30 January 2008

The Recession Cometh

The US Federal Reserve has just cut the funds rate by another half a percent; that's just 8 days after it's last 0.75% cut, and the fifth rate cut in the past four months. It was also signalled that further rate cuts are possible.


What's a rate cut? It bascially means the Federal Reserve brings down their lending rate, which in turn affects banks and financial institutions lending rates, making it cheaper for companies, investors and individuals to borrow money. This in turn is supposed to stimulate the economy. More rate cuts means the Fed believe the economy is slowing, and five cuts within four months means, yep, recession is on the way.

That's pretty much confirmed then; the US is facing a recession, and whether you want to listen to the pretty mild announcements telling people that everything is fine, you have to admit, the situation is pretty screwed. The current administration is also negotiating a stimulus package of $150 billion to spur investment. Inflation rates have jumped up in the last 3 months of 2007, unemployment rates have increased, and economic growth is at it's lowest point in 5 years, when the US was struggling to recover from the 2001 recession.

What does that mean for you? Well, if you're thinking of getting a loan, now is the time. But whether you do or not, the ripple effect is on it's way guys, get ready.

10 comments:

Woozie said...

Nonsense! My new wallet will protect me from any economic woes.

Maya // مايا said...

The US economy reached its peek when Clinton was in power. No one gave two poops about his affair despite the tabloids. No one gave two craps about him stuffing cigars into Monica Lewinsky. But after this stupid Bush guy came into power, things are all different. :P Lol! Bush sucks :P I do too but I suck good :P OmG! Did you hear what I just said?! :O Slap me!

Jay Cam said...

oh man that better not be true!
it means bad things for me...

icon said...

its good that you explained why should someone think about taking a loan now !!

ammaro said...

wooz; dude, i think your wallet is causing just like half of this mess.

maya; true, economy was doing pretty damn well till little B came along

jay; you and everyone around you!

icon; sure, lower interest rates = cheaper loan. go for it!

N. said...

It was bound to happen, however I remember something one of my professors said. Someone ALWAYS profits. So who profits from the recession?

Shionge said...

So it would be best to save for raining days now...over here we have been warned about inflation blah blah blah....

rosh said...

Get shopping y'all - its the only way to keep the Grinch away! Shop till you drop & then shop some more :)

moon-light7 said...

For me it just means that the US economy is in a bad shape, which is good, considering that this all is a consequence of what this Bush guy & his fellows are doing.

What? it'll affect Bahrain too?!! well, our economy hasn't been exactly great lately has it!!

SoulSearch said...

Do you think this has any affect on Islamic Banks? I'm thinking of taking out a loan from an Islamic Bank...
Peace,
Soul