Latest rate cut will add to troubles

I’m no expert economist, but I don’t think that cutting key interest rates by the Fed is going to stop the hemorrhaging being experienced by the spiraling housing market.

Under Alan Greenspan’s tenure, the respected former chair of the Federal Reserve Bank decided to keep interest rates artificially low and not raise them to counter what is now being seen as a bleeding economy.

Because of low interest rates, many people on both sides of the economic spectrum were allowed either to borrow for a new home or purchase adjustable-rate mortgages, which soon reset at the end of the year — affecting millions of people.

But if you think that only the millions of homeowners are affected by this fallout, think again.

With each rate cut cheered on by Wall Street, the pain has become apparent that no amount of rate cutting is going to turn things around. In fact, cutting interest rates is going to make things worse again — at some future date. Not better.

Coupled with a weakened dollar, a slowing economy and rising oil prices, our nation’s economic engine is suddenly facing the prospect of being ground to a complete halt.

Why?

It’s partly to do with our government’s insane “trickle down economics” initiatives, and mostly to do with the Fed’s knee-jerk responses to its own problems long in the making.

Both have allowed these things to happen, and as in the case of Hurricane Katrina, didn’t respond to the crisis until it was much too late.

Don’t worry, though. Some of us will be cushioned from the up and coming recession.

But not all of us.

Schuyler Thorpe

Everett

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