The Political Chase

Fed Cuts Interest Again

Issues related to the economy get hotter by the day and when it comes to discussing it politically, I can’t think of a more boring subject. But if it continues to drop — and it can quickly — by Labor Day next year, bloggers will be economic experts as we are foreign policy experts today. There’s a good laugh in there if you’ll just find it.

Fed Cuts Key Interest Rate

The Federal Reserve cut a key interest rate today for the third time this year, continuing its campaign to prevent the worsening crisis in the housing and financial markets from causing a recession.

The central bank’s policymaking committee cut the federal funds rate, at which banks make overnight loans to each other, by a quarter-percentage point to 4.25 percent. The lower rate is likely to trickle through to interest rates on credit cards, business loans and other forms of borrowing, stimulating the economy.

Presidential candidates need to start speaking up about what their economic wizards are telling them and what their priorities are: the mortgage factor will eventually have a domino effect if not contained.

I imagine if you talked with senior executives at Lowe’s and Home Depot, they would probably describe their business environment as well into a serious economic downturn, or worse. The middle-management bonuses will likely be nothing more than wishes this year.

“Incoming information suggests that economic growth is slowing, reflecting the intensification of the housing correction and some softening in business and consumer spending,” the Federal Open Market Committee said in a statement accompanying the announcement.

The committee used language that kept its options open for the next meeting: “The Committee will continue to assess the effects of financial and other developments on financial prospects and will act as needed to foster price stability and sustainable economic growth.”

When the Fed starts parsing words it’s time to pay close attention to what they are saying and what they are not saying.

I continue to hear “no end in sight.” The castle is what the American dream is built upon…well since WW II that’s been the basic structure. For the foreseeable future, there is no stopping the foreclosure dragons from getting across the moat. Just let the pace of foreclosures continue and there will be an incredible crying out of pain.

If per chance, a deserving soul falls within the guidelines of Bush’s plan today, I wouldn’t count on seeing any funds for a long time, if at all. Eligible today, but maybe not by the time they get the logistical and other similar aspects squared away.