The Economic Game
Many are wondering just what direction the US economy is heading in. Obviously, it’s not a particularly good one. Commonsenseforecaster editorializes:
What’s with all the gloom about the U.S. economy? The problem is that we have two problems. One is that the economy is slouching toward recession or, at best, slow growth. It’s the consequence of falling house prices, higher energy prices, flagging consumers and shrinking profits.
The other is that the market for credit, the lifeblood of a modern economy, isn’t functioning well. That problem is amplifying the pain caused by the first.
Just a few weeks ago, a lot of folks were arguing that the worst was behind us. Housing was still ailing. But after a big wallop, markets for credit seemed to be moving toward normalcy. The Federal Reserve ended its Oct. 31 meeting declaring that the “upside risks to inflation roughly balance the downside risks to growth.” If Fed officials truly believed that then, they no longer do. They’ll likely cut interest rates again on Tuesday. Only the most optimistic observers expect the U.S. economy to rebound quickly from its fourth-quarter slump. The argument now is between those forecasters who expect growth to be so slow in early 2008 that the unemployment rate climbs a little, and those who see a recession in which it climbs more.
In ordinary times, this would be unpleasant, but not so frightening. The Fed knows how to treat this condition: cut interest rates.
Me, I’d place my bet on a recession. Get your home equity line of credit fast, before the credit lines truly dry up.
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