Forbes reports that US Treasury Secretary Henry Paulson said there’s no simple answer to the housing crisis.
“By preventing avoidable foreclosures, we will safeguard neighborhoods and communities and fulfill our responsibility of protecting the broader U.S. economy,” Paulson said in excerpts of his speech released by Treasury. “However, let me be clear: there is no single or simple solution that will undo the excesses of the last few years.”
On top of that, there’s some talk at CNN that Wall Street is calling for the Fed to lower interest rates again.
The government reported December employment figures on Friday. Only 18,000 jobs were added to the nation’s payrolls while economists were predicting job growth of 70,000. What’s more, the unemployment rate was expected to come in at 4.8 percent, up from 4.7 percent in November.
As a result of these gloomy numbers, expectations for a half-point rate cut grew Friday morning. According to futures listed on the Chicago Board of Trade, investors are pricing in a 84 percent chance that the Fed will lower the federal funds rates by 50 basis points, to 3.75 percent, at the conclusion of its two-day meeting on January 30.
It seems there’s no simple answer to any of the issues our economy is facing. In other news, Marketwatch is reporting that Anheuser Busch shipments to wholesalers are up 2%. With all the turmoil in the stock market and housing market, are people drinking their worries away? That’s a simple (although temporary) solution!
Too little, too late. Thats the story with the Fed. This morning, NPR announced speculation that rates may be cut 25 basis points as early as next week. Does this mean we should take advantage of low mortgage rates? Borrow some more to fix up the house? Take a vacation? It seems that by lowering rates, the public has more of an incentive to borrow more. Isn’t that what got us into this credit mess in the first place? It will alleviate some pressure in the short-term, but what will happen 10 years from now?
College students will benefit greatly. For me, timing was off. My brother’s interest rates were about 3%-3.5% lower than my rates on student loans. This was only after a 3 year gap. Now, a few years since graduation, rates are back down.
Does anyone remember a few months ago when the Bush administration triumphantly announced low unemployment and great job growth, or am I just dreaming? Most of these jobs were in the service sector, paying minimum wage or close to it. It sounds great on paper, but has little effect on the economy as a whole. This illusion has faded and the real trouble ( of stagnant job growth) has come to light. So what next? Is is good to keep importing cheap goods & exporting jobs to India top keep prices lower? No, wait, the CPI has been steadily increasing. So how much would it go up if everything is produced at home? And what if more jobs were created here rather than Bangalore?
What we need is a social reform. Restoration of values and methodology needed to change consumer spending and living habits. We are a country of consumers, living in excess(generally speaking, of course). Its the American way. That is the problem.