Oct 30 2008
“A harsh storm seen only once in 100 years is raging”
These are the words of Japanese Prime Minister Taro Aso. He’s talking about the economy, which has become really the only issue to be focused on in our own presidential elections. No matter who you listen to though, you pretty much hear the same thing. Bad times are here.
The United States economy contracted in the third quarter, partially due to people’s unwillingness to spend in a recession. U.S. consumers cut spending at the sharpest rate in 28 years in the third quarter. Early reports for the fourth quarter don’t look too promising either.
All across the globe countries are slashing interest rates in an effort to stimulate the balking global economy. China, Norway and the United States all cut rates this week. Japan is considering cutting rates on Friday and the European Central Bank, Britain and Australia are expected to follow next week.
Janet Yellen, president of the San Francisco Federal Reserve Bank, called the recent trends in the global economy “deeply worrisome” and added that U.S. federal funds rate could potentially go “a little lower” than 1 percent in the future.
“The mortgage meltdown is far from over, the economy and financial markets are still reeling from it,” said Yellen.
Here’s my question. Why are we cutting interest rates? Was this not one of the reasons (to be fair, there were plenty) we got into the crisis in the first place? I’m not an economics expert by any means, but when you cut interest rates and artificially pump the markets with money (the bailout money being divied out now), all that’s going to do is weaken the value of the dollar even more. Does anyone understand this process better than me? Am I interpreting something wrong? How is this going to do anything but prolong the recession?
I was wondering the same thing. When I heard the other night that Bernacke was going to lower the Fed, I thought, “Self, isn’t that one of the reasons we got tossed into this well of shit with concrete sandals?” To which I had to reply to me, “Why yes, that is a reason…I guess, to paraphrase George W. Bush, rarely is the question asked, is our Treasury Secretary learning?”
The only way things will change is if we change economic standards as this type of economical foudation has failed the World big time. Raping the World of all its resources instead of investing in sustainability is only going to make things even worse.
It’s a defensive measure. I can think of little more then to say that. Cutting the interest rates does inflate the economy but they are doing it in hopes that it prevents a depression. Which we all know is worse then a recession. The dollar has actually gained out of this because the Euro and the Pound Sterling are dropping faster in the World market.
But is this a good thing? Hell no. this isn’t free market. This is governmental control. But what can you do? It’s either you get hit in the stomach with a baseball bat or get run over by a Mac Truck. Take your pick.