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On Saturday, President Bush warned that the government must guard against going too far in trying to fix the troubled economy. "If we were to pursue some of the sweeping government solutions that we hear about in Washington, we would make a complicated problem even worse -- and end up hurting far more homeowners than we help."
"Democrats know that wait-and-see is not a responsible strategy for an economy that is teetering on the brink of recession," said Senate Majority Leader Harry Reid. "The president continues to convince himself that inaction is the cure-all for the economic problems hurting hardworking Americans." Democrats intend to strengthen the economy with measures dealing with housing, energy efficiency, and renewable energy.
President Bush said the recently passed program of tax rebates should begin to lift the economy in the second quarter of the year and have an even stronger impact in the third quarter. But he urged caution about doing more, particularly about the crisis in the housing market.
In the meantime, the Federal Reserve is ready to deliver yet another big interest rate cut to aid an economy in crisis. Some economists expect a rate cut of one-half of a percentage point, while investors and others hope for even more.
Whatever happens Tuesday afternoon after central bank policymakers have met with Fed Chairman Ben Bernanke, a growing number of analysts feel that another rate reduction won't pull the country back from the brink of the recession arising from the fallout from the housing and credit crises, not to mention skyrocketing energy prices and consumers reluctant to spend. Lower interest rates may help cushion the blows of a recession, they say, but even with the Fed's aggressive moves, economic and financial conditions will continue to deteriorate.
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Reader Comments (Page 1 of 1)
3-16-2008 @ 3:28AM
thebigkill said...
Come on, fellas...
Between President Bush's $500 payday plan and Senate Majority Leader Reid's energy efficiency plan both telling us its the key to stregthening the US economy, I get reminded of a great song written in light of events from 1972-1973, which were similar times... Iraq nationalizes oil (similar to Valenzuela), OPEC doubles the price of crude oil, Watergate, the last of troops drafted to Vietnam, an estimated 1,600,000 workers in the United Kingdom stopped work in support of a Trade Union Congress "day of national protest and stoppage" against the Government's anti-inflation policy, and the US dollar devalued by 10% (http://en.wikipedia.org/wiki/1973)...
-----------------------------------
And I'm wondering what it is I should do,
It's so hard to keep this smile from my face,
Losing control, yeah, I'm all over the place,
Clowns to the left of me, Jokers to the right,
Here I am, stuck in the middle with you...
3-16-2008 @ 7:25AM
Michael Schneider said...
The housing situation is very important in the next few months. I suspect potential home buyers are a little concerned here even if they can get credit foreclosures should rise. The most optimistic comments on housing that I have heard from a reasonable source were Sam Zell's comments that he thinks housing will stabilize this spring (see Spotlight section, top right, at http://www.Barrelomoney.com) That is probably the most that we can hope for. The tax rebates will help the economy a little but they won't be able to rescue housing. The interest rate cuts would help housing but as risks are adjusted by lenders mortgage rates have actually risen. So far, it seems the rates are taking money out of the economy (from those who earn interest income) and not dong enough to make it easier to buy homes. This is a bottleneck that seems fixable but we will have to see what happens as new challenges keep coming up.
Longer term people should realize that perhaps part of the reason the problems have gotten out of hand is the huge budget deficit which has inhibited the government's flexibility. Action by President Bush on earmarks (his executive order) and some plans by John McCain to cut spending will help but so far do not seem like they will be enough. Other candidates have massive spending programs so maybe we are in long term trouble as respected observers like Jim Rogers suggest (see Channeling Jim Rogers, yellow label, top at http://www.Barrelomoney.com).
3-16-2008 @ 11:19AM
Sheldon L said...
right tbk,
...but don't forget proper credit to Steelers Wheel, 1973, and lead singer, the late Robert Palmer.
;-)
3-16-2008 @ 9:43AM
smartone said...
Ha - Fed just wrote a 200 Billion dollar check Banks in trouble - before figure people figure out that taxpayers just bailed out the banks , Bush wants to make sure middle/lower class don't get any ideas.
3-16-2008 @ 10:43AM
april said...
Why are we listening to a man who was given two companies by his relatives, ran them into bankruptcy, and had them purchased for far more than they were worth by friends of the family.... before he was president? Oh, and let's not forget the S&L debacle his brother was involved in.
He's doing the same with the country, and the US middle class is going to be the family who has to purchase the bankrupt company (the US) so he can continue to play in his sandbox with his other buddies.
I keep wondering why we have put up with this? Are we truly such a nation of sheep? Are we so engrossed in the distractions thrown at us via Idols, Hilton's, sports drug investigations, and fallen public figures that we don't want to look at what's happening in this country?
Or are we just too scared to really open our eyes?
3-16-2008 @ 11:52AM
Neuticles said...
If your personal finances are on the rocks you do NOT sit back and wiat for it to correct itself. It WILL NOT happen. For Bush to say something should not be done is insanity as usual for that moron.
I wonder if that idiot knows which way is up or down? Can he feed himself?
3-16-2008 @ 12:41PM
william lindblad said...
In most cases I don't agree with Mr. Bush however, this time he makes sense. I don't think his answer in the form of rebates will do much good but, on the other hand, the Fed cannot engage both a sagging economy and inflation simultaneously. There remains a great deal of optimisim, primarily in the stock markets and the analysists hype and general b.s. has been concentrated on promoting a fairy tale. Economics has seen similar situations in the past and the current appears to have too much in common with all of the bad. Foreign investment is starting to leave (1857) Imports are eccessive (1893) Housing purchased with "0" down the same as stock purchased in the same manner (1929). Oil, while not a shortage, at record prices (1972-73). Add in currency devaluation, grain prices soaring, small builders with debt and no sales, bonds with shakey insurance, credit card and auto loan default, and this is a new and unknown ball game.
Is the stock market at a bottom? This is current news and the major analyists think rebound is around the corner. I do hope that they are correct, but what they offer is contrary to history - and that crystal ball has the advantage of viewing a confirmed event.
Anyone go grocery shopping? Why so many "2-fers"? Are the warehouses being cleared to prepare for a slowdown? Seems this industry may be expecting the obvious price increases and is about to begin the lay off process.