The Fed Responds To Economic Crisis
January 24, 2008 – 1:10 amBlogs are abuzz over the recent federal response to looming recession worries. Over at OMB Watch, Dana Chasin sums up the surprise response: “Almost overnight, the masters of the universe have converged on a consensus that the U.S. economy is headed for — or already in — a recession.â€? Chasin reminds us that this is a real and dire issue: “After all, The move, made on an emergency basis …represented the biggest single cut in interest rates in 25 years.â€?
Brad Delong’s blog provides the text of the FOMC statement in which the federal government announced the rate cut. Here is a quick “snapshot� from the Fed: “The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth. While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households…�
Over on The Hill’s Congress Blog, lawmakers are weighing in. Rep. Lincoln Davis urges applicable action from lawmakers in both the Congress and the White House. Above all, he says that any move that is made will be felt by the global economy for some time to come. Aside from his endorsement of bipartisanship cooperation, Davis explains the significance of the rate cut.
Rep. Lacy Clay mirrors these ideals and commends Chairman Bernanke and the Federal Board of Governors for their “swift action.� She is clear in her opinion that, “Congress needs to move quickly to restore confidence in the financial markets and rebuild consumer confidence.�
But, over at Government BYTES!, support for a bipartisan economic stimulus package wanes. The blog’s author – Dominic Rupprecht – quotes Sen. Gregg who believes that the government is too late in its effort to step in. Rupprecht expounds upon his lack of support with the following: “I’m not sure I can properly express how pleased I am that the Senator has the good sense to recognize that feel-good meddling isn’t likely to accomplish much in terms of short-term economic growth…â€?
In a piece entitled, “The Politics of an Economic Nightmareâ€? Robert Reich is concerned with the “bipartisanâ€? plan as well, as he states problems with both the Democrats’ and the Republicans’ methods of handling America’s current economic meltdown. He says, “…hold your noses, because the “bipartisan” stimulus package that’s about to be introduced could be a real stinker, including tax cuts for everyone and everything under the sun — except, perhaps, for the key group of lower-income Americans.â€?
Lower-income Americans, he says, do not typically pay much income tax. This in mind, he claims that they are the most likely to spend the extra money that they receive. According to Reich, this is exactly what can – and will – stimulate the economy.
Aside from linking to and commenting on a NY Times piece by Joseph Stiglitz, bloggers at “The Big Picture� covered seven concerns with the Fed’s rate cut. This, mixed with other associated content provides an interesting and exhaustive perspective.
And Dean Baker over at American Prospect has a message for NPR: Do a better job comprehending and reporting what’s causing the current economic crisis. He says that the subprime mortgage market isn’t big enough to lead the economy to crisis, but that “…the collapse of the $20 trillion U.S. housing market is plenty large enough to lead the U.S. economy into a recession.� This, he says, is the source of America’s current market woes.
If all of that chatter isn’t enough to keep you busy, take a gander over at the Congressional Budget Office’s blog.
What’s your stance?
3 Responses to “The Fed Responds To Economic Crisis”
“Swift action”, my ass!
If Bush hadn’t been blowing smoke about the state of the economy for the past year or more,
(”Our economy is strong. People are working. We’re creating jobs”) and if Congress and Bernanke had been smart enough to see through that nonsense and knew what they hell they were doing, we might have headed off the current mess.
But once again, our elected officials have been caught unprepared and forced to scramble at the last minute.
The hurricane experts knew about Katrina in advance. Our economic experts and political leaders SHOULD have been alert to the mortgage, housing and credit problems.
What the hell were they so busy with that they missed the warning signals?
Another reason to fire them all!
By Steve Levine on Jan 24, 2008
By cutting interest rates so sharply yesterday, the FED hit the panic button. Not since before the recession of 1991 has the often clueless body taken such drastic measures.
Our economy as a whole is mirroring the energy markets. If you thought our dependence on foreign oil was going to cripple us, wait ’til you get a load of what our investment banks’ dependence on foreign capital will do. It seems like daily major shops such as Merrill and Citigroup are getting infusions of cash from the Far and Middle East - cash cows created by our incompetent trade and fiscal policies. Of course, top executives in our federal government have long financial ties with these investors and don’t see their gain as our pain.
By Joshua Rosenstock on Jan 24, 2008
I almost prefer the assuaging comfort of one-world conspiracy ‘theories’ to the harsh reality that our ‘leaders’ are actually so inept and stupid as they plainly are.
The real gift of the Bush clan is their talent for making business alliances (irrespective of anything so quaint as patriotism) that benefit the family and the ‘old boys’ in their network.
Not since Prescott Bush was Hitler’s and Nazi Germany’s banker have they had a better opportunity to wreak havoc on the world stage, and enable their fellows to loot the national treasury.
By Vince Williams on Jan 24, 2008