The Federal Reserve this morning in a move to boost the economy cut the key interest rate by three quarters of a percentage point which caused a massive selloff in early trading.
The effort however failed to reassure the global stock markets which plunged on fears that trouble in the US economy could translate into a weaker economic activity worldwide.
"Time is of the essence and the president stands ready to work on a bipartisan basis to enact economic growth legislation as soon as possible," said Treasury Secretary Henry Paulson in remarks to the US Chamber of Commerce... I continue to have confidence in the underlying strength of the global economy.
Paulson did not mention in the prepared remarks the steep plunge in the global markets on Monday which included declines in many markets that were the largest since 9/11.
in my opinion, I think that we are in a recession already and that the raising of the interest rates to "try to stem off inflation" was a mistake.
In a global economy, the old-school rules that Greenspan relied on do not apply simply because thanks to technology, things change at a faster pace than they did 10 years ago.
5 comments:
Greenspan has gotten us through rough times before. He was the God of finance. The problem is that the current President does not take the advice given to him - from ANYONE, because he is the decider. I have been saying the R word for more than a year and everyone thought I was nuts. Our current situation will be Bush's legacy. The rest of the world is freaking out because they count on our $ to but their goods. If Americans are not spending, their economies will suffer as well.
The solution that Bush is pushing, giving money to tax payers, will ONCE AGAIN benefit only the upper class and do nothing to stem the flow of new homeless or dirt poor people suffering. Add to all this the raise in the minimum wage, which we all know just raises prices on goods and nulls the raise in pay. Unless a freeze is put on goods, the minimum wage is useless. Bush has got to go! Bushwhacked is not a good feeling!
Just curious...can we take a bad week, even a bad month, and call it a recession? Or is there a technical definition that needs to be applied.
For those of us with an investment in the precise use of language, one would ask the writer, "is it true?"
I still haven't heard anyone admit it, but it sure seems like we are in a recession. The media has posted the proposal by Bush and it says that people earning less than 97,000 a year will get checks. (families more) Seems kind of odd to me that a single person earning 95,000 a year doesn't need a $300 check. It would probably only buy coffee for awhile. I'll wait and see what happens after the money goes out. That won't be until summer.
I've only watched 1 Republican debate and all the candidates except one said things like "uh, I'm not sure we are in a recession or not...", "we aren't in a recession...", etc.
Only 1 - Ron Paul - said we were and explained in brief why.
Only 1 candidate seems to have a grasp of the real problems and has chosen to skip the false promises the others, especially the Democrats, want to spew upon a populace anxious to absorb those empty pie-in-the-sky "changes".
I remember watching C-SPAN when Greenspan was testifying regarding the economy and a senator from Michigan I believe told Greenspan get out of his office and away from his cocktail parties and rich friends and take a tour of the Senators state to see how things really are.
I think that was a really bold move on the Senators part to publicly say that to Greenspan... because in my opinion, I think sometimes our government officials are living in glass houses and isolated from reality.
Case in point...
If you are bringing home $150000.00 a year and working a job where you are not worried that your company might be performing cutbacks and you risk being laid off, could you truly relate to a person making 35,000 a year with two incomes?
could you honestly relate to the small business owner who some months goes without a paycheck, and whose overhead you just increased by increasing the interest rate?
No, I don't think so.
while I will agree that Greenspan is a very intelligent individual, in my opinion, I always felt that he was out of touch with the "real" economy and ran under the old school economics instead of the fast paced world economics that we are in now.
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