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Now for the really bad news
The Federal Reserve's rate cuts haven't made a dent. The rebate checks being sent to consumers probably won't either. Even the Federal Reserve's recent moves to expand credit availability, including accepting mortgage-backed securities of uncertain value as collateral, may not work. The Fed's moves certainly didn't prevent the meltdown of Bear Stearns, the investment bank being sold for pennies on the dollar simply because other banks lacked the confidence to do business with it.The slow economy is why National Bureau of Economic Research President Martin Feldstein sounded so very gloomy in a speech on Friday.
"The situation is very bad, the situation is getting worse, and the risks are that it could get very bad," Feldstein told the Futures Industry Association meeting in Boca Raton, Fla. "There's no doubt that this year and next year are going to be very difficult years."
Feldstein is in a position to know. The bureau he heads is the private company that decides when we officially enter and exit recessions.
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Feldstein went on to predict the worst recession since World War II. Since the economy was actually expanding rapidly during those war years, what he really meant was the worst recession since the Great Depression.
If you would have felt better not reading that, I'm sorry. But it's my job -- and those of all of us in the media -- to tell you what's going on so you can make informed decisions about your career, your spending and your investments. You deserve to know the truth, even when the news isn't good. If it makes you feel better to tell me and my colleagues to shut up, then go right ahead, but understand that we never will.
Published March 17, 2008
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