For the fourth month in a row, Bank of England interest rates will remain at the record low of 0.5%. In an announcement today, the UK's central bank said it would not expand its quantitative easing of financial markets, much to the surprise of the market. The bank has been buying up assets aggressively, printing cash to finance what is likely to be £125 billion in purchases by the end of this month.

Financial markets expected a much different play, involving an increase in this asset purchase target by another £25 billion (to £150 billion). This move would have let the Bank of England shove even more money into the economy through next month, which is when the bank publishes its latest quarterly economic forecast.

Your mission, should you decide to accept it, Mr. Phelps, is to boost the economy and increase employment but not allow inflation to run rampant. As usual, the secretary will disavow any knowledge of your actions should you fail. This message will self-destruct in five seconds. Good luck, Mr. Phelps. Or should that be Mr. Bernanke?

That, in a nut shell, is the fine line the Fed must walk. It has to get the economy going and more people back to work, mostly by pumping money into the economy. But it can't put too much money into the system or inflation will run rampant. Right now, the presses are running 24/7, and the money is flying out the Treasury's and Fed's windows, seemingly to almost anyone walking underneath them. The stimulus package is in full swing. But what signs are there that it's working?

As the housing market continues to find its footing, one welcome trend for potential home buyers has been falling home prices. The main consequence of the troubled housing market has been a sharp increase in home inventories, and this has led to a massive drop in home prices, and we see news today that home prices are the most affordable that they have been in the past 18 years.

The Housing Opportunity Index tracks home prices, and it reported that during the first three months of this year, 72.5% of homes for sale fell within the affordability range, up from 60% during the last quarter of 2008. This sharp jump is another testament to just how quickly home prices have eroded over the past few months.

As the quarterly reports continue to roll out and the market continues to rally, optimism seem to be rising. Analysts certainly have high hopes for some companies reporting earnings this week.

Analysts surveyed by Thomson Reuters expect First Solar Inc. (NASDAQ: FSLR) to report first-quarter earnings of $1.51 per share, which is 62.3% higher than a year ago. Revenue for the quarter is expected to be 105.6% higher, or $404.9 million. First Solar earnings have topped expectations in the past five quarters, by as much as 47.3%. The long-term EPS growth forecast is 40.6% and the forward PE ratio estimate is 23.0. In the previous quarter, Tempe, Ariz.-based First Solar reported having more cash on hand than debt. The First Call consensus recommendation is to buy FSLR; CNBC recently included it as a stock pick. First Solar has announced that it will build new solar power plants in Nevada and Germany. Its share price has risen 6.9% since the beginning of the year to $147.46.

This morning, the Bank of England's Monetary Police Committee (BOE) decided to keep its interest rate at the current all-time low of 0.5%, as was expected. The BOE announced that it would continue its 75-billion pound program, which is supposed to increase the money supply in hopes of keeping deflation at bay.

The BOE stated that, "since its previous meeting a total of just over 26 billion pounds of asset purchases had been made and that it would take a further two months to complete that program." Some experts believe the BOE will hold interest rates at 0.5% "well into 2010." Before the bank made its decision, the 10-year yield was hovering around 3.34%.

Bloomberg director and columnist Jane Bryant Quinn wants to let investors and readers know that the much-criticized (and justifiably so) mortgage sector has not entirely disappeared.

Further, I don't think she'd mind if I said Ms. Quinn, a leading financial writer for many years, has seen a recession or two: she's seen the disasters arrive, and seen them leave. The United States manages to muddle through every time. (Granted, this crisis calls for heavy-duty muddling through.)

We all know that the real estate market is in trouble, and another sign of just how bad things are came out today as the National Association of Realtors announced another steep drop in home prices during the fourth quarter.

The NAR started keeping comprehensive data on home sales back in 1979, and in that time period there has not been another quarter that saw home prices drop as much as they did in the fourth quarter of last year. So just how much did values drop? A massive 12.4%.

Oil prices inched up slightly today, despite the fact that inventories swelled much more than the market had anticipated last week. Going into today's inventory report from the U.S. Department of Energy, analysts had been expecting to see an increase in oil inventories last week. But, on average, analysts had been expecting that the increase would be around 3.4 million barrels, and the actual increase was much larger, with a reported 6.2 million increase: a very bearish indicator.

Typically when we see inventories rise so much higher than expected, we would expect to see traders push oil prices lower, but not today. Instead, oil was able to move a bit higher on the day, trading up 58 cents a barrel to $42.16. Earlier in the session prices had been up as high as $43.60.

Over the past few years, the mortgage business has been virtually dead -- that is, until recently.

Why? The key driver, of course, is the plunge in interest rates (keep in mind that the Federal Reserve plans to buy up $500 billion in mortgages). In fact, you can get a fixed-rate mortgage loan for less than 5%. You'd have to go back to the 1950s to see those levels.

But there's a caveat: the mortgage growth is not for purchasing houses; instead, we are seeing a surge of refinancing activities. But, hey, this is a start, right?

In the first week of 2009, we saw the biggest jump in mortgage applications since 2003 (this is according to a report from the Mortgage Bankers Association). There was a 15.8% jump in the index.

Interestingly enough, it's still fairly difficult to secure a mortgage, especially as underwriting standards have increased. Basically, a large number of consumers have minimal levels of home equity as well as damaged credit.

Now, Fannie Mae is in the process of implementing new programs for troubled borrowers, which should help. What's more, Congress may introduce some new programs.

However, it is critical that housing prices increase again, which means the U.S. economy will need to once again get back on track.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a valuation website.

The impossible has happened. The Chicago Cubs won the National League pennant?

No, ECB President Jean-Claude Trichet is now in accommodation mode.

Trichet, a legendary inflation hawk, presided over the European Central Bank as it cut its benchmark interest rate by 50 basis points to 2% Thursday.

It was fourth consecutive monthly interest rate cut for the ECB and it matches the record low interest rate reached during the 2003-2005 period. However, Trichet, at the ECB's regular post-meeting news conference, indicated monetary policy makers will avoid a cut in interest rates at its next meeting in February, Bloomberg News reported Thursday.

Economist David H. Wang said there's a bright side and a downside to the ECB's most-recent action, and he isn't so sure the bank is done cutting rates, even with a prospective February pause.

You read that right. Bloomberg.com has reported that The bank of England has lowered it's benchmark interest rate to it's lowest point since the bank was founded in 1694. How much more proof is needed to make obvious the fact that people and businesses just aren't borrowing money any more?

Even if some stalwart soul had the inclination to borrow some money, are there banks out there which are lending it? In the face of unemployment levels which some say honest calculations put up as high as 16%, banks are becoming adverse to lending money to anyone who might actually need it. Of course I can get you credit card applications all day long, if you're willing to pay upwards of 19% interest on new money.

So you have to wonder, when is it all going to break loose. Honestly folks, if the promise of increased revenue reserves was in any way going to help us, don't you think the contraction would have slowed by now? The only way additional cash will correct anything is if that cash is put directly into the hands of the people who pay the bills. Of course, we all know that will never happen. Our government will continue to drop wads of our yet unpaid tax dollars into the laps of their corporate sponsors. That, for now, is where the buck now stops.

Jan. 22: Dow 11,971 (down 128 points); trading range, 658 points

The specter of continuing the ugliness seen overnight in the global equity markets and a 95% decline in fourth-quarter (2007) net income at Bank of America (NYSE: BAC) combined to shake up those in charge of U.S. monetary policy.

So, facing the possibility of a 500-point drop in the Dow following the long holiday weekend, the Fed sprang into action early to shore up the markets.

The move was a 75-basis-point pre-market intermeeting cut just eight days before the Fed's regularly scheduled meeting to drop the fed funds rate to 3.5% and the discount rate to 4%. The Fed made this move "in view of a weakening of the economic outlook and increasing downside risks to growth," adding, "appreciable downside risks to growth remain."

The Dow battled all day to recover from an early session drop of 459 points to close down only 128 by the closing bell.

Greg Tucker is the executive editor of OptionsZone.com.

March 18: Dow 12,392 (up 420 points); trading range, 435 points

Just one day after the collapse of Bear Stearns, the market rallied on a 75-basis-point Fed rate cut and better-than-expected earnings reports from Goldman Sachs (NYSE: GS) and Lehman Brothers (OTC: LEHMQ).

Looks like someone wasn't paying attention.

The clear focus was on the much-anticipated Fed cut that dropped the fed funds and discount rate to 2.25% and 2.5%, respectively.

There was a slight pause during the session, as some hoped for a 100-basis-point cut, but traders pushed onward to finish strong and add another 100 points to the Dow before the close.

All sectors rallied into positive territory for the session and the S&P 500 posted its biggest one-day percentage move since October 2002.

Greg Tucker is the executive editor of OptionsZone.com.

This strategy went from being a modestly successful trade through October to a hero-sized trade in the past 45 days.

The Fed funds rate, the most widely followed interest rate the banks charge each other for overnight lending, topped out in August 2006, at 5.25%.

When the Fed started easing rates thereafter, no one at the economic think tanks forecasted anything close to what we are seeing today (namely a Fed funds rate of zero to 0.25% -- a decline of a full 5% in 17 months).

The decline in rates started out so orderly and coordinated that it seemed almost too good to be true, and the Dow Jones Industrial Average hit an all-time high, topping 14,000 for the first time in July 2007.

However, the quarter-point cuts gave way to a three-quarter-point cut, or 75 basis points, on Jan. 22, 2008, signaling that the Fed was seeing a material breakdown in the credit and housing markets. Following that seemingly radical rate cut, just eight days later on Jan. 30, the Fed again slashed the Fed funds rate by another half point, or 50 basis points, to 3%.

From there Bernanke & Co. held steady for a couple months to see if any good would come of their efforts.

When evidence of further erosion in the credit markets surfaced with the impending collapse of Fannie Mae (NYSE: FNM), Freddie Mac (NYSE: FRE), Indy Mac, Bear Streans and Lehman Brothers (OTC: LEHMQ), the Fed lopped another three-quarters of a point off the Fed funds rate, taking it down to 2.25% on March 18.

That was considered the absolute floor at the time, a level that would stick. But that wasn't the case.

Since the stock market is down so much I have been buying something in the fourth quarter almost every week. I have been patient and have been expanding my watch list. The difficulty for me is that I feel like almost everything is on sale -- but is everything a bargain?

Maybe not; maybe I'm delusional. Perhaps that is because I am tuned into another time and place when I would have been dancing in the streets if I were able to acquire Anglo American ADR (NASDAQ: AAUK) or General Electric (NYSE: GE) for pennies on the dollar. Maybe that is all these stocks are worth? That is what Wall Street currently thinks. That is what Main Street currently thinks. There is a lot more bad news than good.

Then why is Warren Buffett buying, and Carl Icahn and Ken Heebner? After all, I'm just following in their shadows.

The reason is that most investors are simply focused on all the bad news. That is what has most folks' attention and that is making the market -- bankruptcies, billions of dollars in losses, government out of control, Wall Street out of control and more. There is also serious fear things will get worse. If you lost money in the stock market (all of us), or lost your job or your house or any combination of the above, then things look bleak and for now they are. However, we should not be investing for now; we should be investing for the future.

Consider the following elements that support a recovery in the next year. I do not mean a boom, just a recovery -- just a more positive investing environment.

1) By spring it is estimated the government will have poured $2 trillion dollars into an economy of $13 trillion over a 12-month period. Not only is this a market stimulus, but it may prove to be highly inflationary, and if so equities are a better place to be then cash.