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No, the World Economy Is Not Comming To An End…
At least not today. As the rest of the world’s financial markets, dropped up to 10% overnight, American Financial Markets prepared for an onslaught of SELL Orders. World fear that the US Economy will slip into a recession and cause American consumers to stop buying products from around the world is what caused the sell off in the Global Markets.
On to the rescue, the Federal reserve dropped the Key Federal Funds Rate, which affects how much consumers pay on loans and credit card debt. The rate dropped from 4.25% to 3.50%. It also lowered the Discount Rate which is the rate that Banks can borrow at from the Federal Government, from 4.75% to 4.0%. Both rates dropping a respectable 3/4% to 3.5%, and it is speculated that they will lower them again possibly at their next meeting.
So much for the Stimulus package. In his testimony at the The Federal Reserve Board of Governors, 7 days ago, I guess when Bernake said that he recommended the package to be implemented fast, I don’t think even he thought it needed to be this fast. But his response today seems to have had a positive effect at least so far on the US markets.
The panic seems to have subsided at least for now. The Markets started this morning with an immediate drop to 400 plus points after the opening , but after digesting the effects the drop in interest rates will have on consumer spending and borrowing by the banks, the Markets are starting to breathe easier. In the end the Dow ended only 128.11 points downs that’s only 1.06% drop, and the Nasdaq ended 47.75 points down, a 2.04% drop. Not bad considering all the gloom and doom.
“DON’T PANICCCCCCCCCCCCCCCCCCCCCCCCCC!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!” as my old boss used to YELL, in his panicked voiced, when we were so busy we felt like we were going under.
“If you can keep your wits about you while all others are losing theirs, and blaming you. . . . The world will be yours and everything in it…” Rudyard Kipplin ( English short-story writer, poet, and novelist. Nobel Prize(1907), 1865-1936)
economy financial markets global markets sell off interest rate cut recession us markets
on January 24th, 2008 at 4:48 pm
Such short-term gyrations as we’re now seeing in the stock market mean little. What’s more worrisome is that the 10% correction barrier has been breached. With this “correction” now hovering around 14%, one must wonder if this is the beginning of something really bad.
on January 24th, 2008 at 8:11 pm
Hey Jack,
There have been corrections in several of the last few years, and we always bounce back. I prefer to listen to those that think of these times as buying opportunities rather than the predictions of doom and gloom. If there is something wrong then we need to fix it, but I try not to follow the herd into the pit…
Thanks for stopping by…