Bernanke may be readying the deepest interest-rate cut in a generation

[w¡n9Nµ7 §£@¥€r 123]

Federal Reserve Chairman Ben S. Bernanke may be readying the deepest interest-rate cut in a generation as the central bank struggles to prevent a meltdown in financial markets and a recession.

Traders predict the Federal Open Market Committee, meeting today in Washington, will lower the overnight lending rate by a full percentage point or more, based on futures prices in Chicago. That would be the biggest reduction since 1984, when Paul Volcker led the central bank, and would bring the benchmark rate down to 2 percent.

...

"The Fed has moved very aggressively to deal with liquidity problems that are major,'' said former Fed Governor Lyle Gramley, now a senior adviser at Stanford Group Co. in Washington, who said today's reduction may be as much as a full percentage point. "They need to be aggressive on the monetary policy side. This is the worst crisis we have faced in more than 50 years.''

The severity of the crisis was underscored by the Fed's emergency action on the evening of March 16, the first weekend policy shift since 1979. A week ago, the debate among economists was whether the Fed would cut by 50 basis points or 75 basis points.

...

Recent economic data suggests the first recession since 2001 may have begun in December or January. Harvard University economist Martin Feldstein, a member of the committee that officially declares when a recession has started, said last week that he believed a recession was under way and it could be the most severe since World War II.

http://www.bloomberg.com/apps/news?pid=206...refer=worldwide

[Trumplestiltskin 5,791]

Notice how even though there now appears to be a concensus that we're now in recession - the government is still keeping clear of using that term because they don't want to precipitate a panic in the stock market.

Perhaps they're waiting until everyone and his mother comes to that realisation so that when they say "we are in recession after all" so that by then everyone will just say "well... duh..."

[simple_male 1]

Notice how even though there now appears to be a concensus that we're now in recession - the government is still keeping clear of using that term because they don't want to precipitate a panic in the stock market.

Perhaps they're waiting until everyone and his mother comes to that realisation so that when they say "we are in recession after all" so that by then everyone will just say "well... duh..."

I heard on NPR yesterday that Fed will cut the interest date by a whole 1.0%. If this is not a proof of recession, I don't know what it is.

[Trumplestiltskin 5,791]

Notice how even though there now appears to be a concensus that we're now in recession - the government is still keeping clear of using that term because they don't want to precipitate a panic in the stock market.

Perhaps they're waiting until everyone and his mother comes to that realisation so that when they say "we are in recession after all" so that by then everyone will just say "well... duh..."

I heard on NPR yesterday that Fed will cut the interest date by a whole 1.0%. If this is not a proof of recession, I don't know what it is.

Indeed.

Its the battle of the euphemisms - its not recession, its "economic slowdown".

[w¡n9Nµ7 §£@¥€r 123]

Notice how even though there now appears to be a concensus that we're now in recession - the government is still keeping clear of using that term because they don't want to precipitate a panic in the stock market.

Well...the government doesn't get to guess whether or not we're in a recession. They'll use the label when the data justifies it. The specific data they'll be looking for is 2 consecutive quarters of negative growth. This means, by definition, that the government can't 'announce' one until we've already been in one for 6 months (2 quarters).

So this isn't a case of the government lying or obfuscating.. this is just a case of the labels being driven by data. The media and academics don't have to live by those constraints.

Its the battle of the euphemisms - its not recession, its "economic slowdown".

Again, those are very distinctly different terms.

An economic slowdown is a slowdown that falls short of the technical definition of recession (see above).

At this point in time, official data backs up 'slowdown', not 'recession'.

[simple_male 1]

Notice how even though there now appears to be a concensus that we're now in recession - the government is still keeping clear of using that term because they don't want to precipitate a panic in the stock market.

Well...the government doesn't get to guess whether or not we're in a recession. They'll use the label when the data justifies it. The specific data they'll be looking for is 2 consecutive quarters of negative growth. This means, by definition, that the government can't 'announce' one until we've already been in one for 6 months (2 quarters).

So this isn't a case of the government lying or obfuscating.. this is just a case of the labels being driven by data. The media and academics don't have to live by those constraints.

Its the battle of the euphemisms - its not recession, its "economic slowdown".

Again, those are very distinctly different terms.

An economic slowdown is a slowdown that falls short of the technical definition of recession (see above).

At this point in time, official data backs up 'slowdown', not 'recession'.

I have a friend who is a Vice President of a Bank. He is very smart with economy, banking. He told me couple months ago, "Saying that we are not into recession is like saying Katrina did little damage." He even told me last week that Fed will do a big interest rate cut soon. I think, official recession is when they have slowdown in two consecutive quarters or something.

[w¡n9Nµ7 §£@¥€r 123]

I think, official recession is when they have slowdown in two consecutive quarters or something.

Exactly. So officially, you can't announce a recession until that condition has been met.

[simple_male 1]

I think, official recession is when they have slowdown in two consecutive quarters or something.

Exactly. So officially, you can't announce a recession until that condition has been met.

But surely, we are in recession unofficially. Otherwise, why the Fed is going to cut the interest rate by a whole point which they have not done in many years?

[w¡n9Nµ7 §£@¥€r 123]

I think, official recession is when they have slowdown in two consecutive quarters or something.

Exactly. So officially, you can't announce a recession until that condition has been met.

But surely, we are in recession unofficially. Otherwise, why the Fed is going to cut the interest rate by a whole point which they have not done in many years?

Probably. All I'm saying is the Federal government can not officially announce one until the data validates that we're in one. This isn't complicated.

[SteveLaura 0]

This isn't complicated.

Maybe we need a Venn diagram to clarify it.

[simple_male 1]

I think, official recession is when they have slowdown in two consecutive quarters or something.

Exactly. So officially, you can't announce a recession until that condition has been met.

But surely, we are in recession unofficially. Otherwise, why the Fed is going to cut the interest rate by a whole point which they have not done in many years?

Probably. All I'm saying is the Federal government can not officially announce one until the data validates that we're in one. This isn't complicated.

It's not complicated, it is just when we will hear from Fed officially when Fed will be ready to say.

[w¡n9Nµ7 §£@¥€r 123]

The Fed will be "ready" when the data validates it.

[simple_male 1]

The Fed will be "ready" when the data validates it.

I agree. Fed can not declare now until they have two consecutive quarters' "data" to validate it.

[almaty 19]

the Feds are playing it by the book..and wanting to avoid futher slowdown by announcing a recession

[desert_fox 32]

The Fed discount rate was at 0% just a few years back...what is going on is not the first time that the Fed lowers the discount until the economy stabilizes. It can take a year for the general population to feel the effects of a cut in the discount rate.