"The US Federal Reserve has cut interest rates to 3.5%, a shock three-quarters of a percentage point reduction. Fighting to stave off a US recession, the move failed to calm investors, with US shares continuing sharp falls as Wall Street opened for Tuesday trading.
The Fed, the US central bank, said latest figures indicated a deepening of the US housing market slump and increased unemployment levels. One analyst said the Fed was "obviously panicked" by the threat of recession.
"Unfortunately they have no power to reverse what in my opinion is the worst post-war recession," said Michael Metz, chief investment strategist at Oppenheimer in New York."
Read MoreThe Worst Market Crisis in 60 Years
by George Saros
The end of this article explains the situation clearly...
"Credit expansion must now be followed by a period of contraction, because some of the new credit instruments and practices are unsound and unsustainable. The ability of the financial authorities to stimulate the economy is constrained by the unwillingness of the rest of the world to accumulate additional dollar reserves. Until recently, investors were hoping that the US Federal Reserve would do whatever it takes to avoid a recession, because that is what it did on previous occasions. Now they will have to realise that the Fed may no longer be in a position to do so. With oil, food and other commodities firm, and the renminbi appreciating somewhat faster, the Fed also has to worry about inflation. If federal funds were lowered beyond a certain point, the dollar would come under renewed pressure and long-term bonds would actually go up in yield. Where that point is, is impossible to determine. When it is reached, the ability of the Fed to stimulate the economy comes to an end.
Although a recession in the developed world is now more or less inevitable, China, India and some of the oil-producing countries are in a very strong countertrend. So, the current financial crisis is less likely to cause a global recession than a radical realignment of the global economy, with a relative decline of the US and the rise of China and other countries in the developing world.
The danger is that the resulting political tensions, including US protectionism, may disrupt the global economy and plunge the world into recession or worse."
SarosI'm no economist by any stretch of the imagination. But the current transits of Pluto to the Federal Reserve chart, well describe the financial scenario. The Fed is dealing with extreme events beyond their complete control, as the US economy requires major renovation. A long-term conservative financial trend, began with Saturn's ingress into Virgo(9/2/07), and is receiving impetus from Jupiter and Pluto moving into Capricorn. Despite the generally favorable Jupiter-Saturn trine in effect, the fundamentals are too weak to sustain steady growth.
Going Bankrupt
Why the Debt Crisis Is Now the Greatest Threat to the American Republic
by Chalmers Johnson
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