john
The Federal Reserve cut the federal funds rate by 3/4 of a point today to 2.25%. Is this good news or bad? Depends on your perspective. Should you care? Let us take a look.
First of all this key interest rate will directly affect consumers. Specifically spenders. In the good news column, we will see lower interest rates on personal loans, such as auto loans. And if the credit card companies can find it in themselves to squeeze a dropping or two for us, we might see lower credit card interest rates. This in turn should encourage some good old-fashioned consumerism, helping to uplift the economy, or so the theory goes. Whether this, combined with the already announced Economic Stimulus Package will work, remains to be seen.
Now for the bad news. Lower interest rates could entice already financially strapped consumers into taking on more debt, which they probably cannot afford. Secondly and close to my heart, is that we definitely will see a drop in the interest rates paid on savings. Bad news for me, you and all retirees’. A year ago, I was making 6% on my short term savings, as of today it stands at 3.10%. Tomorrow it will drop to 2.35%. Bummer.
AND what really bothers me about all of our governments’ moves of late is that it looks like we really are in a recession. Probably in the early stages and our government appears VERY worried. So let us hope that the brainiacs in Washington have it right.
Oh ya, just in case you are wondering, you SHOULD care 
What do you think about the state of economy? Has it affected your family’s lifestyle?
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My name is John. I am a devoted husband and father in my late thirties.
It seems to me that the Fed is operating in true panic mode! But – let’s get this straight – Bush announced that he wanted to make home ownership available to more people. Programs were started to let anyone who applied for a loan receive one. These low-interest loans were sold in bundles, without anyone verifying the credit worthiness. The chain of financial institutions got in trouble. So, the problem was easy credit, with lower interest rates acting as an enticement. Now the Fed says the solution is – lower interest rates?? It seems improbable that this will work.
Last week, according to an MSNBC poll, 44% of people think that the economy is in serious trouble. This week, the figure is only 41% My question is: where is the other 59% shopping? Could someone please wake them up?
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