Fed Fears Worsening Credit Market

[Purveyor]

Source: Associated Press

(01-02) 14:51 PST WASHINGTON (AP) --

Federal Reserve policymakers worried at their December meeting about the potential for a vicious cycle to develop in which credit problems could worsen. That could hurt economic growth and force the Fed to act more aggressively in cutting rates, according to meeting minutes made public Wednesday.

"Some members noted the risk of an unfavorable feedback loop in which credit market conditions restrained economic growth further, leading to additional tightening of credit," the minutes said. "Such an adverse development could require substantial further easing" of rates, the minutes revealed.

--
The economy is believed to have slowed sharply in the October-to-December quarter, probably to a pace of just 1.5 percent or less, according to analysts' projections. Economic growth in the first three months of 2008 also is expected to be weak.

Economists' big worry is that individuals will reduce spending and businesses will become reluctant to hire workers, throwing the economy into a tailspin. The odds of a recession have grown, with some economists putting it at just under 50 percent.




Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/01/02/national/w110355S91.DTL

[Demeter]

1. Just Not Enough To Actually Do Anything About It

Like telling Bush to cut the crap.

Like returning to regulation of the robber baron corporations and banks.

Like taking away Greenspan's money and liberty.

[aquart]

5. Stagflation is a situation you can't just end.

Any way to go has a bad consequence. Probably nothing much will change until the Democrats move into the White House and the new broom sense of hope and confidence alters the equation.

[pa28]

16. The Fed has no tools to deal with stagflation.

It's an interesting problem and I wonder if any resident experts here know how the situation can be resolved.

I noticed the financial media is already trying to bully the fed into another rate decrease

(see the misleading cnnfn title: "Fed to investors: More cuts coming") http://money.cnn.com/

however I read the minutes and saw nothing like any kind of guarantee for more rate cuts - if anything there was just as much of a suggestion that rates could reset to a higher level.

The latest cpi increase is 4.3 and the last cuts have not even kicked in yet!

[aquart]

17. Rate decrease isn't even a temporary fix anymore.

And it ramps up the inflation thru the roof.

[aquart]

2. In this wonderful economy? How could that be?

[fascisthunter]

3. As If They Didn't Know This Would Happen

what a bunch of BS

[Liberals Rule]

4. I'm NOT Surprised..

Bush spending is now coming home to roost with the bill coming due for us and our children to have to digest. Depression here we come!
Thanks Bushco!

[Vincardog]

6. Hey you "experts" we have not been generating enough jobs to keep up with population growth for 7

years. The people have been feeling the effects of the "Conservative" economic policies (Read Looting crony Capitalism, and fraud by our "leaders"). Even though you have had the Enron accountants committing financial fraud for the last 7 years the people know the truth.

The people know they are getting fucked by the radical Reich and are getting ready to throw y'all out of office and into the world court.

And not a minute too soon.

[Joanne98]

7. ...........

[roamer65]

12. Joanne98...I am laughing my ass off at this picture.

:rofl: :applause:

[snot]

15. nice image!

[msongs]

8. government policies penalize people who live responsibly...

if you save money in accounts instead of buying crap you don't need and running up credit card debt for things you cannot otherwise afford,
you are penalized.

sad ent it?

Msongs

[BeatleBoot]

9. As housing market continues its slide...

Bush's house of cards is about to fall over.

[bahrbearian]

10. Can't they fix it by printing more money?

[aquart]

18. Already did that. Just didn't tell you.

[bahrbearian]

11. Can't they fix it by printing more money?

[loudsue]

13. They've already printed so much of it, that it's worth 30% less than it was a year ago.

That's been part of their problem. And since we have a dollar that is worth less, we have to pay more & more of them (prices are going up) in the world market to keep the Chinese crap coming in, and to support the war, and for the oil we are addicted to.

It's a fine mess the republicans & DLCers have gotten us into.

[NashVegas]

14. If the Fed and Wall Street Want Me To Spend More Money

GIVE ME A FUCKING RAISE!

[FreeStateDemocrat]

19. More tax cuts for the rich will solve everything, we're being set up for another round.

I guess the reason we haven't heard this already is that it would be difficult to do with a Democratic congress. But with the way our Democratic congressional leaderships rolls over for the idiot I’m not so sure.

[Toots]

20. When the Vice President of the USA says Deficits "Don't Matter"

Is this any surprise. Over spending your income does indeed "matter". Just one more LIE told by this Administration..

[bemildred]

21. No fooling these guys. nt