Fed May Not Avoid a Recession Even With More Rate Cuts

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Mortgage and Lending with Kris Krajecki - FOX VALLEY MORTGAGE - Huntley, IL

Bill Gross, manager of the world's biggest bond fund, said the Federal Reserve may not be able to avoid a recession even if central bank policy makers lower borrowing costs by at least another percentage point.

Wow! Scary News for sure!

Hiring in the U.S. slowed more than forecast in December and unemployment jumped to a two-year high.

The central bank has reduced its target for the overnight lending rate between banks three times since Sept. 18, bringing the rate to 4.25 percent.

Look for at LEAST a 1/2 point rate cut on January 30th. This is what they should have done at the last meeting!!

:-)

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Rainer
26,071
Bryan Washington
Keller Williams Realty, Eugene & Springfield - Eugene, OR

Somewhat off topic, but the government needs to stop trying to manipulate the economy.

Inflation, deflation, blah blah blah.  The economy is what it is, let it grow and shrink naturally both domestically and internationally and we would all be in better shape.

I.E. Gas prices, I've heard from people that want a "cap" on the price.  Think back to the 70s when they did that and we had gas lines.

Jan 05, 2008 04:12 AM #1
Rainmaker
426,807
Eric Kodner
Wayzata Lakes Realty: Eric Kodner Sells Twin Cities Homes - Minnetonka, MN
Wayzata Lakes Realty: Twin Cities, Madeline Island

Kris, I agree it appears likely that we're headed for a recession. 

I doubt that a puritst's laissez-faire approach to the US economy will work anymore.  We have become way too dependent upon the world economy to sit on the sidelines and do nothing.  We have put ourselves in that position over recent decades, with huge budget deficits, huge trade deficits and an enormous influx of foreign investment in our economy. 

How are we supposed to mandate that the economy should grow or shrink "both domestically and internationally"?  We don't make economic policy for the world.

In the United States, we could deregulate everything, let the economy go where it will go and so forth.  But other countries will stop investing here if we do, among other things.  I know people like simple solutions, but laissez-faire is a pretty over-simplified approach.

Jan 05, 2008 04:30 AM #2
Rainmaker
1,527,618
Gary L. Waters Broker Associate, Bucci Realty
Bucci Realty, Inc. - Melbourne, FL
Fifteen Years Experience in Brevard County
The Fed seems to be in a reactive mode as opposed to proactive...but then I believe the Fed by its nature is reactive.
Jan 05, 2008 05:57 AM #3
Rainmaker
239,009
Pat Fenn
Marketing Specialist for CJ Realty Group/Cindy Jones Broker - Springfield, VA
To many bailouts and not enough real strategy for improvement.  I believe yesterday's numbers including 49,000 less construction jobs which will trickle down to all of us in the real estate industry.  Hello, knock, knock, hello is anyone out there?????
Jan 05, 2008 07:11 AM #4
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Rainer
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Kris Krajecki

Mortgage Broker Huntley, IL
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