Officials Worried About a Deep Recession

As a number of other bloggers have noted, the Democrats need to be talking 24/7 about how the Chimperator/GOP economic policies and anti-regulation mantra are largely to blame in the rapidly sinking U. S. economy. Instead of gay bashing and working to pass marriage amendments, minding the economic store would have been far more prudent. Now, all will suffer as a result of wingnut homophobia and GOP voodo economics. The latest economic indicators seem to pointing downward and the USA may well drag down other economies with it. Here are highlights from a less than optimistic Yahoo News story (http://news.yahoo.com/s/ap/20080408/ap_on_bi_ge/fed_minutes):

WASHINGTON - Worries about a deep recession — not a shallow one — drove Federal Reserve policymakers to slash a key interest rate last month, meeting minutes show. "With the uncertainties in the outlook for both economic activity and inflation elevated, members noted that appropriately calibrating the stance of (interest-rate) policy was difficult," the minutes stated. On the one hand, the Fed has been urgently moving to prevent the trio of economic woes — housing, credit and financial_ from plunging the country into a deep recession. On the other hand, with soaring energy prices and high food costs, policymakers realize that they can't afford to let inflation get out of control, either.

The government reported last week that the economy lost jobs for the third month in a row in March. All told, the nation has lost 232,000 jobs in just three months — stark evidence of just how much the employment market has buckled under the weight of the economy's woes.

Besides cutting rates, the Fed has taken a number of unconventional steps recently to ease a dangerous credit crisis. Under one new program, the Fed has been letting big investment firms borrow super-safe Treasury securities and put up more risky investments, including certain shunned mortgage-backed securities as collateral. The Fed said it would make as much as $200 billion worth of Treasuries available through weekly auctions. The goal is to make investment houses more inclined to lend to each other. It also is aimed at providing relief to the distressed market for mortgage-linked securities. Questions about their value and dumping of these securities have driven up mortgage rates, aggravating the housing crisis.