Originally Posted by Ken300D

To me, it was shocking that the Fed cut rates 75 basis points out of schedule and then another 50 points right after that. I don't think Greenspan would ever do that, although he may have reacted earlier with the same overall result.

But clearly something has been sighted over the horizon.

What we are facing is a rather cruel combination of financial consequences, especially for people who have extended themselves too much in an ARM mortgage, or a HELOC to buy a car or other such nonsense. They are the ones experiencing the foreclosures and defaulting on loans. That trickles through to the rest of us.

The other part of the cruel combination is a historic excess of federal budget deficit that can only result in a continued strong devaluation of our dollar. You may think you are getting 5-10% return on your investment, but you are not. Your principal is steadily being eroded if it is cash based. This is just another form of taxation that piles on top of explicit taxation, not to mention fees and other ways to avoid calling things "taxes".

So, yes, we are starting a recession. The stops are being pulled out to flood money into the economy in this election year, but that's going to have longer term negative effects, and we may be seeing a combination of effects (to involve international investors) that could spell something of a pretty severe hardship. Something like what the Japanese have gone through in their economy for a long period of time.

Stagnation.