Today the Federal Reserve dropped its funds rate by 0.75%, so that it now sits at 2.25%. Many had predicted that they would drop it a full percentage point, but none-the-less, this was a significant drop. The rate now sits at the lowest it has been since December 2004. The Dow Jones reacted by going up 420 points. The Fed indicated that it would take further steps in the future if it felt they were necessary and would help the country economically. On Thursday we will see if these cuts have had an effect on mortgage interest rates.

I am unsure that these decreases will have a drastic effect on our current situation. The mortgage interest rates have been VERY low for months and the prices of homes have been at record lows as well. Yet the housing market drags. In my opinion, business and/or the government need to do something to change the mind set of the people in this country. If we believe times are bad, we will react based on those beliefs, even if it is just our perceptions, and not reality. Will getting a $600 to $1,200 check in May do the trick? Again, I have my doubts. We need a leader, most likely from the government, that can capture the imagination of the nation and make us believe that there is a light at the end of the tunnel. I am way too young to remember, but my parents and grandparents used to say that FDR had the ability to do that. Maybe that is what we need again. Someone who makes us see the hope and possibilities that are all around us.

In any case, we will see if these tactics by the government will help, hurt, or have no effect.  Time will tell.