Published Sep 19, 2007
On top of their mostly-symbolic cut to the discount rate a month ago, the Fed has now cut the Federal Funds rate, hopefully lowering lenders’ interest rates and saving the economy from a Real Estate bubble-fueled recession. This is a dangerous game: the added credit availability may not trickle down to homeowners or other consumers, and the new liquidity may simply allow predatory and irresponsible lenders to cover their own losses while not learning a thing. This cut is a gift to the lenders — and shows that what we need is a policy solution to this housing crisis.