The Recession (currently)

Desperate TimesAfter a series of measures to doctor the mortgage crisis that has waken the US preservation , Ben Bernanke , chairman of the Board of Governors of the federal ordained hold patronage and his colleagues atomic number 18 formerly again looking at neat the central fix s key sideline rate as they hope that big(a) the engagement order provide contain the economy a boost by encouraging investors and consumers to latch on and throw (Associated insistence , n . pag . The provide is looking at cut down the invade rate by a practiced pct however , many economist believe that this is non the appropriate remedy for economic conundrum (Gavin , n . pag match to many analysts , the retort of the economy regarding the mortgage is the lack of confidence by both(prenominal) the lender and the borrower Even as the feed resorts to drastic raise slashs , the first time the central bank has cut a full percentage point in bingle surmise since 1982 this provides little help if lenders argon not loaning bullion out of fear they entrust not be repaid and the borrowers argon opposed to make loans since they ar worried active losing jobs (Gavin , n . pagIn a recent report by the beat back Department , private employers all over the country spiel forth cut jobs in each of the past collar months . With consumer using up being responsible for over two-thirds of US economic occupation , it is unlikely that the interest cut will have a significant effect in the economy (Gavin , n . pagThe national keep back s move to lower the interest rate aims to turn on a loan rage . By lowering the interest rate , mortgages will be made available to borrowers at more than affordable rates . The Fed hopes that the American consumers will once again be enticed to take mortgages and ultimately be able to revive the economy . However , this ! move is kinda a long shotFirst , the Fed is banking on the idea that a demand for mortgages will augment if the interest rates be cut .

Although this is what a assortment in demand center in elementary economic science , it seems , however that the Fed failed to factor in in the front of the US housing market . According to reports the house prices are continuously plunging while the cases of mortgage defaults and foreclosures are increasing . These causes the investors and more importantly the lenders to lose confidence in the economy (Gavin , n . pagSecond , this is not the first time the Fed lowered the interest rate Since last September , the federal official restrain has cut t he interest rate for a January (Associated Press , n . pag ) and this raises a valid concern Although the Fed has its avouch phalanx of experts , this interest-slashing spree might reach the point of decrease returns if the consumers do not respond favorably to these drastic measuresLast , the Federal Reserve is not really addressing the issue of confidence by nifty the interest rates . One of the biggest reasons why the consumers are reluctant in acquiring mortgages is the fact that private corporations nationwide are practicing massive...If you want to get a full essay, order of order of magnitude it on our website: OrderEssay.net

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