December 11th, Mr. Bernanke might have moved us one step closer to recession with a negligible ¼ point drop in Fed Funds rate. Then, yesterday the Fed announced a new global effort with other central banks and unveiled a plan to sell billions in loans in order to create more liquidity in the mortgage markets. Let’s face it, the banks don’t trust each other any more, so this could be a welcome avenue to create liquidity which would allow lenders to make loans again!! Analysts and Wall Street professionals think yesterday’s announcement is brilliant…
But I can’t help to think…What would Mr. Greenspan have done? And I think he would have dropped the Fed Funds rate by ½ point to try and get ahead of the mess we’re in. No doubt that when the 4th quarter earnings are reported by major banks in January it will be ‘confession time’ again with more write-off’s and more discord on Wall Street.
The Fed might be just too hawkish on inflation here and we are perhaps at the tipping point! Please Mr. Bernanke …have an egg-nog with Mr. Greenspan over the holidays and get this economy going again.
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Thank you for making me Your Orange County Real Estate Connection.
Michael Caruso, Broker ABR ABRM CRB CRS GRI
2007 President, Orange County Association of Realtors