinking twice – adding to the expense of additional health care due to stress over the future.

Let us retire – make room for the younger generation – and at the same time if we volunteer our services or take a lower paying job to provide the a life style change – the economy will actually benefit – due our expertise.

So NO more rate cuts-let those who would not take no for an answer and overbought pay the consequences.

Take care of inflation.

The Fed’s worst nightmare won’t be another cut of the interest rates…it’ll be once the majority of American taxpayers wake up and realize what is going on here.

People of the United States of America:

-We have to unite together and have G.W.Bush and Dick Cheney impeached and imprisoned for crimes against our Constitution immediately! This conspiracy is so big that it actually expands over all of the Bush/Clinton regimes. Just think, we may actually elect a criminal back into the hot seat! Ask Bush/Clinton where the missing $27 trillion went to!
-Indict the Chairman of Morgan Stanley and CitiGroup for Fraud. Citibank and Morgan Stanley are mired in a criminal conspiracy with the USA Treasury and the WHITE HOUSE!
-Ask these Chairmans where the $4.5 trillion missing from the Wanta Fund is.
-Ask about NESARA – There is more than enough gold-backed human money currently in existence on Earth for each and every human being to be a GBP millionaire without debts of any kind.

Go ahead America. Google it. Read for yourself. Make your decision. More importantly, let’s do something about it! The FEDS can kiss OLD GLORY’s butt!

There’s no point in cutting the rates if it’s not going to have a direct effect on consumers. They need to ensure that lenders are passing these savings on to every day, working-class Americans who really need them. Lenders also need to start bailing their own customers out of these foreclosure situations by letting them refinance at the lower rates. Afterall, they are the ones that let these people over-extend their finances in the first place.

At the same time, though, Americans need to take the time to learn about their finances and realize the ramifications of reckless spending and financial incompetence. We’re in this mess because of irresponsible people who exceeded their own limits, along with lenders who were more than willing to take advantage of them.

The people who are really taking a beating right now are the responsible Americans who live within their means and try to save money for their future. We’re getting less for our dollar, and making less from our savings and investments. In the meantime, the government is dumping money in all the wrong places and we’re left to foot the bill for that too.

Even though I’m in the market to buy a home right now, it looks like I’ll just be riding this out along with everyone else. I refuse to pay more money to greedy lenders to offset the hits they are taking from their own reckless and predatory lending.

I have to believe we are in a one in a lifetime credit crunch. There is a lot more in the way of bad debt in the banking system and what they call capital is phony profits. The short term treasury rates plummeted before they cut rates and I think the market is signaling the Fed is too high. I suppose the big problem right now is the last big fundings of the banks and the SIV’s being moved to the banks balance sheet didn’t get soaked up and the money went to chasing commodities. That will end in a crash and financial ruin for most players.

The US is entering a new era of stagnation that will not easily be fixed.

The “supply -side” economic policy of the last 30 years has favored wealthy individuals and corporations with tax cuts and incentives on the theory that they would invest their capital to fund new jobs. The problem is that they invested that money in overseas production facilities – not here in America.

The middle class has lost purchasing power as their incomes have stagnated or declined after being adjusted for inflation. The consumer is tapped out and in debt.

Unless economic policy is changed to insure that corporations are fairly taxed on their profits and this money is used to seed new industries to replace our lost manufacturing ansd service jobs. this trend will continue.

Politicians that are influenced by corporate campaign contributions will never have the political will to do this.

There is nothing short of a total financial meltdown that will, in due time, serve to re-structure the equinimity of corporate entities and consumers. The two are as co-dependant as time and space. One cannot exist without the other. John Bray Wilmington, Ca 90744

The Fed has done exactly what is needed based on the current state of the US economy. Inflation, at the moment, is moderate to non-existent so there is absolutely no reason to raise rates. The subprime crisis has created a disruption to the US Financial system of critical proportion pushing the economy into a recession and requires extra steps for resolution. The Fed therefore has injected liquidity into the market by creating special funding instruments as well as cutting rates. These are the exact steps required to help resolve the subprime messs and to create a soft landing for this recession.

In times of recession, cutting rates is the correct action. In times of inflation, raising rates would be the typical remedy.

As we work our way through a soft landing in the current recession by cutting rates, we also reduce the subprime fallout and provide a loosening of credit for the American consumer to help them deal with the current mortgage crisis effecting millions of Americans. The reduction of rates now to address current problems will provide plenty of room to increase rates at a later date to keep inflation under control without the possibility of putting the US back in recession.

First, I must say like the comments one being Carolyn and I agree. The last thing we need is to have interest rates drop. First off it is not like they are coming to us anyway. I do understand that the process takes time but since we are all in debt up to our eye balls I believe that even if they were giving money away we wouldn’t see any off it. Let me move to my point, ok lets thing about economics have a way to work themselves out. For example, gas is about $3.30 a gallon. Our dollar sucks against any other currency. Gold, platinum, lumber, wheat, corn ok how about commodities in general are all looking like a buy or at all time highs!! To fix this issue is to do what we did in 1981 , let he country go into a recession. Yes I know that might sound bad, but if you look at what happened afterward you would agree the plan would be a good one. Get people to buy more government securities, raise interest rates!!!

We are and have been in RECESSION and it centers squarely on oil. The housing crisis is limited to the lending institutions involved and the people who could not afford what was pushed on them. Which is criminal on behalf of the lending institutions and really has nothing to do with the economic status. For that reason alone the Fed should significantly increase interest if only for an undisclosed short term to clean out the suckers. Americans are going broke while the rest of the world is reaping untold profits at our expense. The rebate is a mistake. To dix the problem is simple:

1. The Fed increases interest rates to 5%.
2. Under Executive order from the President of the US all: oil will be purchased by the government at $57 per barrel and sold to the oil companies for at least 1 year.
3. The use of grain for Ethanol production is eliminated until it can be produced from non food sources for human consumption.
3. All prices will be frozen for one year.
4. Gas will cost $2.00 per gallon max. which will put regular around $1.85 for 1 year.
5. Interstate speed limits will be dropped back to 55 mph for 1 year.
6. Gas rationing: not out of the question.
7. Each consumer can chose any credit card they want but they only get one with a limit of $5000.oo or less based on income.
8. Credit card interest rate cap of 8%.

9. CEO Salaries are no more that 0.1% of a companies profit. Golden parachutes are illegal.

That should just about do it.

simple thought: why not short back in oil and gold futures market? eventually, the inflation won’t be so bad psychologically and US dollar will regain some place…

The problem is the dollar and the dollar is the problem. Wiping out the dollar (more) is not going to benefit anyone with an address in the U.S.A. end of story!

No more rate cuts, they are killing everyones savings accounts or at least those of us still lucky enough to even have a saving account. As one of the 65 million baby boomers now retired or about to retire and lucky enough to have worked for a company that pays a retirement plan and allowed us to have a matching 401K plan to make up for the short comings of a retirement less than what we were making. We need 5 percent for our savings to help make ends meet. If the banks money is worth 6 to 30 percent depending on the type of credit you are asking for. It may be a home or car loan. It most likely is a credit card with a horrible interest rate. Now my money is only worth between 0.5 percent which one of my small savings accounts is making up to about 4.25 percent which my last CD renewal was worth. The lower the rate goes the less money all of us trying to live off of a lifetime of savings has to spend. I get a retirement that is not enough to live on and try to supplement it with interest from my savings. At $20.00 for a tank of gas I can go alot. At $40.00 for a tank of gas I go less. At $51.00 for a tank of gas I have almost stopped going anywhere. At $80.00 for a tank of gas I will have to park my car. I also think way too many people are using the pay day loan to make ends meet and getting further and further behind the eight ball. Pay Day Loans business should have a 10 percent maximum put on them. The credit card companies should have a 15 percent cap put on them. I am not against someone making a buck but they don’t have to get rich off of every customer. All home and car loans should be fixed rates and capped at no more than 6 percent for the next 15 to 20 years. Get away from our dependence on oil from other countries. Invest in the United States and maybe we can slowly work our way out of this mess we are in before it gets much worse. I do not want to live like my father did from 1929-1935.

Why don’t all the savers unite and march our wonderful government in Washington to protest how they are stealing our savings with their contrived inflation!

The Feds should raise the rates starting next week! Inflation is way more of a concern… My husband and I have worked way to hard the past 10 years to save for retirement and pay our house off, and now we are having to pay for all the bad judgments people have made, because our CD’s and money market accounts are not drawing interest anymore. We have stopped spending money because of this. Feds PLEASE RAISE the rates now, inflation is way out of hand!!!

Wealth, just like energy, cannot be created or destroyed. It can only be transferred from one person to another.
When talking about the economy, think in terms of this wealth transfer. It is sort of like a poker game- 1 winner, others losing to various degrees.
Diddling with money supplies and interest rates does not alter the fact that the wealth has been transferred from the many to the few. The only way to REALLY fix things is to give the REAL WEALTH back to the many who lost it. Think about how the game MONOPOLY ends. When you want to start a new game, you have to resupply the other players. Otherwise there is no new game.

i think, fed should leave the interest rate as it is. They should have central government put some $$ in the economy to stimulate that. First thing first, lets look at the problem at hand. Government should take ownership of the houseing loan (paid off bank and get the loan trasfer to governemnt and reduce initial interst rate to 0% for next 5 years, now this would only apply to first time home buyers) This will free up serious money from poeple and they can go spend. 2. lets go back to iraq and oil. try to up the production and get prices negotiated. they are making $2/gallon got to be some way to leverage our efforts. if OPAC does not help, lets try to put lower terrif on US good to middle east which will create cheap US products and higher on foreign goods(i.e. lower trade gaps). Remove all subsidies from oil, put pressure to get production up. folks, i feel like it is so simple to turn this around, however given moran runnig our country, if anything can be doable.

This recession will never return to form, and here’s why:

1) Baby boomers retiring now. Net outflows from stock mutual funds accelerating in time.
2) All debts are past point of no return. Fed will never pay 10 trillion down–never. Homeowners will never pay down their debts–it will only get worse, they still don’t get it.
3) Subprime will peak this year, in fact this May. More defaults will follow. Alt-A and Jumbo ARMs will reset this summer. We haven’t even hit the steep slope yet, and S&P says we’re half way home. they lied before, how can we believe them now.
4) Unless gov’t cut a deal with BOA, Countrywide will take them down with them into the pits of hell.
5) Oil at $120/bbl. that alone will bring on depression.
6) Dollar continues to crash, not just from Fed, but because it is no longer the reserve currency and the petro-dollar is on its last leg.
7) All of the above is leveraged in the shadow market of derivatives to the tune of 600,000,000,000,000. Remember Austin Powers? There isn’t that much money in the whole world. We going to borrow from Mars?

It’s not the end of the world, but the end of our paradigm. The US will never be given a magic wand like the Bretton Woods agreement ever again, and the empire is crashing.

We need to cut interest rates by 2-3%, yes this is true, otherwise we are headed for our second great depression.

It is so obvious, we must as a country solve the energy crisis first and dependance on OPEC. We can not allw them to control our economy. We need to begin immediately building more Nuclear Power Plants and begin drilling for more oil in Alaska. We will not harm the environment and far less than 1% of our citizens would ever see the drill sites in Alaska. Wake up Green Peace and Al Gore. You are killing our economy.

The Fed should defiantly not continue to cut rates. I am studying in Spain for a semester and read the news everyday about the economy because it is something that directly affects me. I arrived in Spain 5 weeks ago and the Dollar was 1.47 vs the Euro now it is 1.56, a nearly 10 cent increase. That is about 2 cents a week that the dollar is losing in value. Not only that but the majority of Americans already are living from on check to the next on a tight budget, yet as the dollar weakens commodities traded in dollars such as oil continue to rise. How much can the American people handle? With these interest cuts we are sacraficing the majority of middle Americans to bail out people and bussiness’ that made bad decisions. I would much rather have a recession where my dollar can actually feed me, than stagflation where the dollar isn’t worth the paper its written on. On top of that, as we continue to weaken the dollar, we must also worry about all the countries that have large reserves of the dollar, such as China. How much longer will countries continue to hold onto a dollar that is constantly losing value, before beginning to switch to other currencies such as the Euro. In my opinion that is a worst case scenario for the dollar and the American economy.

Interest rate cuts send the wrong message. The purpose of rate cuts is to encourage consumer borrowing to stimulate the economy. However, that is what got us in trouble in the first place. A family can only borrow so much before they have to stop borrowing and pay off the debt. Recession and inflation are symptoms of a much greater issue.

All empires throughout history have fallen. The United States of America is just the next one to go. The reasons for our collapse are the same reasons the Roman Empire declined and fell. They are the following:

1. Decline in Morals and Values (This is the greatest culprit)
2. Greed (This is really a part of #1)
3. Political Corruption
4. Poor Economic Management
5. Division of the Empire
6. Self-assurance or Complacency

Does this sound familiar? The Roman Empire was systematically eaten away. This will, and is, happening to us. History is repeating itself. Frankly, we are at the point of no return. So, how can interest rate cuts help?

The crazy thing about US economic policy is that there isn’t any. The FED operates to sustain overpriced stock prices and asset prices at any cost. When the economy is driven by other than just stock prices, and other than just monetary policy, then perhaps the US economy will improve. Consumption and high asset prices do not make a great economy. Inflation of asset prices must eventually come to an end. If unmanaged, that end is stagflation and unemployment. The end to that will be proper economic management.

Stop lower the interest rates, because sooner or later that creates a major economic bubble. Which just causes major problems for many. Let things play out on their on.
It also hurts people who have saved all our lives (401k’s) and would like a little return on our CD’s as we began to retire.

Since 1932 all the federal reserve has done si build this economy only to cash in which is what the Fed and the banks are doing. They call it economic cycle which is rubbish. Every one of us must get together stop talking abouth it we have talked enough and just do it, do not go to work or shop for goods for five working days or until the Fed packs and leaves this country back to wherever they came from. Then we can all do what is right for this country which we all love.

Vote Ron Paul. He is the only one who knows exactly how the economic system works and what to do to fix it!

The lowering of interest rates is what has weakened the dollar. So no don’t lower interest rates any more. Also we have been printing money , there is no backing except the government.

Its all about politics folks. Its important for the Republican influenced Fed to keep proping up the economy with toothpicks with these constant rate drops until after the election.

I understand that oil refineries ( the good ole boys )are taking lower and lower margins to keep gas prices from going crazy, given their higher costs (over $100 per barrel ). Mmm …. I wonder why?

And maybe, just maybe, there is a concerted effort to keep the dollar low. Afterall, it is now the only way to attract foreign investments. Here comes inflation !!!

We haven’t seen hell break loose yet. Wait until after the election. The poor slob that wins won’t know what hit him/her.

Enought rate cutting has already been done. We should allow the markets to work themselves out and hold tight.

The dollar is not only going lower because of the lower rates, its also the lack of confidence in the US as a whole.
The US is splashing the world with more and more dollars, nobody knows what to do with them anymore.
The world is losing confidence in the dollar thats the problem due to the ever growing debt the prospect of increasing problems in the future paying for domestic healtcare, even one of your own rating companies I believe it was S&P in the middle of this dollar crisis starts talking about lowering the rating of the whole contry due to future problems if things are not gonna change in the way the government is spending money.

The lower dollar causes other country’s with stronger currency’s to buy it only causing more inflation for the US and the next time you buy oil again you will have to pay more dollars, weakening the dollar even more, etc etc.

Lower rates don’t work.
The US government needs to back Freddie and Fannie now, putting more confidence in the whole situation, its only confidence that can end this situation. Yes they will also save a lot of people starting the crap but there is no other way.
The new strong rules will prevent it from happening again, putting more relief on the whole situation and all of the US.
With this situation under control more confidence will come into the dollar reversing some of its losses against other currency’s lowering oil and gold price as its gets more expencive for other country’s that they start selling, lowering inflation and reversing the cycle.

But to keep the dollar from falling at a later stage, there has to be something done about the trade balance, more investments into your own country and less dollars to other countries.
Drastic measures to control future healthcare spending.
Oil wars should be stopped, you only raise oil prices giving these countries the US hates more and more money, you increase inflation and in the end only hurt your own people instead of helping them, thats what you are payed for.
More money should be put in finding a replacement for oil for at least a few things oil is used for lowering the power of the OPEC as they are using now to strangle the world and in this situation the US the most.
They lower production at $50 a barrel but dont raise it again as oil hits $100 with the excuse its pure speculation, who cares, kill the speculation then by upping the volume and get the prices under control at a more fair level.

Its all about confidence, confidence in the morgages, confidence in the dollar, confidence in the ability that the US wont go bankrupt if they dont change their government spending.

Intrest rates is just a small factor to adjust smaller misfunctions in the economie.

This one is more fundamental.

This has already been stated, but it is absolutely true.

The feds should definitely stop cutting rates.

My understanding is that the whole point of these rate cuts was to stimulate the economy. This would happen because interest rates on consumer loans like mortgages, home equity lines, credit cards, auto loans, etc. would also go down encouraging the consumer to borrow and spend. From what I’ve seen these rates on consumer loans have not gone down at all. However the interest rates on savings accounts has most definitely gone down. How is that good for the economy? The devaluation of the dollar has also contributed to the rise in commodity prices, which are reflected in the prices consumers have to pay. Again, how is that good for the economy.

As far as I can tell these rate cuts have had no beneficial effects but several adverse ones. So please Mr. Bernanke, stop trying to help us, we can’t afford it.

This was already stated earlier, but hits the nail on the head. It is absolutely true

I think the costt of living has gone up too much entirely. On the one hand utilities are wanting more and more money. Then necessities such as gas, food, and medical attention are getting more expensive also. You add it to the cost of housing and other things such as cars, and what you end up with is a bunch of people strapped for cash. The more cost goes up to the consumer, the less they will have to go back into the economy. So the problem is twofold, you have corporations not wanting their profit margin to slip so they increase prices (inflation), and you have consumers not wanting to give up money because they have to save for necessities, and prices keep going up. How can the government fix it when instead of putting money into the economy themselves, they are off spending money in Iraq and Afghanistan and leaving the burden on the american people. When will the average american stop having to pay? If you would like to respond please send to silverfoxx1981@yahoo.com. thank you.

Forget about lowering rates. The Fed should RAISE rates. The problem in the credit markets has NOTHING to do with the cost of credit — far from it. It has to do with the inability to price risk. In that respect, the rise in inflation may be a good thing: because it makes home prices relatively cheaper (due to inflation), it can make it so that home prices will rise in nominal terms and thus cure the problem of people being “upside down.” On the other hand, the Fed can’t let this get out of hand. With the dollar plunging and oil and gold skyrocketing, the Fed has to start controlling inflation. Indeed, the Fed should do only ONE thing: raise rates to combat inflation and it should consider inflation and only inflation in all of its policy debates and forget about economic growth.

Should the Fed lower the Feds Fund Rate? Why? will it bring long term rates down? Aren’t we just going to exchange banter about “Wall Street factoring in” 50 or 75 bps? Who cares? Will a drop spur consumer confidence or create jobs? I say Nay-Nay. Also may I comment on the self-procalimed “pundits” who call our present dilema a “cycle” – like 100% Liar Loans creating “buyers that weren’t buyers” has happened previously in history? I was doing business in the 70’s (homes were doubling during the escrow period) now THERE was some inflation -but it was ignited by the ‘74-75 Oil Embargo (gas prices quadrupled overnight) – NOT LIAR LOANS for people with no skin in the game! Volker had to take fixed rates to 17% (from about 9% by the way) to cure the ills of that economy. Our rates may already be too low. The proof is the ever-devalueing dollar Gentle Ben creates with his cuts. Ironic – eh? The Fed creates the very inflation they’re trying to combat by cutting rates! One suggested “answer” to our present problem is “let time shake the market out.” Tell me our “best and brightest” have a better plan that THAT!

dear jason, live in china, or columbia, or romania and work for a dollar a day – thankful that they are working! They leave their families for weeks or months at a time thankful to be working and sending money back home to their families – without which they would once again be eating dirt and grass.
I wonder if we the people will ever be thankful for the goodness we have? Probably not, not until we really suffer, may happen – whaa, whaa, whaa. poor US -A

It’s hilarious that the people on this board can’t take responsibility for themselvse and are blaming the Fed for this mess. In fact, Bernanke raised short-term interest rates for many years, and only recently has he lowered them.

In fact, the problem was caused by all the banks trying to cash in quickly on the sub-prime bubble. As banks inflated home values and sold terrible ARM’s to borrowers who were too dumb to understand what they were getting into, they created a huge portfolio of worthless promises on paper.

The banks are now trying to recover a fraction of their assets by foreclosing in an attempt to resell these homes in an already saturated market. This, obviously, will worsen the decline in home prices and hurt banks even more.

Instead, the banks need to refinance these loans into fixed 30 and 40 year mortgages at better interest rates so that they can actually give these people a mortgage payment they can afford. In addition, Freddie Mac should insure these loans so that the banks aren’t taking all the risk.

I agree that stupid people and stupid banks who did stupid things should pay for their crimes. But cutting off our noses to spite our faces will only make our problems worse.

RAISE RATES!! The falling dollar does NOTHING for the economy. So great everyone now has to pay more for everything!? Wish we had someone in office that knew what the h**l they were doing!

I sent a comment that was not printed, must be because I mentioned the name of a true economist. Well good news again today, Bernanke proved his move to not be such a bad idea–one more day. According to my censored source from San. Francisco – he sees the dollar strengthening, the crude weakening, equities doing better and bonds are selling off! all GOOD NEWS.

Again it appears that the market is searching for a bottom – this also is GOOD news, sorry doom and gloomers, pararnoia panickers the sky did not fall for yet another day.
Good news, if the sky does not fall perhaps whoever gets elected in the next election will actually have a few embers to blow on, and maybe a momentary breather before the next leg falls.

in the mean time I for one am getting my house in order – with nothing to fear.

The whole thing is a mess. No way we can continue to lower interest rate and the value of the dollar. As; mortgage bills, gas, food and water are going up. We need to figure out what we can do increase the income levels for the middle and poor class instead of weaking the dollar for the stock market

I am convinced that the economy would “work itself out” if the PROFESSIONALS who are trained and experienced could do their jobs without BAD NEWS media reporters manipulating the masses on an hourly basis toward fear, doom and gloom. I appreciate unbiased reporting of the FACTS and the freedom to come to my own conclusions and making intelligent, unemotional decisions with my investments. Can’t wait to see the headlines tomorrow proved wrong, AGAIN!

Hey, good news! Bernanke just may be brilliant after all! According to Todd Clark, managing director of stock trading at Nollenberger in San Fran. states “I am seeing the dollar strengthen, crude weaken, equities are doing better and bonds are selling off” Yea someone with an economic background sees the big picture, and not the tragedy of the moment!

It is getting better, even if La monica insists on staying in his emotion negative rut.

If you are looking for someone to blame look no further than your local REAL ESTATE AGENTS! They created an artificial inflation in the cost of homes to line their pockets with higher agent fees from the higher prices. They took advantage of the low interest rates to draw people into a false sense of security that they CAN AFFORD these over priced homes that were up more than 100% in value since 2000. Think about it… when in our entire history have the cost of homes jumped that high that quickly? If you bought a home in 2000 for $100K to $140K by 2005/2006 they were telling you to sell your home for $500K to $600K… does this really sound realistic to anybody??? Sure… if your GREEDY!!! A home was meant to be the place you lay your head, raise your family, contribute to your neighborhood, and entertain your friends and family… IT WAS NEVER MEANT TO BE A SHORT TERM INVESTMENT PURCHASE. No wonder so many people are depressed – they forgot that life is not about being a millionaire, it is about enjoying your life and all that your life encompasses!!! If you base your happiness on money you will never find true happiness and when it is all gone, what will you have left? OK.. maybe you can blame the FED’s too… after all, they helped the Real Estate Agents with their deception!

Cutting it should help a little, but not cure. Let the dollar drop so American goods are more afforable to the foreign markets & move the plants back here. Getting good paying jobs back will cure. People can’t pay bills & buy things on $10.00-$15.00 per hour. Foreclosures & bankruptcies are going to continue to climb while spending drops for the next couple of years. Get used to it. I’d like to see a “career” politician get by on the new wages.

STOP LOWERING INTEREST RATES.
IN CONTRARY, RAISE THEM TO THE EURO LEVEL.
Lower interest rates will encourage more people not to buy more but to BORROW more. And this is what this article alone suggests.
And this is what caused problems in the beginning. People were buying houses they could not have afforded.
I do not want to live like pariah, with lots of green, worthless paper in my wallet. Please, bring back my pride, as an American and bring back the value of the dollar.
I noticed that majority of people have the same thoughts. so, why nobody in the White House, nobody in Congress or Senat do not listen to us, people?
WHY?

please stop cutting rate! US $ is dropping too much.

Hollan Holmes from Dallas (see below)has the best answer of all of these. That’s because it’s based on the truth- the truth that the government, the banks, and the establishment media do not want you to know.

I think the collapse of the USD, and inflation as a result is more a treat for the USA than all the consequences of the supprime crisis…because the purchasing power will be more affected. We all know that consumption is the engine for a strong US recovery…So, cutting rates one more time is the last thing to do in this depressed economic situation!

No more rate cut. With inflation so high, is not going to lower mortgage rate. It only fatten the banks margin.
By cutting rate, he is robbing money from people who actually live within their means and save. And distribute this money to the reckless.
Why are people so pessimistic? Recession typically last less than 2 years. What is the big deal? It is not the end of world, why risk inflation which will erode of standard of living?

Every time the FED’s cut rates, they are only lining the pockets of banks & investors… the average working citizen DOES NOT benefit. Rate cutting only creates inflation & lower interest rates on our saving, checking, and money market accounts! Not to mention foreign investors buying up our assets because their dollars are worth more! Thus far, I have seen NO positive effects from rate cutting!!!

Lack of gov.is responsible for the U.S. financial condition. The $600 rebate will push gas prices up another 20-30 cents a gallon because oil companies wants all the extra money. When should the gov. be responsible for bailing out mtg. companies, auto industries, and everyone else that wants to live above their means. lower intrest rates has not and will not help the economy. it actually hurts the older citizens that has saved their money for retirement and living ff its income. SOLUTION; Go to Walmart and buy the round and square peg hole game that has a toy hammer with it and give all the lawmakers a test, if they can”t get all the pegs in the right hole in a couple hours get rid of them

You didnt really just write this:

“Hopefully, the rate cuts will encourage more banks to loosen their lending standards again”

Did you?

STOP cutting interest rates!!! You are severly hurting people with CDs and Money Markets. Enough is enough!

The cost of living has increased so much over the years and employers are not compensating their employees like they should… add higher energy and health care costs… and your done with disposable income… which is unfortunately what our economy is based on. You know our country is in trouble because we look at WalMart as an indication of a strong economy… not what we produce, what kind of industry we are supporting… just what we consume. It will be a decade before we sort this out… if we are lucky.

It’s so simple it’s complicated, and that’s why nobody sees it.

DEBT CAUSES THESE CYCLES!

Solution: get rid of the debt and its causes, and quit adding to the debt.

The causes: The Fed and its lending practices, out-of-control government folly spending, excessive taxes taking money out of consumers’ wallets, and dependency on a petroleum economy.

The implementation: Just writing off the debt would give the global debt economy a level 9 heart attack, but it would take care of the problem. The immediate recovery would cause a lot of investment and spending of both debt and non-debt funds. Cutting interest rates to 0 or even negative territory is not the answer as that kills the currency. Backing the currency with something not resembling thin air (the Ron Paul approach) would stabilize the currency. Raising the interest rates would accelerate the continuing recession and maybe get it done with early. Eliminating the Fed and returning the money supply back to the government would go a long way to elimnate these cycles. But the best solution is to decrease the money supply, since less currency chasing more goods and services will cause prices to drop across the board, which helps everybody. But such a reduction in liquid cash cannot be offset by an increase in liquid debt, either, or else it has no effect. Getting off of our petroleum dependence, or at least the imported part of it in favor of the domestic and alternative fuels, would be a huge improvement.

Us Paulites warned everyone about this, and here we are. Instead you chose, with the MSM’s help, three economic morons. You reap what you sow.

I think Milton Friedmen was right when he said we’d be better off without a FED reserve.

This will not be a garden variety economic slowdown no matter what the Fed does. The Fed’s actions to date are only making things worse. The Fed, by promoting two major economic bubbles in stocks and in housing with their loose monetary policy, cannot expect the fallout to be benign. There was just too much debt created by the Fed’s policies. Now that debt has to be liquidated. It cannot be inflated away. I expecting a depression and it will be primarily the making of the Greenspan Fed.

STOP CUTTING THE RATES- I WANT TO GO TO EUROPE ON VACATION!
What ever happened to a “Free Market Economy”? Let the markets play it out. Stop trying to fix this mess we let our greedy selves get into. And next time…”If it all sounds to good to be true”, it probably is.

No way! When the interest rates go down the house prices go up. Plus borrowing is what has gotten us into a lot of this problem so why should we encourage people to borrow more? Plus we would love to be able to draw higher interest rates on our CD’s for our retirement years.

The average American consumer is up to his eyeballs in debt. The feds want the banks to loosen up their lending policies thus allowing the American consumer to borrow more money. This could potentially perpetuate the illusion of prosperity for a little longer but does it really make sense? If economic growth in this country is based upon the consumers being able to continuosly take on more debt then it’s a house of cards that will eventually collapse.

As long as we can see, history tells us that every action that is taken by the Fed, needs a prudential time to show the effects. May be only a quarter of a point should be cut in the next meeting…And in my opinion, recession must be a priority over inflation, given the fact that it is created by external elements that Fed can´t control such as oil and commodities. That is why support the idea of cutting rates, but always considering that results are shown over some time.

rate cuts want help.the middle class you know the people that are losing there jobs overseas have to have money in there pocket!!!!!!!!

How can more rate cuts help when it is clear that consumers are not receiving any benefits from those cuts? The cost of borrowing for consumers has risen since the first wave of rate cuts. Anyway, why would we want people to borrow more? Isn’t that what got us in trouble in the first place? A recession is good and a corrective measure. Nevertheless, recession and inflation are symptoms of a much greater issue. We need to stop thinking of short term, instant gratification fixes.

re: “Where to begin? Retail sales for February were shockingly weak, with sales falling 0.6% during the month compared to economists’ forecasts of a 0.2% gain. Those numbers put dents in the argument that consumers would keep spending in the face of the housing downturn.” – - – The housing downturn affects income from jobs for people in all walks of life from lowly laborers in construction, landscaping, lumber mills, steel mills, concrete plants, brick manufacturers, etc., etc. up through mid-level builders and on up through the corporate officers of big “tract” builders… It’s hard to spend when you don’t have an income!
Please, no more rate cuts.

I don’t think it’s fair to blame Mr Bernanke for all our problems. Hello!! The real problem began at Mr Greenspan watch.The real problem started since 2001 when greedy bankers,securities, lenders,brokers and gang went for an O.D. of stupid subprime mortgages. Would you please tell me if you have 5000$ can you call these genius at Merrylynch and ask them to get you some 500000$ of stocks.God forbid!!! That’s exactly what these idiots were doing in the housing business which is the main sector of our national economy and under the close supervision of Mr Greenspan.The whole nation entered in a vicious circle: More demand , more housing and more higher prices. The bloody subprime mortgage was not the problem. The real problem began when every American wake up and found himself rich as he already owns an etra multi thousand $ equity on his house and started shopping every stupid digital junk and equipping the third bathroom with an LCD or he became an investor as he started looking for a second house, beach house, Florida house or changing all his countertops to Blue Bahia granite…Then as everybody became more rich (God bless you Mr Greenspan) almost everybody started over-using using his plastic cards and getting more junk and more plastic cards…If we can stop blaming Mr Bernanke and blame ourselves it could be better. Maybe if we can stop watching our stupid TV channels, and stop piling Chinese junk, study little bit more and try to improve our industry it will be better for every body. Fair enough Mr Bernanke?? Well the Fed reacton was a bit late and it is quite wrong to reward the greedy bankers. Let them slach the mortgage rates and force them to lend the eligible decent American hard workers. That is the only way to give life back to the housing sector and to our economy…

i’m buying a house in a about a month so i hope rates go down just long enough for me to have a lower mortgage payment so that i can also afford gas. then rates can go back up! thats my request anyways

being told on a daily basis that the American currency is worth less has a huge pyscological impact upon us Americans. If I’m told my dollar is worth less that means I have to save more dollars to keep up which means spending less which isn’t good for the American economy. Personally – O think the BUsh administration knew the American public was tapped out and lowered the dollar so as to get foreign currency. Remember – the name of the game is getting your money from your pocket into my pocket.

Strange that the economists don’t see the Iraq and Afghanistan Wars as a factor! Think of the waste of billions, becoming trillions of dollars and that it is all being debt financed!

We got into this mess by lending people with bad credit lots of good money – how does lending BANKS with bad credit lots and lots of good money (with zero collateral) solve anything?

Oh yeah… by deflating the dollar, you spread the cost to everyone else and let the (4 to 5?) banks off the hook by reducing the value of their debt.

Meanwhile everyone’s savings quickly go to worthless and those consumers (who are using credit, not savings) are now buying necessities with their cards.

Any idea on how long it’s going to take our nation’s lenders (China, Germany, etc.) to decide that we, as a nation, have overspent our credit? Or to jack the rates on those loans skyhigh to make up for our currency devaluation?

the problem Bernanke has is not unsimilar to the average American and is in fact a product of this countries philosophy of economics…. spend more then you make…. then when it becomes crunch time for a small shake out the gov’t creates new ways for you to dig yourself deeper and deeper into debt…. and the gov’t does the same… at the end of the day someone is going to have to pay off the debt…. the reality is the feds are put into a position whereby they have to reduce rates because there are no more loop holes – no ways to borrow from another credit card to pay off the monthly bill on the other…. this countries baby boomers who amassed the fortune because of the gov’t’s decisions are now poised to be the ones to lose everything…. I say stop pulling the bow back and let the system correct… those with sound fiscal policy will prevail and there will be a new philosophy that will exist you spend what you make and enjoy the fruits of your labor with the one’s you love and that you share the rewards with…..

No more cuts. The first ones didn’t help. Need to check on the oil companies and find out why the prices keep going up.

There is nothing that we can do immediately to solve this. 15 years(Reagan/GeorgeW) of voodoo economics has brought this country to it’s knees. We need to tax the wealthest of us(a lot) and bring a moderate tax cut for the middle class, get out of Iraq, reassess afganistan with an eye to how much it is costing us, change nafta to save jobs and ensure that the republicans never take the whitehouse again!

Inflation of the 70s was horrific to live thru. I do not want to do it again. I have been warning about this for 4 years since the war started. Do not lower interest rates any further.

Let see, the dollars down, oil is up (weak dollar) and what got us here in the first place (beside greed) is that Greenspan left the interest rates too low for too long. An Bernarke (due to elecion year?) is taking us down the same path. Only a matter of time befor it bites us in the butt. Wake up and let’s start doing the right things.

The Federal Reserve’s new Term Securities Lending Facility (TSLF) is a joke! It’s clear that the sole purpose of setting up the TSLF is to absorb the upcoming flood of mortgage-backed securities from the liquidation of Carlye Capital.

It’s good to see there are some people that understand (hollan from dallas & jason from philadelphia) that no country has ever survived using money created out of thin air, backed by nothing. — the federal reserve & IRS can’t function without each other, they both need to go!!!

Ugly retail sales, etc, ..point to a recession? We are in a recession, where have you been?!!

No country has benefited from devaluing its currency; if the Fed continues to destroy our dollar via printing more money and cutting interest rates, oil, food, and all other commodities will rise in cost and we’ll all be standing in soup lines! Both Bernanke and GW should be fired!

Lower interest rates are fueling inflation. The rate of inflation is
increasing consumers costs far beyond
the amounts consumers need to pay
their morgage payments. Now the drain
from inflation is causing the morgage
defaults. Low interest rates caused
the bubble and low interest rates are
now expanding the bubble and placing
everyone in present and future jeopardy.

Who cares about a cut in the discount rate? It in no way gets past on to the customers. It is just another way for banks to keep a profit they are happy with. The market has been going south, cost of oil is going up, but the average 30 year fixed rate for a mortgage has been going up? There is no logic, just keep enough money under your mattress and don’t trust a bank.

The bigger problem is inflation. A raise is a luxury, and the exception. Gas prices are going through the roof, along with health care. The cost of groceries is getting ridiculous. How can anyone survive if costs are increasing with double digit percentages, but our income is staying the same, or decreasing? I actually made less in 2007 because my former company switched to a crappy HSA. I had to pull out more pre-tax dollars to cover the outrageous costs on a high deductible plan. I therefore had less income, but my employer sure did save a lot on health care cost. Which he thanked me for by not giving me a raise.

I believe the Federal Reserve should follow a path that is counter intuitive on short term rates. I think they should raise rates by three quarters of a percentage. I think this would cause the “Oil Speculation” bubble to start to burst by increasing the value of the dollar and getting speculators out of the oil market. This would also help to curb inflation and jump start consumer confidence since consumer spending is 70% of the economy. When the economy does better the banks (The Federal Reserve’s customers) do better.

I am a Mtg. Broker in the State of PA and believe that the Fed should cut the rates..This will jump start the economy, houses will again be sold and every phase of the housing industry will start to rebound. Individuals with massive debt would be able to refi into a suitable monthly payment. I still have people who need to refi out of credit debt.

Oh and to that person that thinks that the war is causing these problems. GET REAL. At this point the War is the only thing holding up the economy. The War Machine is currently at the top of the economy food chain keeping those in it with jobs and spending. Allowing people in retail to sell to them.

It don’t think the Fed will be happy until I’m earning under 1% on my substantial amount of savings. There is absolutely no incentive in this country to save. Where should I put my money? In the stock market? Not right now. The Fed cuts rates, people still pay the same or more for mortgages and I earn less interest on my savings. How does this help anyone but the banks?

This whole situation also CLEARLY shows our (America’s) over dependence on credit. The housing market collapse created the recession issues and our debt levels (both personal and government) contribute to the weak dollar and these factors are dominoing throughout the economy.

Unless the Fed can some how force oil down fromm $111/barrel, make the Prez and Congress reduce our debt and convince foreign investors the dollar and our debt is worth more than the market says it is, it should focus on the one area of the economy it is likely to impact … fighting recession.

It didn’t ‘happen’ overnightm and therefore, it can’t ‘un-happen’ simply because we wish it so.
It’s a rough ride; everyone hang-on! The markets have to adjust themselves and with it, the consumers.

The Fed should start raising interest rates not lower them. The policy of lowering interest rates is having the opposite affect on mortgage rates. This is due largely to risk and inflationary pressures, requiring investors in the mortgage backed securities market to require a larger rate of return. The things the government can do now are:

1.Reverse the interest rate cutting policy allowing mortgage rates to come down. This will allow existing home owners to refinance at a lower rate and other possible home owners to afford mortgages.

2.Banks are taking up to 8 weeks to respond to offers on foreclosed and pre-foreclosed properties from potential buyers. This is ridiculous. If banks would respond in a couple of day’s time to an offer more of these properties would be purchased.

3.Tackle the issue of high energy cost. High energy cost are driving inflation at every level and taking extra liquidity out of the market. The government obviously did not learn anything from the energy problems of the 70’s. Some common sense permanent policies might be the more fuel efficient the automobile the more the tax break should be. If an automobile does not meet certain minimum mpg requirements those individuals should have to pay a fuel surcharge. We as a country need to conserve and invest heavily in alternative and environmentally friendly energy sources.

The last time I checked the federal government was well over 9 trillion dollars in debt. We cannot afford to bailout existing homeowners nor should we.

Stop lowering rates!

You are KILLING the dollar!

You are KILLING people on fixed incomes!

You are KILLING people’s savings!

RAISE the rates before its too late!

“It’s this simple … inflation = the money people earn doesn’t go as far. Recession = A lot of people aren’t earning ANY money”

Right on. Problem with the Fed though is that they’ll eventually pick controlling inflation first, since inflation hurts the debt holders, i.e. the rich and powerful.

It seems everyone responding attended a school that taught them outdated (and proven wrong) Keynesian nonsense. Inflation, defined properly as the growth of money and credit beyond the supply of goods and services always creates bubbles, which pop and cause harm to everyone involved – the innocent and the guilty.

The real problem is the Federal Reserve themselves. They always bail out the banks and Wall Street and the heck with the common man and his small stash of savings.

For the youngsters replying here that think inflation will solve all wrongs, then they did not live through the 70’s when prices were going up so quickly an annual raise never allowed a person to even maintain the same standard of living. That’s why Volker focused on the supply of money and NOT the Fed Funds rate. Only by taking rates to 20% (yes kiddies, that’s right 20%) did he conquer the fear / expectation for continued inflation, which allowed for a healhty economy.

If anyone responding with more Keynesian crap about inflation will read about Germany during the 1920’s, they will understand that it is a drug that feels good, but like any drug you need more and more for the same outcome / high.

Please read more economic history folks.

Loose money got us into this problem, and it’s absurd to think that loose money can get us out. When housing appreciation is three or four sigma beyond trend-line growth, it’s silly to think that low interest rates are going to keep that trend going. All these interest rate cuts are just further discouraging saving while encouraging foreigners to buy more and more of our tangible assets, because no one wants to hold any more American IOUs.

Bring back Paul Volcker! Enough with the easy money Fed!

America runs on oil. You can talk all you want about recession. As long the cost of oil remains high no one will have money to pay for much of anything else. My tax rebate will go to buying fuel and nothing else. That’s some economic stimulus. Only the speculators and oil companies will be benefiting. At $4.00 a gallon the fed can not do anything to stop recession.

Stop lowerinf interest rates and icrease them so the real estate market will correct, with a 60-70 percent drop in the current prices

Cutting the interest rates is a double edged sword.It helps some industries while hurting others. This problem has been a cycle since the early 70’s and will continue…nothing new. Let it play out in time and the economy will grow again.

http://www.sellmyinventory.com

The Federal Reserve is a bank. It is the bank for the banks. The banks go to the Federal Reserve to borrow money.

The banks are the Federal Reserve’s customers. The Federal Reserve will keep pumping money into the banking system and lowering short term rates until the “credit crisis” gets straightened around.

The Federal Reserve does not like inflation but that is not its main concern. They will do what they have to in order to get the banking system back in order even if that means letting inflation levels increase.

The Federal Reserve will let inflation levels increase until the banking system gets back in order. They care about the banks, not you, so everyone except the banks is going to have to pay the price for the “credit crisis” in inflation so that the banking system can get back in order.

I sit here reading all of this and its just crazy that no one has got it yet ok first i would like to say i dont know about all of you but when i was 16 gas was like 1.02 now its 3 a gallon or more give or take but you have to have gas to go to work to make money and used to you couldfill your tank and have money left to spend in the economy but now haha thats a joke and its crazy because no one in their right mind would buy a new home when they cant even buy the gas to get work much less a new car when you cant even pay to put gas in the one we have think about it where we used to pay like just say 30 a week now we pay 65 or 70 a week now compare to the whole month at 30 a week thats 120 now lets say 70 a week thats 280 a month now thats why our economy is in the state its in its odd to that Bush is an oil man dont you think hmmmm????

Why is it that the “people” can see what’s happening and what needs to be done but those in charge of making the decisions are stumbling around like blind mice?

WE HAVE THE OIL, BUT WE HAVE POLICTICAL WHORES WHO ALLEGANCE IS THEIR POWER STRUCTURE ! “GOING GREEN, MEANS SOMEONE MAKING ALOT MORE GREEN !”
IF I BUY A CAR THAT GETS 50 MILES PER GALLON,,, THE FEDS WILL RAISE THE GAS TAX CAUSE IT’LL BE LOSING MONEY AT THE CURRENT RATE OF CONSUMPTION ! THE OIL COMPANIES WILL RAISE THEIR PRICES STILL EVEN HIGHER TO COUNTIUNE THEIR PROFITS !! THE TAX REBATE CHECK FOR MOST IN AMERICA WILL JUST BE RELIEF FOR PAYING FOR GAS & FOOD FOR ABOUT 4 MONTHS !!! WE NEED TO PUT AMERICA JUST !! AND DRILL DRILL DRILL ! OR THE KENNEDYS’S,THE GORES CAN PAY FOR MY BILLS ! IF NOT THEY CAN SHUT THE H#@LL UP !!!!

Stop cutting the interest rates! Let the economy sort itself out!

when we send all our jobs overseas, who will be able to buy all our stuff?

This whole mess is due to the Feds misguided desire to reduce inflation and cool the real estate market by systematically raising interest rates.
These rate hikes which took place after Bernenke was put in charge and the sluggish response in then lowering them killed the housing market and caused the foreclosure crisis and all the other resulting problems around the world. Now as a result, an inflation problem we never even had now exists and is made worse by the global lack of faith in the feds decision making and the state of our economy.

Instead of having attacked the housing market as a means to cool inflation, the feds should have figured out a way to be less energy dependent. Perhaps tax cuts to motorcyles and other fuel efficient vehicles instead of those to gas guzzling SUVs would help. The fed needs to resurect the housing market in order to get things back on track and cutting interest rates may not be enough.

It’s this simple … inflation = the money people earn doesn’t go as far. Recession = A lot of people aren’t earning ANY money. In other words, would you like to have a job, but not be able to buy as much or would you prefer not to have a job at all? That’s what the Inflation/Recession arguement boils down to for the average American. Recession is the bigger problem and, as another comment noted, the failure to act aggressively against recession caused the Japanese problems during the end of the 80s and throughout the 90s. Another reason the Fed should act against recession is that inflation is primarily due to oil prices and, to a lesser extent a weak dollar, not wage inflation. There is NOTHING the Fed can do about oil prices and a weak dollar isn’t all bad (helps our exports and trade balance). So the Fed should fight the battle that it is most likely to win … the battle against recession.

The root problem is the foreclosure mess, and reducing the discount rate will do little if anything to fix that.
Foreclosed, abandoned homes are a problem for the former owners, for the mortgage holders, for the neighborhoods, for the communities and all of their taxing entities and eventually, for all of us.
Abandoned properties attract vandals, are frequently stripped of appliances, attract drug users, harbor vagrants, and attract all sorts of illicit activity, all of which take their toll on the communities.
Taxes are seldom paid on vacant properties, putting all taxing entities into a cash-flow bind; devastated values result in severly diminished revenues; it is predictable that eventually, many governmental bodies will be unable to make payments as due on their bonds, which, if it is allowed to occur, will create another financial crisis at least the equal of the present one.
We need to focus on the mortgage foreclosure mess: it is the real problem. Lenders need to understand that foreclosing will result in greater losses than mortgage rate and amount adjustments.
The tax code needs to be modified so that, in this instance, a reduction in debt is not treated as taxable income (it is obvious that a homeowner in default on payments cannot pay the additional taxes that would accrue to the 20-100,000 income represented by such mortgage debt reduction.
Lenders need to have the opportunity to sell their tax loses; they would realize very desirable cash infusions; the tax loss to the treasury would be less than the loss it will incur given the present course of event.

The Fed has (once again) under-estimated the power of the American psyche…and that is simply we don’t have confidence in the economy. Gas prices are curtailing our spending, unemployment is up, foreclosures are everywhere and we don’t know where this is going. So we won’t spend, even when the government hands us money or lowers our interest rates. The Fed can’t cut anymore as that is only killing the dollar and foreign investment. That old adage is now most appropriate: Just ride it out. Let the economy shake itself out. There are going to be some serious losers when this is all done, but that is the price we are going to pay.

From the developing economies – I call for a three quaters. That may sooth our dreary market and decrease fear.

The only way to permanently fix the economy is massive funding in a comprehensive alternative energy srategy. Without one the economy will be either in and out of recessions or more likely eventually enter a long term “new economy” of negative or stagnated growth. The current stimulus package, although well intended, will do nothing but increase future federal debt levels.

Does anybody really think adding more funds to the market when the banks are tightening credit standards due to severe losses will actually work? I am not sure how I would loosen my credit standards if I were say, Bank of America, just because funds are cheaper, especially after my Q3 and Q4 write downs.

The Fed is doing everything wrong right now. They should be trying to flight inflation – because of the dollar’s drop, we are going to see inflation we have not seen in 30 years (since nothing is produced in America anymore).

This is something that requires more effort than the Fed – Congress needs not only a balanced budget, put to start paying off the debt they ran up the past two decades. US businesses need to focus on developing export markets (which it appears we have forgotten how to do).

No, this is not going to be a recession – it will classify as a depression when all is said and done. There are no fundamentals left in the US economy.

The short answer is NO, NO and NO! The long answer is Ben & Co. can do whatever they want that pleases the White House. It is already too late to stop the Junior Depression from happening. I am amazed at the level of arrogant stupidity of people in power. The White House, Greenspan, Ben and others do not understand that people need to spend their money-earned not money-borrowed. Borrowed money is a good tool for responsible borrowers who leverage and make more money at the end. Borrowed money becomes a nighmare for irrisponsible borrowers who finance their day-to-day lifestyles; meals, vacations, cars, clothes, etc. This is exactly what the Feds want to accomplish by lowering the rates; more stupid people to borrow more money and spend it all on their short term needs. Never mind the “worth_less” dollar! Wake up Ben & Co! People are suffering because of inflation that was created by Greenspan and taken over by You & Co. Do all of us a favor, just quit!

Well, finally all the foolishness has come back to haunt us. The Bush tax cut for the rich. The 9/11 gifts to many with life insurance. The Katrina gifts for those not smart enough to buy insurance. I heard about a person that died in a car wreck that didn’t have insurance. I could not believe that the government didn’t bail him out. And there is the Bush war. Print lots of money and give FREE money to everyone. If gifts of $300 to $1000 in tax refunds are good, why not a million to everyone? The obvious solution is to print more money. It won’t cause inflation. We can all use it to buy gold and silver.

“What most people fail to understand is that our economy is entirely artificial. It is based on money that simply doesn’t exist. The Federal Reserve is issuing a fiat currency, that is a currency backed by absolutely nothing. It is completely manipulated. Recessions and depressions are NOT naturally occureing market entities, they’re products of the grossly irresponsible Federal Reserve banks. Abolish the Federal Reserve, eliminate the income tax, whose sole purpose is to pay the interest on this fiat currency (income tax is not used to run one single aspect of government) and we can begin the road to recovery, using a currency backed by REAL money, gold and silver. Until we abandon the Federal Reserve, which is neither federal (its a semi-private cartel of BANKS) nor do they have any reserves, our economy is forever doomed and we will remain indentured servants of a government which has grown far beyond its manageable bounds. Raising or lowering rates will have no bearing on our impending economic collapse. Game over.

Posted By Hollan Holmes Dallas, TX : March 13, 2008 12:33 pm ”

I can think of nothing better to say than this…except one thing. There was one presidential candidate that kept alluding to this problem and you ignored him. While ample time was afforded to “hot air” debates about “who was electable” No time was given to the individual that was providing possible solutions to our problems.

The protection of the press and speech were placed there so that the government would have to be accountable to people…How ironic that the press simply dances by the strings of their political masters.

The simple truth is this “THEY DON’T WANT TO FIX THE PROBLEM!” The fed has done this before…countless times.

A defination of insanity is expecting different results from the same action. And that is exactly what the fed is doing.
Cut rates, Wall Street rallies, the dollar drops, gold rises, and when the bell rings at 4o’clock the bankers are happy.

Just keep this in mind…your “FRNs” (Federal Reserve Notes) are worthless, and one president in the last century realized the madness of a government BORROWING money from a bank instead of printing it…He was murdered in broad daylight on a bright sunny Friday afternoon.

Wake up “America”, cause this ain’t the republic our forefathers built anymore. Its an Oligarchy, cleverly disguised as the mob rule form of government we lovingly call a “Democracy”.

Inflation– funny to think. That is part of our problems as the American people continue to move forward. *Thinking* We are not doing it. We are not doing it the right way. If the American people *only* knew 1/2 of what the Government was doing, we would be worst off then we are now! Power to offices has been given to the wrong people that have placed us right where we are today. So shame on you. By raising prices, the people will suffer and suffer greatly. So my advice, sit back and enjoy the ride.

Why don’t they go and talk to real people on the street instead of looking at numbers all day. People are having to choose between gas and other necessities while having to spend more and more on everyday goods. Their savings rate has tumbled in matter of few months, therefore having less money to spend.

Lowering interest rates hasn’t stopped foreclosure nor made homes more affordable (interest rate is virtually no change from last year). I consider myself in the upper middle income, but I can not afford $417k conventional loan, and yet they increased it to $729k in my area. Why are they putting more risk into the market? People who can really afford such amount to borrow really don’t need the help. Come out of the bubble and see the real world for a change.

The author of this article does not get it about the economy. The FED need to Raise the interest rates. This is the only solution to recovery.

I would suggest to read Peter Schiff’s book “Crash Proof” and watch him on Fox and CNN at http://www.europac.net/video.asp

Dan Pallotta – Are you (or anyone) insisting that if NO ONE whispered the word recession that we will never have one? That is foolish. WE (those who have our eyes on the future and not the end of our nose) can see recession coming or already here and the forces moving us towards that. Don’t fool people into thinking that recession is only a self-fulfilling prophecy. Otherwise you will also have to convince everyone that simply “talking” about getting OUT of a recession is the best medicine once we’re in one, which is equally asinine. Look at the DATA and trends. Talking about those two things is not some voodoo magic spell that curses the economy. It’s taking a realistic look at where we are and where we are going.

Ben Bernanke – please STOP the rate cuts, bailout plans, money dumping, etc. You’re only making matters worse. Let the housing market self-correct (a.k.a. prices drop to meet demand) because artificially propping them up with all the bailout plans will only prolong the pain long enough for Bush to get out of office.

Stop cutting rates. It only makes the dollar weaker. Stop trying to bail out the organizations that got us into this mess. Let the chips fall where they may and concentrate on strengthening the dollar.

People keep speaking of recovery. Recover to what? Industry, manufactoring, farming all but gone from America. The only thing (that was) keeping the ecomony going real estate, health care and retail. Real Estate in the tank-retail to follow. The lending rules need to be revamped as well as credit scoring or the housing market will not recover. New car sales have yet to bottom out. Credit card default is coming-we havnt seen anything yet with writedowns from banks. Until those in the know stop playing games we are never going to recover-and again recover to what? There are no jobs available-unless you are willing to move overseas. Perhaps I too am going to ask to be paid in Euros.

It’s the dollar, stupid.

You are in a recession NOW! The next step is a DEPRESSION that will make 29 seem like a walk in the rose garden. You have not seen anything yet.

The Fed should take pause and may be even consider an increase within 6 months. Unfortunately all the rate cuts in the world will not stop this one. The Credit mess is of the banks own doing by disregarding good lending practices all in the name of turning more fees. Those guilty of misleading bowers or putting them in mortgages they know they could never afford should be locked up. The other part of the equation is energy. The speculators need to be forced out of the market. Recent days inventories should have resulted in price drops. Not the case and it is not just the dollar wows. How about good old fashion greed. Want to fix that one, require anyone buying oil in the commodities market to actually hold it for say a month or two before they sell. You would see the speculators jump out so fast prices would be fall back to a typical supply and demand model.

It’s time to quit lowering rates. This is just further weakening the dollar and increasing inflation. It’s time to let the banks and hedge funds deal with the mess they caused themselves.

The current pattern is harming those of us in the middle class, even financially responsible people. Even on the higher-yielding online savings accounts the APR is now below the inflation rate, meaning that our money is losing real value as time goes on. Add to that rapidly rising food and energy prices and we’re getting squeezed really badly.

We have been living beyond our means for many years. Our savings rate is negative, our credit cards are maxed and our national debt is ridiculous! We are being told to live “one day at a time” and don’t worry about the future. Well, the future is here folks! Remember the old proverb about the ants and the grasshopper? Simple but true!
Oh, and the world is running out of oil also!

Paul R. LaMonica is a fear, doom and gloom propagandist. Do a search of CNN articles authored by this one-sided, angry author. One would think we were living in squalor, not the best country and economy in the history of mankind.

The Fed is a scam thrust upon the United States by a cartel of ultra rich. Please google “The Money Makers” to see the history how the scam has been used throughout history to fleece the middle class and the use of cyclical economics to remove money and redistribute property through a system that is based on nothing!!!!

The whole “rebate” stimulus package is a joke. You know what I’ll be doing with that check? Sending it back to the IRS as a portion of the $3,000 I ended up owing from last year. If I wasn’t doing that I’d be paying off the now small amount of credit card debt I still have. The only thing any even semi-sensible person will be doing is paying down debt with it. So that stimulus will be DOA as far as helping the economy goes. Just an idiotic idea to begin with. CUT MIDDLE CLASS TAXES DRAMATICALLY WHILE RAISING UPPER CLASS TAXES DRAMATICALLY RIGHT NOW, IMPLEMENT MANDATORY OIL RATIONING, CUT THE MILITARY BUDGET BY 30%-40% AND HEAVILY SUBSIDIES ALTERNATIVE FUEL RESEARCH, LIGHT RAIL SYSTEMS, ETC. FORCE CHANGE NOW BEFORE IT’S TOO LATE OR IT WILL BE TOO LATE VERY SOON. WAKE UP AMERICA THE BELL TOLLS FOR THEE!!!!

The quote from the article says there is nothing the Fed can do but wait. This is exactly what happens when everyone gets on the “we need to de-regulate everything” train. People cannot be trusted, even if they come n a suit or have a CEO title. Companies cannot, I repeat cannot be left to police (regulate) themselves. If there was real regulations (even government staff to do the job + tougher laws) the subprime real estate schemes would have been caught and punished severely instead of everybody in charge just watching to see what will happen next.

“It’s difficult to figure out just what the Fed can do other than let the credit markets and housing markets work themselves out, and hope the actions the central bank has already taken stimulate the economy at some point.”

Now people who never cared will pay the butcher’s price for just going along with the de-regulation bankers and their political backers.

The fed needs to leave interest rates alone. Let the market take it’s normal course of action and fall into recession. In my opinion if some of these banks or mortgage company’s need to shut their doors that’s just too bad for them. Maybe they should have been a little more carefull about underwriting questionable loand in the first place. As far as I can see, slashing the interest rates are only helping the banks create more magring and having little effect on the consumer. Stop printing money and infusing it into our banking system and creating inflation. Start regulating the banks and mortgage companies as they currently do with the securities firms. I think the fed is working extra hard this year trying to prop up the market mostly because of the election. Unfortunately they are doing more harm than good at this point.

Printing more fiat currency and cutting the prime rate will only devalue the savings and assets of those who sacrificed and saved responsibly for their future needs. This punishes only the wage earner and rewards the banks and financial wizards that took gross advantage of the stupid, greedy, and ill advised that thought that, no matter what the storm, all boats will always float -and SOMEONE would bail them out if they were swamped. The chickens ALWAYS come home to roost. It should NOT be the honest, hard-working taxpayers who have remained the self disciplined backbone of the nation who suffer.

Untill the riseing price of Fuel and the cost of Fuel and Produce go down the American People will continue to cut there spending takeing care of there family,s come first.The Fed.is helping but it,s not enough.

The Fed needs to take a decent breath and stop hyperventilating. The cuts have sent a signal but any more will kill the dollar so much that we will have to take out loans for gasoline (if you can get a loan). Worse, foreign investors might decide they have to unload dollars at a loss to avoid worse later – like covering short positions in a surging market. You hate it, but you cut the losses.

Bernanke’s rate-cut frenzy is like changing your oil every 2000 miles, then 1000, then 500, if your car is malfunctioning. HINT – Maybe the problem is not the oil…

I’d be curious if Paul La Monica ever sees any good news in the economy or is his glass always half empty?

What the Fed needs to determine is whether they’d rather have a lot of worthless dollar bills in their pockets or something of value instead. The Fed seems more concerned about keeping investors happy (with multiple rate cuts), than about being practical.

The ONLY time the Fed should cut rates is if the economy is somewhat stale and needs a little boost. These cuts should be minimal and occur rarely.

Tax cuts DO work! Cut them more! That will stimulate the economy moreso than rate cuts. Supply Side economics work every time, or have we forgotten? Rate cuts help banks, but not the average citizen. Put more money in everyone’s pocket (yes, including the wealthy, as they’re the ones who CREATE jobs), raise rates & get the markets (and commodities) back to fundamentals. Yes, we NEED foreclosures! We NEED housing prices to fall! We NEED some economic darwinism!

Recession is normal, and necessary. This time around, embrace it & recognize it as an essential cyclical part of a successful economy.

Retail sales sink .6% in Feb 08… Much weaker than expected…

Things to consider — this report is probably weaker then noted. The following retailers Do NOT report monthly sales data.

Source: Company Reports TNS Retail Firward

http://online.wsj.com/article/SB120476282188615013.html?mod=djm_HAWSJSB_Welcome

I have resonded once to this blog, but maybe if Mr. Bernanke and Gang find it, they will see what the general consensus is…

What I would like to see them do is drop the Fed Funds Rate one more time by .5% to 2.5% and come out with a strongly worded “hawkish” statement about inflation and that they are done with rate cuts until they have time to work through the system. Also, continue to keep the TAF window open to those holding MBS pools for collateral so that if there are loans in there that are under stress, it will delay the bank/security dealer from having to take the loss today and maybe stretch the problem out over time and let the banks take the losses instead of me. This will protect the currency, give traders the incentive to dump out of the inflated oil price and by easing the inflation fear, long term rates (mortgages) will come down with the reduced inflation risk giving people a better opportunity to hang on through this difficult period.

They should cut 0.50% in March, then two more 0.25% cuts, and then halt. This would put us at 0% real interest rate, as core inflation is running at 2%. That’s plenty of monetary stimulus.

As for oil, this is NOT inflation; its price is controlled by a cartel. We need to slap on a carbon (spelled O-I-L) tax immediately. I suggest $12 per EVERY barrel of oil sold in the US, imported or domestic, at the barrel, not at the gas pump. This will start to dampen demand, which will stimulate people conserving oil and switching to other fuels, eventually bringing prices back to earth and raising a LOT of revenue for national health care. And, that creates domestic jobs.

And, that’s my story.

National Homeownership Month, 2003
By the President of the United States of America
A Proclamation

“Today, the United States is fortunate in that our homeownership rate is at an all-time high, and low interest rates continue to encourage millions of Americans to become first-time homeowners.” These are the statements that got President Bush re-elected. At the time the consumer crazed citizens of the United States bought this lock, stock and barrel.

This President has a track record through-out his career of wrecking and bankrupting organizations. Unfortunately he has performed his magic on the United States of America.

I don know what the Fed is going to do about this “economic perfect storm.” Socialize the banking industry by not letting teaser rates adjust for five years. This obviously will not make the money people happy. I am sure that the CEO’s of banks and Mortgage companies make more money in one year than many of us make in a lifetime. As part of its ongoing investigation into executive pay, the Oversight Committee asked Countrywide Financial, Citigroup, and Merrill Lynch to provide documents relevant to the compensation of Angelo R. Mozilo, Charles Prince and E. Stanley O’Neal. Like everything else our politicians do, these rate cuts are designed to bail out people with money. This country is not a democracy it is a plutocracy – (government of the rich, by the rich, for the rich). Hope you all enjoy your George Bush six-pack coming in May 2008.

I need to find a job. I lost my job last Sept 07 and I haven’t able to find a job. I don’t know how adding 200 billion is going to help me get a job.

Absolute IDIOTS!

If someone invented a way to turn lead into GOLD, gold would be WORTHLESS!

What would the USA do if another country dumped counterfeit money out of a plane over every city? Yet they let the Fed (a non government agency) print dollars out of thin air.

Our dollar is worth about 40% less now. Would you quit your job if your boss gave you a 40% pay cut? I would.

America needs to insist that the contract (Constitution) between elected officials and citizens is not being followed. Only the government should coin money. COIN – NOT PRINT

We do not need interest rate cuts or tax cuts or rebates. We need good old fashion common sense economic policy like: 1) let’s help the consumer and force (that’s right, force) banks, credit card issuers, etc. to reduce their fees and penalties, and games played; 2) we should begin serious discussions about breaking up the oil companies to wring inflation out of oil; 3) shut down hedge funds that are speculating in oil (I know that this will hit some pension funds, but so be it); 4) let the prices of housing free fall (it’s going to get there eventually). Let the stock market free fall and the “gamblers” take their lumps; 5) last, but not least, the Fed has to quit cooking the books on the economy and let the people see how bad a shape it’s in. It’s time for a reverse “Shock Doctrine” where the big guys get the “shock” and the little guys just hunker down and come out on the other end in better shape than when they went in.

Until the Fed and federal government can work up a way to get these bozo bonds, LBOs, and other phony derivative-type depth charges out of the financial system, the economy will not recharge. Period.

I don’t know why some investors were so eager to buy the shadow of an asset, but the weasels and greedheads who thought this one up should not get off cleanly. I suspect this is the wall street equivalent of a country of hamburger stands selling each other mystery-meat burgers and wondering why business levelled off.

The fed should leave interest rate as it is right now, 3%. Time will be the determining factor on the outcome of the economy as always especially if the troops come home from Iraq next year.

Cut rates.
The inflation is caused by the increase in energy prices, just as it was in the 70s. The only solution to that is to use less oil and pressure OPEC & company to produce more.

Worry about inflation of course , what good would a job be if a loaf of bread costs twenty dollars ?

Stop the inflation now before food riots start breaking out .

“… investors and consumers need to realize there is a lag effect of several months before Fed policy moves have an impact. History shows that Fed easing will eventually work their magic”
This reminds me of Granny Clampetts cure for the common cold: Take this medicine, drink plenty of liquids, get plenty of rest, and in a week to 10 days you will be good as new. (Works every time.)

Leave rates alone.

We made this bed and now it’s time to sleep in it. We got fat off $1.00 gas (yes it was that cheap a few years back) and super low rates. Now it’s time to pay the piper and let the market work it’s way out.

Sorry to say but civil projects like the old Tennessee Valley Authority are going to have to be put in place to help out. Not a total loss but face it folks, we’re headed toward a quasi-fascist future.

If the Fed are going to continue cutting interest, commercial banks should do the same by cutting interest rates on consumer’s credit cards. The government should limit the importation of goods to assist our manufacturing sector which in turn would create jobs. Double the tax on foreign luxury goods. Temporary reduced the tax on gasoline by at least 25% so people would have more money to spend. Have a moratorium on NAFTA for at least three years till our economy goes back in track. Government should also reduced our foreign aid by at least 50%. We are not paying our tax to support other countries. Government should start concentrating on the domestic side right now.

Shoot, I mean “lower those rates” and raise that inflation high! See, I’m giddy already with the thought of house prices inflating with everything else!

p.s. Let’s stop spending billions of dollars per month on this stupid war in IRAQ.

On the one hand, stop lowering rates. The fact that Wall Street “expects” a rate cut shows that things are already wacked. Teach them a lesson. Keep rates where they are and let the free market fix everything. Less pain than the 70s.

On the other hand, raise those rates and repeat the 70s! Raise them high! During hyper-inflation, debtors benefit and debt holders suffer. Most of us are debtors, and we need those house prices to inflate up just like Mom and Dad’s house did!

National Homeownership Month, 2003
By the President of the United States of America
A Proclamation

“Today, the United States is fortunate in that our homeownership rate is at an all-time high, and low interest rates continue to encourage millions of Americans to become first-time homeowners.” These are the statements that got President Bush re-elected. At the time the consumer crazed citizens of the United States bought this lock, stock and barrel.

This President has a track record through-out his career of wrecking and bankrupting organizations. Unfortunately he has performed his magic on the United States of America.

I don know what the Fed is going to do about this “economic perfect storm.” Socialize the banking industry by not letting teaser rates adjust for five years. This obviously will not make the money people happy. I am sure that the CEO’s of banks and Mortgage companies make more money in one year than many of us make in a lifetime. As part of its ongoing investigation into executive pay, the Oversight Committee asked Countrywide Financial, Citigroup, and Merrill Lynch to provide documents relevant to the compensation of Angelo R. Mozilo, Charles Prince and E. Stanley O’Neal.
This country is not a democracy it is a plutocracy – (government of the rich, by the rich, for the rich). Hope you all enjoy your George Bush six-pack coming in May 2008.

The FED should RAISE rates. I don’t see how cutting rates helps the average consumer. After the last couple rate “cuts” mortgage rates rose. But saving rates all dropped. So it helps nobody at all and hurts people with savings income. Meanwhile the dollar keeps falling and the costs of necessities like gas and food are skyrocketing. And income is not rising. So, more and more people are having to borrow money just to get by.

So let’s just keep dropping the rates further and further which will only drop the value of the dollar, raise prices, which will encourage and force people to borrow more money just to survive.

It seems like in this case cutting rates will CAUSE a recession not prevent a recession.

ARE YOU FREAKING INSANE BEN? Time to raise rates not cut them.

It’s hard for people to spend what they don’t have. Increase our take home pay and we’ll spend more. Lower interest rates and people will borrow more, causing them to increase their personal liability to pay back and eventually curb retail spending even further as they strive to repay what they’ve borrowed on top of what they’ve borrowed before. Get real, folks.

The markets are trying to correct.The Fed actions just make the situation worse. Let the banks take a hit on their bad loans. Trying to prop up the banks is a waste of time and the rest of the world knows it. Support a strong dollar and sound business practices and we will all eventually get back on the path to growth and prosperity.

I think the only thing the Fed should do at this point is to put in place a policy that will expedite the end of the current economic woes. Raise interest rates ….

The reason is that the longer we have easy fiscal policies in place, the longer it will take for the current economic pains to subside. The current trend for higher inflation will force the consumer to spend less and less, in order to have enough money for the required things like housing and bread. What we need is to cause a collapse, let some weaker banks fail. Protect the larger banks. Once the weak structures are out of the economy, it will be easier to get the free market system to recover.

The world is awash with US dollars. Like everything else, the more there is, the less it is worth.
Bubba, this is not a drill. Basically, the US economy is a phony. Tweking stuff will not change anything. Sooner or later, Bubba, we all will pay for the “sins of the past”. Sooner or later, common sense and natural market forces will dictate where we end up.

I am a Mtg. Broker in the State of PA and believe that the Fed should cut the rates..This will jump start the economy, houses will again be sold and every phase of the housing industry will start to rebound. Individuals with massive debt would be able to refi into a suitable monthly payment. I still have people who need to refi out of credit debt.

The reason why we are in this situation is because some bright, very well educated minds who run this country of ours, decided that NAFTA and WTO was a good idea.

When it became apparent that we are in trouble these same bright minds applied gimmicks such as lower interest rates which caused the ballooning of the real estate industry. This was done because we needed jobs for all those people that lost their jobs due to NAFTA and WTO. We built too many homes and the balloon exploded.

Now those people need a job again.

I have an idea! Why don’t we bring back manufacturing? I’m not as wise as the people who run our country but I believe this to be the solution to many problems.

People in America will be employed making product under EPA guidelines and world pollution will be reduced. Those giant ships that bring goods here from China will not spew fumes into the air, ( they burn a gallon of fuel for every 6 inches they move), these ships will not be necessary.

Recession will go away because people will have jobs.

The rivers in China will be alive with fish again. All that pollution will not be introduced into the oceans. We may even stop global warming.

In my mind there are many benefits to this but I’m not as wise as those who run our country and satisfy the corporate needs.

So I’m just a lonely voice that does not count.

Vote Democrats and Republicans out of office! Send a message.

How about just cutting the rate down to .25 or the lowest that they can. LMAO Seeing that the Economy is so screwed right now the Feds don’t know what to do about it. Cutting rates is not the answer.

What about us who at our extrem ends of charge cards but still paying on time with extra. and can not brefinance or borrow because banks are not lending.

I think the Fed should stay put where they are now with interest rates. Let the financial sector figure their way out of the mess they created. The way this country is heading at present, I’m looking to become a resident of South America, & leave the U.S.

Fiscal and monetary policies will have little impact on the sluggishness of the US economy. The root cause of the US economic problems is increasing crude oil prices.

Crude oil prices began to rise with rumors of the Iraq invasion, and have rising by 100% since the invasion. Trades take advantage of the instability in the Middle East to bid up the price of crude oil. Higher crude oil prices forces US consumers to reallocate budgetary components. Thus, payments that were air marked for mortgage was reallocated to gasoline. And, their inability to cover their mortgage allocation leads to the mortgage crisis. See http://www.jethroproject.com/tjpitsthewar.htm

Gas, food, health care excluded, watch inflation. There is too much credit out there at 29% on Credit cards. The gov has to much on credit 9.5Trillion. No attention to the small business owners. Oil is not a commodity because there is no good substitute. Oil goes up a buck/barrel each day and into wall streets pocket, not even the countries that produce…where is the regulation. We must take corporations out of politics and must write laws that pass congress. I have a solution to the subprime mess as I was an originator at one time of these loans and understand them, but noone seems to really care…except the subprime people of course.

Stop with the fear mongering already, will you. You people who keep banging the recession drum are the ones causing it. Go do something productive.

You are kidding right? Record foreclosures are all because of fear mongering? The Foreclosures happened because millions of people bought homes (in hopes of selling again for huge profits)they could not afford and when the Adjustable rate on those mortgages went up they could no longer the payments. This in turn created a tightening of credit nationwide. Making it harder for people to buy homes, and get credit cards. When that happens home prices drop. Because there are no buyers meaning less equity and less money to be borrowed to be spent on crap to keep out consuming economy moving. our Economy is based on consumption NOT production and when Americans can no longer consume this is the result. Retailers layoff workers. Corporations and businesses no longer borrow from banks because nobody is buying, (no need to open new stores). and on and on.

the Feds need to raise the rate at least a 1/2 point. They keep lowering the rates and the banks are just padding their pockets to bail themselves out of the mortgage mess. The banks and the borrowers knew they couldn’t afford those houses so let them work it out. Extend their loan 5 more years and let them refinance. The dollar needs supported. The economy will not turn around until people can afford to buy gas and groceries and have some money left over each month. The price of gas is killing the average American and the economy is not going to recover if the average American can’t afford to buy anything or go anywhere after they buy groceries and fill up their gas tanks. If they expect people to go on vacations this summer to help the economy they better straighten this out before long.

The feds should definitely stop cutting rates.

My understanding is that the whole point of these rate cuts was to stimulate the economy. This would happen because interest rates on consumer loans like mortgages, home equity lines, credit cards, auto loans, etc. would also go down encouraging the consumer to borrow and spend. From what I’ve seen these rates on consumer loans have not gone down at all. However the interest rates on savings accounts has most definitely gone down. How is that good for the economy? The devaluation of the dollar has also contributed to the rise in commodity prices, which are reflected in the prices consumers have to pay. Again, how is that good for the economy.

As far as I can tell these rate cuts have had no beneficial effects but several adverse ones. So please Mr. Bernanke, stop trying to help us, we can’t afford it.

Remember Paul Volker, Ben should read the minutes of his meeting back in 79-80-81. That is a painful solution, but the only solution.

It’s not clear that the devaluation strategy is reversing the trade deficit in a timely manner. Perhaps it’s time to consider tariffs in North America.

3/4-point rate drop sure might get the attention of the Chinese. “Bail-Us-Out” Ben can only do so much without crashing the dollar. It’s time for Americans to get an old fashioned dose of patriotism. What can you, as one person, do ?? Spend !! Spend like you really mean it. Spend like you’ve never spent before. Take recreational shopping to a new level, and leave no penny unspent. Repeat after me: Saving is evil; spending is godly.
Still tapped-out from Christmas you say ? Like a bad Sci-Fi plot, your fancy brick bank has turned into a vacant lot overnight? Can’t get through the EZ-Payday-Loans front door without using a megaphone backed by a Sherman Tank ?? Bosh ! We are facing the 3 axis of unspent money: untapped credit card limits, your children’s piggy banks, and your parents “excess” social security income. Did your dad really need a new set of teeth ? Hasn’t he ever heard of tomato soup ? And that greatest evil, uptapped credit cards may require an all-out invasion. Vacuum up those last pennies from under the cushions on the couch. Watch a McHale’s Navy rerun, put on a peacoat, get sloshed, and go out and spend like a drunken sailor !! And when you’ve answered the JFK challenge “ask not …., ask what you can spend money on for the good of your country”, you can rest and finally say, “Broke at last, broke at last, thank Ben a-mighty, I’m broke at last !!”

Do the idiots at CNN realize that expansion of the money supply causes debasement of the currency (INFLATION). So every time the government purposesly lowers the interest rate they are causing currency debasement (INFLATION). What’s with all these monetary pundits that seem to know nothing. Better go read some Ludwig Von Mises, Ron Paul or Murry Rothbard. What a bunch of mindless talking heads.

Need More Rate Cuts – and plenty of time – to heal our economy.

The subprime fiasco is not going to go away overnight. Lowering the rates is the only real solution to the subprime fiasco. Most people do not realize that when the rates where increased overnight (a very short period of time – it should have taken 5 to 10 years)Everyone who took out an adjustable rate mortgage from as early as 2000 was affected. It was not just the subprime industry. These adjustable rate mortgage only adjust every 6 months to 1 year and if they only adjust by 1% at each adjustment it could take 2 years before people can really afford to live again.

A large part of our problems are that house prices are too high relative to incomes, and were propelled there by loose lending standards and easy money to people who couldn’t afford half of what they borrowed. Add to this the crazy derivative products which now back the bad mortgages, and this house of cards is set to fall as much as it rocketed up in the first place.

The rescue plans to date simply try to defy the inevitable and reflate the bubble to prevent market forces response to irrational prices and risky derivatives. These rate cuts are devaluing the dollar and fanning the flames of higher inflation down the road.

In the end, taxpayers will be forced to bail out the lenders and irresponsible borrowers, via adding to our already onerous National debt. We’ll be told it’s the “only way” to save ourselves from our own undoing.

All of us who pay our debts and are fiscally responsible will be punished far more than the people getting a “helping hand” on their underwater McMansion with the brand new Hummer parked out front.

Begs the question…who is the bigger fool here? The irresponsible borrower or the homeowner who pays their monthly mortgage?

We need the Clintons back in office.

The administration needs to address the core problem – and stop the flow of real blood and tons of money in the war!

If it is the government’s intention to stimulate the economy, why not start at the core of inflation: energy costs?

A $200B infusion should be directly made into automotive and trucking industry fuel pricing via government coupons. In severe times, severe undertakings must be made. That amount of fuel price subsidization should be sufficient to provide a several months of consumer relief from the high cost of fuels, transportation and the associated high cost of foods. With that one assist, inflation should take a large enough reduction to not only kick start the economy, but build investor confidence.

Hi

I see many people complaining about oil prices, the greed of Opec etc. etc.

Hey but USA did nothing, I repeat. totally nothing, to lessen the oil dependency. No energy preservation, no energy saving, nothing. USA spent and spends oil and energy as if there is no tomorrow. 50% (HALF OF THE WORLDS) energy is used in the US. And now the big complaining starts. Sorry are you blind?? Furthermore China and others are keeping USA afloat by loaning you trillions of dollars. If they do not loan zillions every day to the US, the US would be bankrupt in no time.

And please tell me who is facing these truths? Many comments in this list are almost unreal in their unconnectedness to reality. Hey US it is time to wake up and get real. You cannot go on as you did and your ship is going on the rocks if you do not take just and global action now. US has lived long enough by being irresponsible with resources. It is time to pay up and act.

If you have a chance place yourself on Europe..they are looking at west and east simultaneously..and seeing China supllying america with no import taxes. Stopping China (all their products needs oil+metal for machinery)make them value up to 70% their currency and drop their productions..Americans will have the strength of USD back..and commodities as OIL+Metals will drop 50%. Its is easy..then investidors will come back to America as fast as light speed. The problem , I insist ,the americans are being intentionally subsidizing by chinese government..why !!Welll who knows tomorrow !! Remember when Japonese starts to buying all americans targets companies..Money+Power are always brothers.

No one is talking about the real problems: The cost of the U.S. military (engaged in war or not) and how the feds keep giving tax breaks to the rich instead of cash “rebates” to the poorest. Spending on the war and the rich are the least productive ways of spending tax money. Instead, give it to the poorest and watch it get pumped immediately into the retail sector. And forget the $600 rebate. How about $6,000 each for the nation’s poorest 25% of single adults and $12,000 each for the 25% poorest families?

Seriously, the only reason inflation is a concern at all is because of energy prices “Oil”. This country revolves around it, when it goes up -”Everything” follows. I mean how do we get to work? How do items move from A to B? What are many meterials made from? We are suffering a double whammy, Oil is totally over valued, Job market is rediculous, food prices soaring because of transportation “Oil” AND we still ship tons of food out of the USA for free everyday. Quit giving it away. As all other locations in the world are showing us – everything cost money. They want food? Fine, pay through the nose for it. People have to eat, therefore food holds more clout than Oil. We need to start making some deals. Oil goes down = consumers spending more money = economy fixed. Now tell the people running this country to wake up, the people of the USA are not their enemies and remind them that they work for us.

Wow, Mr. Holmes, abolish the Fed and the income tax and switch to a currency backed by gold and silver… yeah… I don’t even know where to begin in explaining how unbelievably stupid that comment is. I really hope you are being facetious; or maybe you just arrived in a time machine from the 1800’s.

Anyway, the administration is actively pursuing a weak-dollar policy. That is one of the big problems here.

No more rate cuts.

If there is a liquidity issue just hold more auctions for short term borrowing.

Rate cuts fuel inflation and erode the savings. The rate cuts are not passed to consumers in lower mortgage rates as banks fear inflation as well. For the moment the stability of currency is needed much more than the benefit of a rate cut. A percieved long term inflationary pressure on the dollar can form a positive feedback loop (large scale movement of investments to non-dollar denominated assets, emergence of commodities markets in other currencies etc) which would be catastrophic for the US economy.

Over here in Europe we have been amazed for a long time now at the mindset of the FED, US government and a sizeable part of the American people and businesses.

Continiously focused on more growth (double digit if possible) for companies and the stock market and more spending power for consumers not sustainable by fundamentals alone, more debt was taken on and fanzy products were constructed resulting in ridicously excessive leverage wherever possible, like this particular balloon would never ever deflate.

Instead of paying of debt across the board and letting the housing market and (now global) economy sort itself out slowly, while maintaining low inflation, a narrowminded approach was used by the government and FED via stimulas packages and drastically reduced interest rates, resulting in more debt, sending the dollar into a tailspin and dollar-denominated commodities through the roof.

Time for Bush and Bernanke to go back to school, before their local and state governments go under as well, as a result of increased rates on their debt, which they can no longer manage. Good job!

Political considerations should not prevent the Fed from allowing the market to take its course.The market will not begin to grow again until it hits a solid base low and is not overly interfered with by Bernanke.

The type of inflation that we have in energy and agriculture (a derivative of energy) cannot be battled by the Federal Reserve.

You have decling demand and bloated inventories of both crude oil and distillates in this country so obviously the supply demand rationale has gone out the window.

The energy / commodity markets are now infected with the same scum who created the Tech, Real Estate and Credit Bubbles. The Energy / Commodity bubble shall pass as well – bubles just have a habit of persisting for far longer than what would seem logical.

To fix the dollar when the Amercian Public decides too wake up and demand from their elected officials that they manage public spending in a responsible way and not too continue the practice of deficit spending you’ll begin to fix the dollar problem as well.

It’s not only low interest rates that are driving investors away from the dollar it’s also the fact that from a fundamental balance sheet standpoint the United States doesn’t look as attractive currently as it did in the past hence the exodus of investors from the dollar.

Instead of waiting for our elected officials, who have their own interests, to “fix” the problems perhaps we should consider that perhaps WE are the problem. Where do you spend your money? How many American jobs would be created if we bought American products? Give up those Honda’s, Totota’s, BMW’s that might be ASSEMBLED in the U.S. from components produced over seas. GM, Ford and Chrysler are all making some great products and they CERTAINLY could use the business. The same is true for clothing, food and many other products. If YOU (and I) were willing to spend a few dollars or cents more and buy ONLY American made products we wouldn’t have some of the current unemployment, crime, drug and social problems.

Of course oil, and inflation are both contributing factors to this mess. However, our real probelm is trade surplus and what it has done to the value of our currency in the overseas markets.

I personally think that lowering the interest rates is doing more harm than good as millions of people are subsidizing their Social Security income from the interest rates from their lifetime savings and it has caused them, due to the high price of everyday necessary needs to stop buying things they would like to have and try to make the best on just bare essentials.It is inexcusable for our goverm,ent to let this wonderful country to get in the mess it is in.I think all the politicians in our government should be made to live like the middle class and poorer class are doing at the present time in this deplorable situation.they all seem to living in another world. Betty Thorner Pearl River, LA March 13,2008

GOLD STANDARD?!?! Great idea- link the value of a dollar to an arbitrary commodity- that way, every time a huge reserve of gold is found in the ground somewhere, the value of that commodity (and the dollar) goes down- regardless of what the current condition of the economy is- thereby taking away ANY control the Fed has over the economy. Why not just link the value of the dollar to pork bellies, or Frozen concentrated orange juice- or even better yet- CRUDE OIL.

The Fed needs to temper the need to control inflation with the need to support sustained growth- policies which are polar opposites. Current lack of spending is fueling a recession, due to the fact that consumers are being forced to spend more disposable income on products with an inelastic demand- food and energy. WHY?!?!- Because energy prices are inflated by the fact that demand is greater than supply, because the supply is being controlled by an illegal cartel- a semi- monopoly, if you will, called OPEC. This is all further complicated by the lack of certainty of the supply due to a war in Iraq.

Present day rates are not inordinately harsh. Cutting rates will just add fuel to the inflationary fire and prolong this mess. I agree with Paul Smith. Savers get hurt by rate cuts now and by inflation in the future. The US suffers from a lack of savings and more rate cuts will not help.

The Fed needs to raise rates to halt inflation and support the dollar. The economy will tank but recessions are as American as apple pie. This too will pass. Just ride it out.

For those that can should re-finance their home loan while rates are low.

The Feds, especially Bernanke, are in way over their head and running around like chickens w/o one. As I’ve said to many people the Feds should leave everything alone and let the chips fall where they may – it is inevitable that they will anyway. Cutting rates is helping no one but the banks and causing aggravation for the consumer in the form of inflation and the falling dollar. Let home prices fall and in the end it will be better for the long-term health of the country as prices right now are ridiculous and rose far faster than incomes. The Bush tax cuts should be repealed for the wealthy to get more revenue into the treasury and somewhat reduce our deficit. When will Republicans finally realize ‘SUPPLY SIDE ECONOMIC POLICIES DO NOT WORK’ David Stockman in the 80s called it VOODOO ECONOMICS for a damn good reason. There’s nothing in the end that anyone can do but to let the economy run its course. I pity the poor bastard who get elected this year as I predict this mess will only get worse.

What most people fail to understand is that our economy is entirely artificial. It is based on money that simply doesn’t exist. The Federal Reserve is issuing a fiat currency, that is a currency backed by absolutely nothing. It is completely manipulated. Recessions and depressions are NOT naturally occureing market entities, they’re products of the grossly irresponsible Federal Reserve banks. Abolish the Federal Reserve, eliminate the income tax, whose sole purpose is to pay the interest on this fiat currency (income tax is not used to run one single aspect of government) and we can begin the road to recovery, using a currency backed by REAL money, gold and silver. Until we abandon the Federal Reserve, which is neither federal (its a semi-private cartel of BANKS) nor do they have any reserves, our economy is forever doomed and we will remain indentured servants of a government which has grown far beyond its manageable bounds. Raising or lowering rates will have no bearing on our impending economic collapse. Game over.

It is amazing how our “Elected Elite” are ignoring how much the price of fuel is adding to inflation. Do “they” not think that the “tax rebate” is not going into our gas tanks instead of consumer goods? Our “Elected Elite” are supposed to help our problems, not add to them. Where are solutions supposed to come from?

Time to switch to fighting inflation. Not aggressively at this point. But stop the cuts. They may be slowing the skid somewhat. But the market still looks schizophrenic to me. I think cuts have done what they’ve can.

Let people spend less for awhile, let the imbalances even out and these bad debts get off the book. It’s a big pill to swallow, but better than pretending we’re not sick.

I hate to admit it, but I really don’t know much about what is going on. All I know is that I am trying to save money, buy gas to get to work & no I don’t own an SUV, but that price hurts my pocketbook. I buy groceries for the family and I am back to hurting a few days after payday. I don’t know what needs fixing more. I do know that I can’t go to Walmart to blow money if my money goes to gas. I can’t get a home loan becasue the interest is too high and now everyone is scared to give me a loan, even though on paper I can afford to pay it. I will let the professional decide, but speaking as a little person of the world, I need help with the day to day expenses of just getting by.

The Fed needs to keep the economy moving at almost all costs (inflation growth, etc.).

I beleive the Japanese were in the same pickle, but did not act fast enough in addressing their slowing economy by lowering rates enough.

By the time they started to really lower interest rates it was too late. The ecomy stalled and contracted miserably. And for the following ten years growth was nil.

As for inflation, the Fed can always raise rates to curb the inflation once the econmy is back to notrmal growth.

Since the FED under Greenspan created this bursting bubble, its hard to see it as our savior. Monetary inflation, caused by the FED is the culprit, and more intervention in markets will only make things worse. Soon, stagflation will look good.

Stop cutting rates.

Mortgage rates now are worse than they were a year ago, so clearly the Fed is only helping rich bankers get richer. Stop paying police in a country whose members turn around a suicide bomb/attack our troops. Get the troops home. Put the money into clean energy/better batteries/more fuel efficient engines/electric cars/better highway system/high speed rail lines all over/mass transit in every city. These public projects will create jobs, improve the life of the average citizen, and use America’s real strengths (innovation, and strong work ethic). Stop speculation on oil. But in the long run, with development on batteries and solar cells, with a mandate that every new home in southern california/arizona/new mexico is built with a solar roof that is tied into the grid (maybe we need new grids as well) and more wind power elsewhere in this country, electric powered cars and electric mass transit could be the pill that gets us off oil in 50 years or less. With enough innovation we might even be able to wean ourselves off fossil fuels. But for now, start spending our tax dollars in America please. And stop cutting rates, my pitiful savings account can’t handle it and I still haven’t seen a good mortgage rate as a result.

The Fed is symbolic of the rest of our pill popping society, “Let fix the symptoms instead of the problem”. There are greater issues and forces at work here that are not being addressed. Namely we are the masters that have become slaves in our own castle. While we held lavish parties and balls the servants have set up the guillotines out side the walls. It is only a matter of time before they start to come for us, unfortunately I here someone knocking at the gates. We need to stand up and regain control of ourselves and our country. Why does no one have the courage? Why are we continually presented with inept leaders with no fortitude other than to feed us from the baby spoon, (I am referring to both Republican and Democrats)?

We as a people, as a nation need a great idea to stand behind and push us forward. It is time we reinvested in our infrastructure and our own people, our own CITIZENS!!!!

1. Energy – It drives our economy, and our independence. Unless we can make a large capital investment to become masters of our own fate we are doomed and forever will be embroiled in conflicts around the world without end.
2. Roads & Infrastructure – If no one has noticed they are falling apart. It is time to reinvest in our transportation system. New rail! New roads! New urban planning!
3. Foreign trade – We have become a nation of Second Handers who create nothing but only consume. This must stop!!!!! We need to rectify the trade balance not with tariffs and protectionism but with JOBS & PRODUCTION. We need to produce products, American Product, and be reworded by our government for keeping jobs here not punished and rewarded for shipping jobs over sees.
4. Middle Class reinvestment – Our Tax code does not reward us for investing in our selves as a middle class. Instead it incentivizes us to spend everything we have in order to feed the economy. Unfortunately this is a zero sum equation that can only lead to ruin. The Middle class has been cast down and lost sight of the dream for true financial independence. There is a difference between rich and wealthy, unfortunately they are now considered one in the same. One should not be punished for working hard to become rich. However the wealthy need to pay their far share in gratitude for what they have gained.

Stop with the fear mongering already, will you. You people who keep banging the recession drum are the ones causing it. Go do something productive.

All econimists and investidors sperad out the world know that the ‘domino effect’will reach the amount of USD 1,5billion. By now,FED+European Central Bank spent aprox 500b..and the moment is nearly to come they will have to stop the action to avoid a worldwide discrepancy concerning that monetary base is the USD. Here is hidden the problem.All bankers already know it and none wants to loose more! If China doesnt value its currency and keep subsidizing America the world’s financial system will fall,because China is the cause of inflation on commodities and pushes their goods into the american market once their currency is attached to USD. This is the end of the story..all the rest is bla,bla,n]bla.

A quarter of point will do good at the feds next meeting. Don’t forget about inflation.

I believe it’s a balancing act where your current and short term economic situation is tied to your “future stability” (inflation). So yes, they should moderately cut rates that will later on (not immediately) help the economy and then manage the inflation. Seeing as to how the most important factor affecting the economy right now is confidence, I think communication is the key to coming out of this. The public needs to be addressed and informed.

yeah sure, Fed–some dilemma –but can we be happy with this—encourage more irresponsibile lender-bankers and investment houses with their bundled mortgage operations. The average guy is suffering with more inflation(really another tax)–throw me a bone –a decent return on savings that is SAFE.

Raising rates into a recession is not prudent. The problem we are seeing is a lack of confidence in the credit markets. Making credit more expensive will hardly make credit more available. Most of the runup in commodities is not supported by demand. Given that, these are more likely than not to drop over time. The good thing about a weak dollar is that it makes our goods more attractive to other countries reducing the size of our trade deficit and making the cost of production in our country cheaper vis a vis to other coutries. Given this, it is more likely than not that other countries will follow suit and cut interest rates. Look at it this way, the rise in oil prices over the last 6 weeks (approx 31%) is not supported by a similar dop in the dollar. Therefore, you are seeing the results of rampant speculation across the globe. The lack of credit is more problematic to our economy than inflation at this point. Rememeber, credit is the lube that makes the global economy go.

I think the Feds ought to cut the Fed Fund another point then freeze it forever. This whole notion that the govt should have a knob to play with at its’ own disgression is rediculous and is in part the cause of the problems we’re experiencing.

I hate to invoke the name of a nut but Ron Paul is right: The Federal Reserve should be disbanded.

I agree with Jim. People need to be more responsible about their spending. I guess those McMansions and gas guzzling SUV’s are coming back to bite people on the ass. My wife and I are losing thousands of dollars due to these interest rate cuts by the Fed. These cuts also fuel inflation so I guess we’re screwed.

The rate cuts and cash infusions the government is doing is only a short term pill to ease the pain of a broken economy.

What’s really going to fix it is if the fed finally realizes that if people have good paying jobs, they will spend money. Good paying jobs pay taxes. Uncle Sam needs to stifle this insane free trade policy which rewards companies to ship technology and manufacturing overseas, and come to grips with the fact that American is being de-industrialized.

FURTHER, asking the US taxpayer to subsidize other countries defence by policing the world is unfair. We pay higher taxes to support defense for other countries, who in turn use the savings to underprice US labor.

Globalism is killing America. Period.

It’s time to bring things back in house. The fed should cut rates by a half point and the government needs to increase the import tariffs. With most Americans trying to pinch pennies to save on gas. This is a prime opportunity to push them towards buying American.

It’s late and greed continues to destroy the financial system. Get back to the Gold standard NOW, let excesses work themselves out of the economy, no more free bailouts, raise interest rates, educate the public. And elect Dr. RON PAUL as the next president as he is the only one who knows what is wrong and how to fix it. The others are so clueless it’s not even funny.

Fed cuts may help investors save there ass sets for a while. The real need is a tax cut for middle class americans which would permit longer-term spending, instead of the “surge” plan (rebate). I get no benefit from this plan. And of course, less spending by the federal government.

Writing for the Financial Time, Martin Wolf discusses what kind losses may still be in store. “Most of the losses will fall not on the financial sector but elsewhere. As Prof [Nouriel] Roubini notes, a 10% fall in house prices (relative to the peak) knocks off $2 trillion (14% of gross domestic product) from household wealth. The first 10% fall has already happened. What he sees as a likely 30% cumulative fall would wipe out $6 trillion, 42% of GDP and 10% of household wealth. Already, falling prices are showing up in declining net household wealth. Prof Roubini also talks of a $5.6 trillion decline in the value of stocks and the possibility of additional trillions of dollars in losses on commercial property. Total losses might even equal annual GDP. The principal direct effect of such losses will be on spending, particularly residential investment and household consumption.”

The combination of an incompetent administration’s reckless military spending, wall street’s near criminal mortgage and securitization practices, debt fueled consumer spending, and a national imported oil addiction have dramatically increased the odds that a global systemic financial collapse ‘perfect storm’ disaster will occur. Its not even certain now that any type of fiscal or monetary stimulus can prevent this financial Armageddon from occurring – the cause of our present predicament was decades of irresponsible political, fiscal, and monetary practices – the de-leveraging and cleansing process will take decades as well. A decline in American power and prosperity will be the inevitable result.

Everytime the fed cuts into the interest rate, the dollar falls and the investors head to the commodities market and drive up the price of oil and gold. FIX THE DOLLAR FIRST. Can’t anyone at the fed see that the average american is being driven from the american dream? Get the investors out the commodites market!

NO RATE CUT!

Banks aren’t passing down the cuts we’ve seen already. Additional cuts will only benefit them and that’s if they are willing to make loans. Yes, the stock market would take a kick in the pants without a rate cut. However, with stocks on sale, investors will take advantage with many of those investors defecting from the oil markets.

This will help most people in the long run with the majority of losers being slow oil speculators and bad bank executives.

Well I believe fed not only should not cut the rates but should think about raising them. Falling housing market and mortgage issues will not be solved by cutting rates or increasing the limit for Jumbo loans. Banks were stupid enough to get them selves in to this mess they will have to be smart enough to get them selves out of it as well. Raising rate will stabilize dollar, ease the inflation and in turn can help economy make healthy turn around in late 2009. In the mean time get ready for banks posting huge losses.

The interest rate cuts would help the economy if Banks would lower Mortgage and Credit Card interest rates for the borrower/consumer. The banks appear to be more concerned with making up their losses than helping a stagnated economy. Also, it would be interesting to know how many foreclosers could be avoided if Home Owners Insurance were more affordable!

The sky is falling! The sky is falling! How can anyone be positive with all this doom and gloom. Take a deep breath, be GREEN and it will all work out. The “i want it now”’s will have to wait until the can afford it.

fair trade practices? How about a fare playing field. These other countries, IE CHINA need to clean their act up. Why don’t they just create their own products and stop TAKING our jobs. Maybe it would just be nice to shut off NAFTA (not a f**cken trade aggreement) Wake up people. It’s not just manufacturing, every time you call customer service and you get someone in another country, that’s another job lost which DOES contribute to someone losing their job and possibly their house. It’s not just this rate garbage. We need to STOP offshoring jobs! The other terrorism.

“It’s the oil STUPID!!”
Demand is out pacing production. Our economy runs on oil (energy). As energy goes up (and up and up) then the economy goes down. Add to that corrupt politicians married to greedy bankers and you have the perfect storm.
OK RATS!!! Abandon Ship!!!

They need to realise that rate cuts aren’t helping us, they are hurting us. Stop cutting rates. Focus on inflation. Help Americans feel safe enough with their economic future to spend money on things that will stimulate the economy naturally.

The reason our economy is going south is due to the lack of business savy and CEOs and CFOs that cause their sales/revenues to drop. They don’t empower but micro manage their employees through their concern about costs that always seems to stimie sales, thus creating the recession, secondly their not passing along pay increases to their employees also creates an overall economy of people with a declining deposal income which also creates less growth.

We need more Steve Jobs and less of nearly every other CEO!!!!!!

At the very least, the Fed should hold rates steady; I think they’ve already cut them too far. I agree with the comments from Marcus, Vallejo,CA with regard to our rapidly declining status in the world economy. There really is too little substance behind our economy, and the only real solution for that is to quit spending more than we make/produce, both as individuals and as a country. Easy credit is what got us into this mess, and the only solution is to hunker down, start living within our means, and start saving money rather than borrowing it. As long as we have an economy that is driven mostly by the consumer, we will continue to be a net importer rather than a net producer. Sadly, our own standard of living may actually have to decline a little bit in order to get us back to the point that we can compete effectively in the world markets. Currently, we are systematicly selling ourselves to the rest of the world, and that includes some of our worst enemies. If we can muster up the stomach for this long-term medicine, we’ll be a great deal better off in the next decade. But we have to start taking the long view, rather than going for the quick fix. We have all been credit junkies for too long, and now the “cure” will be painful and time consuming. But that’s the only road to real recovery. If we keep throughing easy money at this addiction, we’ll find ourselves in even worse shape later on.

Lowering rates is the most irresponsible thing the Fed can do. When they lower rates, it makes dollar denominated assets less attractive to foreign investors (who own 50% of our government bonds and finance 75% of the budget deficit) and reduces the value of the dollar. The dollar is getting so weak that those same foreign investors will demand more of a falling currency just to make them whole – that’s an interest rate hike.

Inflation IS a weak currency – you need more dollars to buy the same loaf of bread, or barrel of oil or ounce of gold.

The government and its citizens were permitted to spend money they didn’t have because of the unwarranted expansion of credit and the Fed’s ability to print money.

Buckle up, the party is over.

I’m heartened by the intelligent level of response here. Reports of our “dumbing down” are greatly exaggerated. Would that we all (Republican, Democrat, or other) exercised such common sense at the polls. The Fed should raise the rate. Inflation is a killer.

As someone who works in the mortgage industry, I worry about increased inflation. In the short term the rebate checks will only help a small amount. I believe the fed needs to stop trying to save the economy with the rate reductions and let the credit markets work themselves out. And for Gods sakes, get the governement out of the mortgage bailout business. All these programs are doing is getting people false hope since most of these are PR programs such as the SONYMA Keep the Dream program that no one qualifies for. My thoughts, hold rates, watch inflation, and thet this Credit crisis figured out.

And for anyone looking for a nice affordable home in an area that doesn’t have to worry about declining values…Buffalo Region of New York is a place to start.

O my GOD! What is the FED doing? Bernanke should resign or should be fired.

There is no doubt in my mind that in order to avoid INFLATION we have to strengthen the Dollar by raising interest rates and not cutting. Let the market crash.

Do you know how many businesses and corporations are not running well just because they are build on sand. Let them crash. A thunderstorm will clear the sky and a restart in 2 year will be much better.

The same thing with the housing market. The prices must go down to a point where it makes sense to buy again. Otherwise it’s gonna be a crisis forever.

And…….Stop the war in Iraq ( just b/c of the economy, aside from the human part of it.).

Just let the train wreck. Stop bailing out the banks for thier mistakes and let free market economy takes what it is due. Consumers cannot continue to fuel the economy forever. Sooner or later we will have to face that reality, man up and make it happen on your watch, Ben.

Inflation must be top priority

At this point, it may be wise to fight inflation. The short term impact may feel horrible as financial institutions may fail at a higher rate and households continue to default in their mortgages. But how can we restore sanity into the economy? We cannot have a healthy economy if disposable income is mostly spent on over priced housing. The latter leaves nothing for consumption and inflation just aggravates the problem more. There has to be a remaking on the legal framework in which financial institutions operate. From credit cards with high penalties and excessive interest rates to mortagages where financial institutions have the ability to repackage them without any legal oversight, things need to change. The irresposable fed policy of the late 90’s brought us to this state and we seem ready to repeat the cycle, but under much worst conditions. Energy, inputs, and food are more expensive and the Fed kept saying there was no inflation until recently.

The recipe of pulling economy out of the current situation can be gleaned from analyzing
who was buying houses in the recent years. These were not people that saved $100,000 or
$200,000 or even $300,000. They could not afford to throw all their savings on houses which
prices exceeded their savings. They were also prudent enough to not buy these houses by taking loans
which nobody is able to repay.
Only people that saved NOTHING were buying in recent years because they had nothing to lose and because
they knew that the state always help to those who has nothing.

So, the solution to the current problems is to raise interest rates to 10% or 15% and let home prices
to drop 50-80%. Let all these cunning beggars who bought millioneirs’ houses go where they belong to.
People that have saving will buy their houses when prices drop.
And this will pull economy out its current troubles.

Cutting interest rates has done nothing to help the situation. Banks still aren’t lending and there is still a credit crunch. To top it all off, you pay $100 or more at the grocery store and that’s without buying any meat! Prices are ridiculously high and it doesn’t matter how much they cut the interest rate, no one can really borrow anything anyway. Time to tighten our belts and let the chips fall where they may. If I am spending all my money, paycheck to paycheck, on food, gas and keeping a roof over my head, I’m not going to run right out when they drop interest rates to buy something else. Time to hunker down and deal with the repercussions of the last 7 years of failed policies.

The republicans have ignored the middle class, poor and elderly so long that it is backfiring. Also forget globalization, buy American made products, invest in AMERICA…if you want to build a strong economy invest in its people, and its products…thats what made us great to begin with, oh, yes, that was before your time.

The Feds cutting rates is not trickling down to us! Yea, the banks get the cut between each other – but please show me more than two banks that have reduced their credit card interest rate since the feds started cutting – I know of only one – Bank of America… and I do not even have an account with them (but am considering it). The banks are only looking out for themselves. Bail out middle class Americans folks!

Hey, Ben! Keep lowering those rates, buddy!

Let’s lower them to increase the risk of a serious inflationary period, then raise them at Warp speed up to about 8-10% or so. My Savings account is going to thank you!!

It is time for the Fed to stand down. Infusing 200B of liquidity into the lending sector allowing banks to borrow using their mortgage securities as collateral is a risky exercise at best. Consider what happens when that debt that backs the loans is in default. What then will the government do to bail-out our economy? We need to focus on sound principals as oil prices have soared due to the weak dollar, as have wholesale prices. We need to act appropriately in order to protect our long term interest. Imagine what happens if fuel reaches $6.00 per gallon – it will have a cascading and devastating effect on the American people. It will be much easier to ride this one out now versus after a few short term strategies fail. A natural cycle of capitalism is recession; recessions are what prevent catastrophic consequences of mismanaging the economy – the worst example is The Great Depression.

We should all take the same course the speculators did: BIG OIL 101 – How to Bankrupt a Nation!

The Fed needs to understand that they cannot fix this condition with interest rate adjustments, if they want a long term “healthy” fix, put the incentives into alternative fuel production and remove our foreign oil dependency.

Our country is being held hostage at the gas pump. The old saying “If you got it a truck brought it” is key. With diesl fuel moving above $4 a gallon, and trains, ships and trucks using diesel to get our goods to market, anything the consumer buys will cost more regardless of what the Fed does with their interest rates and rebates.

Remove our foriegn oil dependency for a stonger economy and country!!! While you’re at it, hold executives of institutions like Country Wide accountable for their actions with strong civil and criminal penalties.

(1) The Feb should freeze CEO and Executive Level Salaries at a level specified by the Fed. Then, ACQUIRE AN HONEST CORPORATE FIGURE OF WHAT THEY WERE ABOUT TO MAKE. (3) DEDUCT THE FREEZE SALARY FROM THE CORPORATE FIGURE. (4) TAKE THE REMAINDER OR RESULT AND PLACE IT BACK INTO THE 2007 TAXES COLLECTABLE REVENUE AGGREGATE. USE WHAT IS COLLECTED TO PAY OFF COST OF IRAQ, HEALTH CARE, AND FOR MIDDLE CLASS RELIEF AS WELL AS DOMESTIC
INVESTMENT. IT IS EITHER THAT OR DEVALUE THE
DOLLAR WHICH MIGHT BRING ANOTHER “BOSTON TEA PARTY.” TOO SIMPLE, I SUPPOSE!!!

“Hopefully, the rate cuts will encourage more banks to loosen their lending standards again, and will spur consumers and corporations to start spending more by the end of 2008 or early 2009.

Plus, even though there is a debate about whether the tax rebate checks that consumers will receive in the next few months will really help the economy that much, it’s hard to see how the rebates can hurt.”

This is just nuts and crazy. People are so short-sighted! For crying out loud – Americans have been living on someone elses dime for 30 years and I blame Regan and his “live for today and spend… it will all work out later” style of living. We cannot sustain ourselves in this way. It is going to hurt, but everyone has to hunker down, buy American Only made products and ride this out. We also have to pay off all our credit card bills because they are not making any of us rich – only the top 10% of this country.

Let’s meet Maslow’s basic needs for 5 years and see how we stand, then you can give loans to people who should not be buying homes to begin with!

The Fed absolutely must not cut rates again! It will not get us out of the recession, will eaken the Dollar further, and will ignite inflation that could soar into double-digits by the end of the thrid quarter. The Fed must stand pat. Banks are going to fail; there’s nothing the Fed can do but postpone the enevitability. There’s no reason not to allow them to fail as quickly as possible and allow markets to correct and recover on their own.

SOme here are erroneously claiming that a rate cut will help all Americans by making cheap loans available. This is the sort of thinking that coused this horror in the first place. The housing sector is over-blown because of cheap, risky mortgages. Those days need to be gone for good and the housing sector shrink. Yeaqh, this is going to hurt, but it has to be done. There is still too much in our economy that simply is not sustainable. Investors believe that the economy must always grow, but more realisting people, with long term outlooks, understand that the economy grows and contracts. We don’t try to prevent this, but plan for it.

Fed must not cut the rate too much, may be restrict to 0.25-0.25%.
Key element is: The adminstration must show that they have started spending cut to reduce defficit, this in turn will allow everybody including our global partners that we are serious about our economy, restoring confidence, dollar stability.
Some risk in respect to recession will allow to get our house in order,but having an effective spending policy will stabilize the economy, dollar and confidence. In the mean time we have to sit tight for 6-9 months.
Mujib Rahman

It really does not matter how much you cut the rates or how much ‘money’ you pump into the economy. This is more an issue of where American’s monies are being diverted…gasoline! Folks are not s ’stupid’ as wall street investors would have you believe. When the ‘rubber’ meets the road, something else is going to give. We all must travel to and from work at the very least. In other words, not all of us can use public transportation. I only dream of being able to use it. So, everytime I pull up to the pump, especially of late, I curse the very greedy oil investors who are truly driving the coming economic disaster. If gasoline prices keep rising and do not come back to a reasonable level, folks will end up cutting out everything that would affect their ability to get to and from work…that includes buying anything other than food and at the rate we are going…the air we breathe too! Semper Fidelis!

The Fed, and Bush administration have painted us into a corner. Artificially low interest rates, inflated home values, and a collapsing dollar, and rising trade deficits to boot. With no equity in their homes, the comsumer will not bail out this economy. CC debt up 45% in last several years, and -1% savings rate, the govt. must stop bailing out banks & stock market in guise of helping homeowners, and let a steep, short adjustment in housing lead to future stability. You cannot bring back lost equity with lower rates. It’s the tulip bulb rage all over again.

I don’t see rate cuts as a positive step to end this economic downturn. The rate cuts were initially designed to help people with variable rate mortgages refinance, however, people were typically in these loans because of bad credit and unstable financial situations. Let me give an example. I purchased my first home last year (30-year fixed – thank God, great credit) and called my mortgage broker last month to refi and take advantage of the lower rates. I wasn’t eligible to refinance because my credit score and financial situation (which hasn’t changed from last year) doesn’t meet the new benchmarks for lenders. I needed even better credit, less debt (funny that my mortgage is almost all of my debt), more income, and more equity. I’m in a pretty good place with my finances, and a fixed-rate mortgage. BUT! If I couldn’t refi in this situation, how are people with worse credit, barely meeting bills because of rising housing costs, and most likely in more debt actually able to take advantage of the interest rate decreases? Please, someone let me know.

“After all, aren’t we all responsible for this mess?”mike….

no WE are not!!!! but We are ALL paying for other’s greed!!!!!

bring back all the jobs that were farmed out to foreign places and we will have money to spend!!!!!!!

I Think, for a long time FED has played with rates, a very dangerous instrument that it cannot control. A lot of mistakes have been made by Greenspan & Co. The results are more crisis for the USA and the world…

I think the Fed should cut rates just one more time and immediately change their tone to a more anti-inflationary stance. Commodity prices have surged because investors don’t know when the cutting will end. As soon as the end is in sight the dollar will strengthen and commodities will fall. With all the stimulus in place we’ll be out of this by year end.

Cut Payroll Taxes and increase interest rates to at least 8% for 6 to 12 months. The economy will correct itself after that.

Of course not, when our economy is 2/3 from consumers, why would you reward the top 1% and greedy speculators, when “regular” people cannot afford gas to go to work….is the fed ascribing to bush’s trickle down piss on you strategy….try to help rich people first…then if any crumbs make it to poor or formerly “middle class” fine…..inflation first, then returns on investments….housing market, subprime whatever, has to work itself out…I am not libertarian and think ron paul is cuckoo…but less govt. in this case is appropriate….furthermore, why, when I do not get any benefit from “mortgage interest deduction” when mortgage credit would benefit others like myself who live responsibly, throw $200 billion to banks to screw us over some more…and give it away again, or “rescue” rich people…..who are mostly benefiting fom the bail out not poor, who already lost their homes…..wake up…..if rich people lose all their money fine, if you look at gap in this country, it is alarming, we are more unequal than China…..

Why lower the interest rate? Its not being passed along to the consumer, mortgages aren’t being refinanced to the vast majority who need them. The lower rates also mean the value of the dollar continues to go down. The dollar goes down in value and the price of everything goes up because the US doesn’t produce anything anymore. We only consume and import. That means oil, electronics, clothing and even food will go up in relation to the higher oil prices. The lower rate only seems to affect the DOW average which has little effect on whether or not companies lay people off because they will do that either way in an attempt to justify CEO pay. Let the banks suffer for their serious errors in judgement for the last 6 or so years of bad loans. Make people accountable for their own mistakes and that means both the borrower for asking for the mortgage they couldn’t afford and the banks for giving them out. Not to mention the system in general where the banks loved the rapid run up in prices of homes because they made more money, the realty firms made massive amounts of money and the only person not benefiting was the consumer.

The answer to what should be done lies in analysis of who used to buy houses recent years and who did not. People that saved $100,000 or $200,000 or even $300,000 did not buy. They could not afford to put all their money on houses. People that saved NOTHING used to buy by taking loans which nobody is able to repay (that is why people who saved money were prudent enough to not be lured by these loans).
Hence, the solution to the current crisis is as follows: raise rates drastically (say to 10% or 15%) to let home prices fell drastically. Let all these beggars that bought millioneirs houses go where they belong to.
People that have money will buy these houses on cash when prices will drop 50-80%. And this will pull economy out of its troubles

No one seems to understand that the Fed has 3 different tools for controlling the economy (i.e. money supply). 1. Interest rates, 2. Open Market Operations, and 3. Reserve requirement. Of the three, open market operations clearly have the greatest impact on the economy (that’s when they buy or sell Federal securities using NEWLY PRINTED MONEY to control the money supply, and inject more money into the system during times of recession, and pull back during inflationary periods). Everyone is so hung up on interest rates (the reserve requirement is almost never touched), that they overlook the greatest tool the Fed has- buy a Wall St Journal and keep track of M1, M2, and M3 to see what the Fed is really doing.

I think the “R” word is much too tame. I think we are in a depression to rival the last one. The government just knows how to cover it up with fancy lies and terms. You can only lie so long, no matter who you are. I want to know if I can get advanced tickets for the soup lines.

Inflation is definitely the greater threat. Interest rates should either be held steady or slightly raised. The rising fuel and food prices are hurting the middle class and poor. They are also threatening the position of the U.S. dollar as the international currency of choice. If the dollar falls much more, the U.S. economy may be severely impacted or permanently damaged.

The Fed should be keeping inflation at bay shouldn’t they? Cutting rates only give a temporary boost to the market. If it is any good… it is just delaying what is about to come. At its worst the Fed is pushing us into stagflation. So come to think of it, what will come will come, is it worth risking stagflation for that?

In my opinion there will not be a big turn around in the economy until after the elections in the fall. I think it is obvious that American investors are scared and tired of this rollercoaster and they are tired of things not changing whether it be the economic forecast, the war policy, or homeland security, we have been spinning our wheels as a country for several years now. I don’t mean this to be a polictical swipe at the current administration but I do feel that many Americans feel the words and speeches we hear from the White House are full of usless words and empty promises. Again, in my humble opinion, regardless of which party wins the White House, you won’t see a recovery until that change happens.

The Feds could lower the interest rate to zero and it still would not waver from the fact that we are paying more and more for gas. It boggles the mind that no one can seem to point a finger at rising energy costs. They are all surprised that consumer spending has fallen greater than expected. If I am spending close to $3.50 a gallon for gas, guess what, I am not buying something else. The government and Wall Street need to get a strangle hold on oil and gas prices. Oil and gas prices continue to rise as supply rises and demand falls. I don’t have a PhD in economics, but it is not hard to figure out something is wrong here. Big oil has their hands deep in Capital Hill and the White House pockets so our economy will continue to fall while they get rich and then scratch their heads wondering what is wrong.

When will our government figure out that the leaders of the world oil are laughing at us. They keep raising prices and we keep buying. When will our government figure out it’s the little people are the ones dying on the vine, you think the oil ministers don’t know what they are doing to our economy. Destory our economy destroy us.

I think the Fed should leave the rates alone for now. Give the economy time to respond to the actions they’ve already taken.

The problem with our econimy cannot be fixed by lowering interest rates. If certain foreign countries decided to “pull their money” out of American investments, we would be facing the worst depression America has ever seen!

We need to:
(1) Stop CEO’s excessive compensation increased by implementing a tax sructure similar to certain Euroean countries. It would also add to the Treasury coffers.

(2) Stop our dependence on oil by immediately developing alternative energy sources – all of them (nuclear, fuel cells, bio-fuels, etc.), not just trying to determine the “best one”.

(3) Place extreme taxes on exports to make those countries buying our products to apy moe and place extremen taxes on imports to stop the severe trade deficit (where Americans buy “cheap” products produced in countries where the employees have no protection or benefits)

(4) Replace all of Congress with people who will quit the partisian games and start saving America.

If we do not do these things very soon, then you can rest assured that America will soon no lnger be a world leader and will collapse juct like the Roman Empire did centuries ago!

I can only hope, but I don’t have much faith in the current American Executive, Congressional, or Corporate leadership!

The fed needs to leave the rates alone. Further cutting will only help to reduce our dollar value, and hurt the average consumer more. Who wants to buy a house when you can’t afford gas and bread?
At this point, the credit markets need to work themselves out, and we need to focus on our own resources. This means agriculture and fuel. The more we can expand production our own staple products, the more value we create for our own economy. In the long term education and technology exports should also be focused on. – When you house starts falling apart, you don’t look at the roof, you fix your foundation.

give the small invester and fixed income people that are in the lower tax bracket [under [#100.000]a break. They are the ones that put the money in to circulation. Let us realize a little profit on our investments as much as the large Corporations and Banks you keep Bailing out.

at this point i don’t think interest rates have much to do about it. its the price of oil that is hurting the economy. between gas just to get to work and oil to heat your house and the increase in grocery price people don’t have anything left to fuel the economy, and until oil gets back to around 70.00 a barrel we are in for a long haul

The problem is “the consumer fuels the economy” and he hasn’t got the money to spend. First: freeze peteroleum prices which have a trickle down on the economy.Secod a six month freeze on unpaid credit card balances no interest increases. This called government “For the people”

The FED should cut the rates with 0,75%. It will help all Americans. Cheap loans will mean more spending and more spending is what US citizens want. Why save money if you can spend it on a bigger car than your neighbour?……..

An economy based on loans without assets is a dead end…..

If the rest of the world (yep there is more than the USA in the world) start asking for Euro´s (gogo Trichet and battle the inflation)instead of Dollars than it´s bye bye to America and the bill for living to large for way to long will be settled.

It´s to crazy for words that Wallstreet is already pricing in a 75 point rate cut, so the FED needs to follow or stocks will drop hard and THAT is what Big Ben hates!

Do what Reagan did.

It may be an error to not consider that this downturn may be something different than a typical recession in the American economy. What we are seeing may be the most far-reaching global economic realignment in history. This realignment may be akin to the state by state realignments that have occurred in the US as industries have shifted from one state to another. The scary thing is that most states did not recover well from these shifts in the past. Will the U.S. recover well if this is truly a global realignment ?bal front

Clearly they need to be more concerned about inflation. Recessions happen as a recurring part of the business cycle and you cannot eliminate them. Inflation is much more corrosive.

What good have the recent Fed. rete cuts done for the adverage joe??? It seems that the banking industry is not passing the savings along to the customers. After the recent 3/4 point cut, 30 yr. fixed mortgage rates rose a 10th of a point, after the following 1/2 point cut, they rose another 10th of a point. Prior to the 3/4 point cut 30 yr. fixed, in my area, were aprox. 5.49%. Last week they were 6.09%. Dont blame the bankers. Last year the oil companies made record profits, and fuel prices continue to climb. Last year the insurance industry had record profits and premiums continue to climb. Now its the banking industries turn. You can call it inflation, if you like, seems to me that corperate GREED is out of hand !!!

NO MORE RATE CUTS TO “HELP” THE ECONOMY. i CAN’T AFFORD IT.

Maybe I am a bit of a hard case when it comes to economics but i see the Federal Reserve Bank’s involvement as a primary reason for the down turn of the USA’s economy. I don’t think we could ever abandon the fiat style monetary system we have now but increased regulation and involvement is not the answer. If we are to compete in a fair market system with nations that can produce more at less cost we need to reinvigorate a federal tarrif on imported goods. If nations don’t want to pay a premium to trade with us then they don’t have to trade with us, and maybe we could reignite some production of goods in the USA. Aside from encouraging congress to pass better trade regulations with nations like India and China the best thing the Fed can do now is to do nothing.

Raise the dang Rates for petes sake. A good 1/2 point would make people second guess the speculators. They have commodities priced so high because they are running away from other financial vehicles. This seems to be the 80’s again.

Stop dropping interest rates, let supply & demand work. The already existing recession will be acknowledged, oil prices will fall. The Fed has to stop tampering!

I believe that the Fed must address the core issue, which is JOBS. Tax cuts and interest rate cuts will only go so far if the middle class Americans are not working. The Federal Funds would be better spent on infrastructure here in the US, for example, A high speed Interstate Rail system could give new growth to the steel mills, additional Nuclear, Wind and Solar power generation. Also, new highway improvements to ease conjested traffic. In short, get the jobs back for American. It is not rocket science but we must stop the Oil Corporations from running this country and finally, we must stop the economic draining of this Iraq War.

How about going back to the gold standard, disband the Fed (they are privately owned and making money on us/US), and make companies who have patents for alternate energies use them or lose them (talking big oil there son). Maybe what they are trying to do is drive Americans into poverty, that way they reduce our wages while giving us the same amount in our checkbook, hence American products become more competitive with Chinese and Mexican workers who get 50 cents a day (well that is probably up to a buck by now).

Reality check, maybe our economy just can’t sustain growth like we thought it could. Maybe we can’t sustain a trade deficit as long as we have. Maybe we shouldn’t be propping up other governments and worry more about propping up our own. And lets not forget that our government is run by lawyers, for lawyers, and of the people they fleece. Have a nice crash.

Here is a reality check from the trenches. The consumer is just about finished as the main engine for ecomomic sustainability…let alone growth in this country.

Here are the reasons why:

Credit Card debt at around 2.5 Billion
Dollars……a lot of this is on maxed out credit cards……. have to pay that down

Maxed out on home equity borrowing…..the last piggy back was raided and now there is nothing left….have to pay that down

Paying more for gas, heating oil, food……all commodities that are needed every day……gotta get to work, keep warm and eat…….Thank you falling dollar and bottom feeding speculators

And to handle all these pressures the consumer is saddled with real wages adjusted for inflation that have fallen
over the last 20 years or so and continue to fall……….Thank you H1B,Illegal Immigration and Out-Sourcing Overseas

The Fed rates should be frozen for the time being. What will determine the outlook for 2009 is what the future occupant of the White House plans to do. What about exploring another Bretton Woods program where currencies are stabilized? We are now craving for economic stability these days.

Cutting more rates has no effet. It will just destroy more USD, and will just keeps rising prices in every commodities and products around the world. The result will be a lack of confidence in the USA, and in the USD, and brings a more long period of recession for the USA and the rest of the world…

“Hopefully, the rate cuts will encourage more banks to loosen their lending standards again, and will spur consumers and corporations to start spending more by the end of 2008 or early 2009.”

Loosen lending standards? Too many people are already in debt to their ears. Why lend more? Companies are crunching everywhere but exec salaries. Pension plans are all but gone. Are people saving for retirement? No – they’re too broke. We’re going to have a massive problem in 30 – 50 years when we have a lot of retirement age people with zero money. They will strain the system like you couldn’t even imagine. The root of the problem, though, is banks allowing people to continue to get in over their heads. Economic stimilus? What are they going to do with that? SPEND IT. Sure, it will put some money into the economy but it will do little for the real problem.

I agree with John from San Diego, CA that the Feds should not do anything. I don’t believe monetary policy could have a big leverage on the current economy situation. Onething the government needs to do and can do is to regulate the pays of the managers in many of those financial firms. It’s ridiculous to see people get paid in millions while their firms financials are in freefall.

What the FED needs to do is stop and look a big business. They give them the breaks and nothing to the consumer. In turn the corporations give big pay and bonuses to the EXEC’s and pass nothing on to the consumer. Yet they still cry foul when the consumer defaults and demand a perk for the losses( as in bankruptcy laws)

Maybe if the FED starts borrowing directly to the consumer it may kick start the economy.

I agree that we need to save, but for most Americans it may be tough when they live paycheck to paycheck because of no raises and cost of living increases.

The bottom line is that the FED needs to stop dealing with businesses and start dealing with the consumers.

“History shows that Fed easing will eventually work their magic.”

If only.

History may indeed “show” the application (and supposed “benefit”) of this supposed “magic” over the last 68 years or so but this is not your Father’s or even your Grandfather’s historical cyclical downturn. This is an inflection point of unimaginable severity. It will have worldwide consequences before it is over.

This is atypical in every way we, who are alive today, can imagine. The sooner the Fed and everyone else come to grips with this fatal analytical flaw, the better we will begin to comprehend what we are in for.

Before this is all over (and I think 2009 or 2010 are simplistic and overly-optimistic scenarios — it might be 2020 before we “dig out”) we may all turn to the many analyses offered by the so-called Austrian School to try to appreciate what is going on.

We have broken the whole money system. It cannot no longer properly function to send the correct signals for decision-making and resource allocation. This is a problem 30 years in the making. It will not go away overnight.

We have been running the system red-hot for a long time. It will cool us and itself before it can be stimulated back to life. What we are doing is not jump-starting anything. If anything we are electrocuting a dying patient.

When any system — whether it be a social, economic, biological, or an individual human organism — has been entropically so mismanaged for so long, it will “fail” before it can recover. Crack-cocaine will kill and the individual patient will never recover in that case.

But our crack-cocaine of easy money has not yet entirely killed the patient. Let’s not be fooled into thinking that “History shows that Fed easing will eventually work [its] magic.”
It can instead kill us, if we follow the typical — and sad-to-say only — prescription the Fed, and the rest of us, know — more easy money.

Good Luck America, our health depends on yours!

I think that the Fed should self-destruct and that “things” should be left alone to work themselves out. After all, a business cycle is a business cycle is a business cycle. I don’t like this “artificial respiration”.

No. The solution is simple. Low gas prices = better economy. Simple. You don’t have to have a dr. degree to figure this stuff out.

You folks have no idea what’s coming. Can you remember a little historic ‘blip’ known as The Great Depression? There are so many factors that are all coming together and they point to one thing….

Let the market, economy, seek its own level. Do not allow more debt by slashing interest rates. Encourage the responsiable who save and have little or no CC debt, a home he or she can afford.
Stop blaming those poor lenders who made the “Liar Loans” and start taking the responsibility for your own actions. No one forced the ARM on you. You had eyes to see, and a mind to think with.
Do Not force feed the banks with more liquid cash. Just what is the status of the banking sector? Are we on the verge of a banking meltdown? Is the Fed so concerned that they make billions avaliable just to keep the doors open?
We, in America, are not used to discomfort. We have drug companies to fix that problem. But I am afraid that discomfort is looming. Our addition to debt is a tuff habit to break. For the most part we are all addicts on this bus

Very little is being said about the invisible cap on the wages of the American Middile class in a Global economy where competing salaries for the same work a far less than what exists in the US. The FED is stuck with having to keep interest rates low because the average American cannot afford a houses even at current lower prices with higher interest rates. At current prices the average property has peaked and in fact has reversed in value especially with such large existing supplies. High energy prices do not help to relieve the carrying costs. With persistent demand on energy from India and China, continued lower earning power by the Middle Class, and the huge impact of the housing market on the overall economy I thik we are in for a long haul. Lets get real .. 5 to 10 yesrs before we begin to see a real recovery, and that is if we get a dramatic change in our energy policies and a cloing of the gap between wages and the real cost of living.

Yes. Keep dropping rates,as required. But, before dropping rates, think of the effect that droping rates wiill have on the dollar. If the value of the dollar drops, oil will rise. Oil rising wil have a ripple effect on our economy, since we live in such a petroleum-based society. Plastics anyone?

Keep in mind that when the price of a commodity, like oil, rises due to speculation purposes only, the price will come right back down again eventually.

So 2 suggestions: First, patience. After a hangover, whether from too much alcohol or speculation in the housing market, takes time to get over. Second, dropping rates based upon knee-jerk reactions do more harm than good. The FRB and Treasury should take a slow, measured response to any of these “crises”. Any moves have to have both short- and lon-term benefits

After all, aren’t we all responsible for this mess?

Cutting rates is not the answer. Congress mandating lenders to loan money to people who can not pay it back is the reason we are in this mess. Lets speak clearly about all this. Congress is to blame for everything wrong in this country because they are bought and paid for by special interests.

If the Fed remembers it’s history, it will stay strong and resist the demands from Wall St. to keep cutting rates. $1000 gold? $110 oil? The dollar in freefall? Yes there will be a recession (I think we’re already in it), but a line must be drawn.

The Fed needs to stop cutting rates. They need to be the foremost authority on monetary policy again and be an AUTHORITY – not a peer. Peers succumb to peer pressure, and the Fed is succumbing to Wall Street demands. They should revert back to proper economics and reign in the speculators. We will pay a price as a country for the way our ridiculous central bank is handling the Economy and the way our government spends. Economies of the world expand and contract in a natural cycle – we are not so powerful a country that we can have eternal expansion. The laws of Economics will prevail. And why oh why will we bail out institutions that run awful balance sheets when they fail. They bet wrong – they bet with our money and our mortgages. They didn’t play by the rules and now are in trouble. Let them pay – let inefficient businesses shut down and let new more efficient businesses take their place.

Not unexpected. This administration is ALL about bailing out their friends… after all when your economic and energy strategy is laid out by guys like KEN LAY and his ilk why would you be surprised. People get the government they deserve! If you voted for “the ends justify the means” team, well just who do you think they were/are enriching??? All the guys at the top (read here big republican donors) will do just fine. It’s the little people (the sheep actually) who are gonna take it in the teeth!

Imagined quotes from current and recent Fed Chairmen:
“And now friends, I’d like to play my favorite song……..actually, it’s the only song I know.” Print – print – print some more, money from thin air, merilly merrily merrily we go, being Cavalair.”
We need to stop this madness, and restore faith in the US dollar. Let’s demand the Fed focus on the INTEGRITY of the currency, before we have hyper-inflation, a bankrupt government, worthless bonds and annuities. Recessions happen, just like the sun rises and sets, so get real, PLEASE!!!!!! STOP CUTTING RATES, and STOP PRINTING DOLLARS OUT OF THIN AIR.

To tell you the truth i don’t think they should be cutting interest rates. The more they go down the more trouble we seem to get in. What are they hoping for that people will go out and get loans??? Cutting the rates makes no sense to me… On the other hand the only thing pissing me off are gas prices and groceries. I was responsible when it came to purchasing my house so it hasn’t affected me. And i’m glad some of these banks are having problems, everywhere you look there is a new bank going up..WHAT”S UP WITH THAT??

The Fed has cut rates enough. I am thankful that they cut rates to help the economy previously and that they have the foresight to see the road ahead, but it seems as though the rate cuts are no longer affecting/helping the average American, in fact they are hurting.

I bought a house in January, after saving for years, and thanks to the Fed rate cuts and the 10-year note, rates were rediculously low (5.5%) But now, we see the greed of banks and the credit crunch that is happening and interest rates have shot way up for commercial and residential loans.

If interest rates for the average person continue to go up while the Fed rate is going down, they need to stop. It isnt helping us anymore, in fact its only pushing inflation higher and causing us to spend more on fewer products, which makes us want to purchase less. They are just shooting themselves in the foot, the $120B tax rebate bill isnt going to do a lot of good if gas shoots up another $.40-$.60 a gallon. It will basically erase that bill and then what? We are back to where we started, only prices are way more than we can afford.

Maybe due to the perfect storm of high oil prices and the implosion of the credit markets (each of which is due to the clossally inept decisions of human beings in public and private positiins of authirty)we juat have to suffwer through a now inevitable recession until things get back in better balance. Cutting interest rates now is like chasing the horse after it is out of the barn. The present administration and the so callled leaders of Wall Street have been exposed as clueless. Hopefully the next generation will have more common sense and open its eyes to the reality that is evident.

If we think the credit crunch is hurting now, the combination of uncontrolled inflation AND tight credit will put us ALL down! For such a long time, analysts fed us this mis information about the consumer saving the bacon, along with high prices bringing down consumption. But the point that was and is missed is that the American consumer has CUT BACK, conserved and maxxed out the credit cards already. It is time for MUCH more comprehensive guidance by the Feds and major reorganization within the credit/insurers/bond/mortgage industry. Please clean your houses!

This Fed’-Wallstreet back-and-forth has become comical…These DAILY, knee-jerk reactions are little more than a futile attempt to correct that which has been in the making for at least 7 years.
The rest of the world, used to rise, fall, swoon in sync’ to the US economy. They don’t care anymore and our economy has become nothing more than “smoke-and-mirrors”.

Good Luck to all of us…

A couple of ideas: 1) Don’t cut rates, support a rise in the dollar and see oil prices come down. 2) Charge the OPEC countries overinflated prices for the food and goods they get from us. I’ll trade them a loaf of bread for a barrel of oil.

So far, interest rate cuts have had no positive effect. Banks and credit card companies haven’t passed the drops on to consumers, instead using the increased spread as profit for themselves; there’s no evidence that will change. Also, Americans have for too long been spending money they don’t have on things they don’t need to impress people they don’t know. Long-range, I think the story in this months Atlantic Monthly about how McMansions could become tenements in 20 years has some validity.

Short-term, we need more savings, less spending, and higher interest rates. Remember, it was insanely low interest rates from 2001-3 that in part led to the real estate bubble.

How can economists be “shockingly surprised” at the pull back in personal spending. For 2 months now all we’ve heard about is the gloom and doom ahead. The so-called slow down has not personally affected my wallet yet, but I’m pulling in anyway just because of the chicken little news I hear every day. I know that only contributes to the problem but what are you to do when most of the rest of the country is too ignorant to know what personal responsibility actually is — including our government.

The Fed’s best course of action at this point is to do absolutely nothing. Leave the building and come back in six months and see where we are at. For crying out loud you’d think the guys at the Fed would understand there’s a lag between the time they cut and the time the effects are seen. STOP CUTTING RATES!!! $110 oil…hello??? The dollar is already in freefall, but yes, if the oil producing countries start asking for euros instead of dollars, you can pretty much kiss America’s leading role in the world goodbye. We will be holding not worthless, but nearly worthless currency that nobody wants, or needs, anymore. At that point you could say hello to 10% mortgage rates. That will REALLY help turn around the housing market. Sheesh!!!!

When Ben Bernanke was talking about throwing money from helicopters to bail out a stalled economy in his confirmation hearings, it wasn’t a joke. He was telling you exactly what his intentions were. Think about that. Rates should be raised to stop hyperinflation before its too late.

Don’t cut rates anymore. Consumers have to pay more and more for gas to get to the jobs they still have and have to cut back in other areas; what doesn’t the Fed understand about that? Keep the dollar from falling, drive the price of oil down and people will take the money they were spending on gas and put it back into buying stuff.

Eventhough I could benefit from a lower rate, I think the best course for the Fed is to leave the rate alone.
The extreme cutting of the funds rate under Greenspan set the stage for the mortgage/credit meltdown. I think a kindergartener could have predicted the outcome of cutting the funds rate to 1% and then turning around and quickly raising it to 5%.

We had this coming to ourselves. Borrowing and spending like crazy eventually leads to this point. Rewarding CEOs who enable that kind of foolishness only encourages more of it. We don’t need to be encouraging people to spend; we need to encourage some fiscal discipline in our personal, state, and national financial lives, cut outrageous CEO behavior, and stop sending all our jobs overseas to encourage (yet more) American consumerism. Whatever happened to Bretton Woods and the idea that stable, family-wage JOBS and FIXED EXCHANGE RATES were the keys to economic stability and growth, not credit-financed spending…

What’s next, a program to buy personal credit card default?
Taxpayers shouldn’t be bailing out crooked lenders and incompetent borrowers. It will only prolong the agony.

What is the Fed running, a popularity contest?

People must be held accountable for their actions to insure responsible future behavior.

Hold rates steady. Invest massively in energy saving
vehicles, a subsidized hybrid
produced by the tens of millions would help lower inflation, create jobs and guess what? People would be able to afford prime mortgages.

This government should confront the falling dollar and rising oil prices,oil prices that have nothing to do with market fundamentals like supply and demand, but instead are being fuel by corrupt hedge funds and Wall street banks.
The speculators need to be reigned in, NOW!!

The recent cash infusion to desperate banks and the forthcoming stimulas checks to Americans, these insane moves will only pad the banks balance sheets briefly, as consumers pay down credit card debt and the cash infusion the banks received will be used to throw more speculative capital at oil, further driving up prices.

There will be a day of reckoning. Wall Street and inept government brought this country to its knees in the 20’s. The breaking point today is closer than you think

I advocate no change – inflation is a much bigger issue now. Bernanke should quit listening to politicians, and just let the markets work. Recessions are natural and good for the economy in the long run. The hard part is convincing the (generally) unintelligent electorate that long-term results are more important than short-term ones. If only we had Volcker in charge now, I would feel a lot better.

Why is the Fed more concerned about bailing out the few dick heads in mortgage industry, than the millions of people that are being pushed to the brink by cost of food and fuel. IT’S INFLATION, STUPID !!!!!!!!!!!

Cutting the rates further makes no sense …. with bank charges and fees we already pay institutions to keep our money – any further cuts and the banks will be asking us to pay them interest as well.

Let those who made the big bucks take the big losses now …

Fed should pay more attention to Inflation. But what if the government wants the dollar to be weak?

Rates should be raised. It’s almost as if the Fed is intentionally trying to destroy the dollar. The have an agenda for setting up a North American currency, so in a few years they will then pose as our saviors with their new “plan” which is nothing more than destroying US sovereignty and replace it with world government.

A box of cereal at walmart is now going for almost $ 4. Wages are not going up. I am afraid of the day coming soon where we are living in tents eating earthworms and weeds in the woods for food and boiling water in pots.

“Those numbers put dents in the argument that consumers would keep spending in the face of the housing downturn.” American consumers will continue to spend on useless stuff up until one, and only one, thing happens. They can’t borrow any more money to do it. Guess what? They can’t. But this is a good thing. We need to stop borrowing, we are too far in debt now, and that is the root of our problems. Lowering rates only works because it encourages lending. No, they should not lower rates further. Banks need to return to reasonable due diligence to lend money – including credit cards – and the rest of us need to live withing our means. Ignoring basics only makes good for a short time.

I don’t know but it’s apparent something else needs to be done because the rates are already low… It’s been said time and time again the confidence of americans to go and spend money is low.. But why would we spend money on items when staple foods, dairy, and gas are so high they are through the roof.

It’s a tricky situation, but i believe that there should be an american comittee that soley does not rely on Bernanke (even though he has been proven a genius before).

Solution
Open areas that have been off limit to oil production. Bring online new production asap.
Add an export tax on commodities being exported.
Reach out to the American public to band together and reduce energy consumption.
Work with American automakers to produce super efficient vehicals, provide tax incentives to consumer to buy these American built vehicals.
Push forward with alternative energy programs.
Work with American businesses to be more competive foreign markets. Insure that trading partners meet minimum requirements as per green house gases and pollution. (It is really a small world, and soon China’s pollution problems will become ours)
Net Results
Decrease in the Trade deficit.
Decrease in Oil dependency.
Decrease in Green House Gases.
Increase in American Wealth.
Increase in the Value of Dollar.
Decrease in Budget deficit.

I personally see the Fed is catering to the people who made big mistakes and is trying to bail them out. Meanwhile the general public who is just trying to get by gets to take a back sit and just loose money more quickly they work hard to keep their hands on. Oil at 110 even though supplies rose, Gold at 1000, and apparently were not in a recession or we do not have an “inflation” problem. Its as funny as hearing good old George say “what $4 dollar gas prediction?” Maybe all the gov officials just try to act like they don’t know until people slap it into their faces..

The fed needs to raise interest rates 1/2% or more to stop the dollar’s free fall, push down oil prices, and knock down inflation. Much of the current inflation is being driven by oil and commodity prices going up. Commodity increases appear to be driven more by speculation than supply/demand imbalance.

The federal reserve is only prolonging the inevitable. Rates need to at least stay where they are to curb inflation. There needs to be a day of reckoning for our economy and they need to let it happen or maybe even help it along. My comments may be unpopular but, I call em like I see em.

Bernanke is definitely an anti-recession guy. He has shown a strong propensity towards avoiding a recession at any cost – which in this case is inflation.

To inject $700B into the money supply over the past 3 weeks plus nearly a 3% cut in interest rates (when all is said and done next week) shows that inflation is a distant second in his decision making process.

Get ready for some serious inflation folks!

The Fed should raise the rate by a quarter point and then leave it alone. The markets can’t correct themselves if the markets are always trying to predict the effects of an outside element. All an interest rate cut will do is cost us more now and prolong the time it will take for the economy to rebound.

Are there serious talks in OPEC to decouple the price of oil with the dollar? I know Iran’s been saying it, but is there an underlying sentiment amongst the other countries to do that? If it were to occur, wouldnt the value of the dollar free fall? I’m not an economist, but i’m very interested in the bigger picture when it comes to other nations economic moves in relation to ours. WE’re doing a magnificent job screwing it up ourselves, but what happens when other countries start to react to our decline further precipitating the collapse..

-interested

The Fed should announce that there will be no further rate cuts. In two months they should announce that they are considering raising the interest rate. Then in August they should start raising rates VERY SLOWY by .25 points and keep going ’till they reach 6.
Other than that I would ask Volker to take over for Bernanke or do something bold and appoint Ron Paul to replace him.

Personal responsibility is something republicans talk a great deal about except they never practice what they preach.

Where is the personal responsibility of the CEO’s of the subprime crisis… oh they made of with a few 100 million dollars… while the rest of us eat cake.

Don’t tell the average joe to have personal responsibility when even those at the top don’t practice it.

If we keep losing jobs the stock price of companies won’t really matter as no one will have any money to spend anyway. CEO’s should stop worrying about their stock price and their bonus and keep people working. Get rid of all the economists and start using a little common sense. We need jobs, people.

Lowering the interest rate any more is insane. I think that they should raise it. What ever happened to personal responsibility? You’re killing my savings.

The Fed’s cutting rates is what got us into this trouble in the first place. Rates should be given a quit 4 point increase to straighten things out.

That should tell the world the U.S. is very interested in stopping the dollar’s fall and stopping inflation dead in it’s tracks.