Fed's Emergency Rate Cut Stabilizes Stocks

Bush, Congress Pledge Action On Stimulus Plan To Curb Economic Slide

(CBS/AP)  Jolted by global recession fears, the Federal Reserve slashed interest rates Tuesday, and President Bush and leaders of Congress joined in a rare show of cooperation in promising urgent action to pump up the economy with upwards of $150 billion in tax cuts and government spending.

Market meltdowns overnight around the globe and growing anxiety at home stirred lawmakers and the administration toward swift action, possibly within a few weeks. Wall Street plummeted as the day began, following Asian stocks, then warily eased its sell-off after the Fed ordered the biggest cut on record in a key interest rate. The Dow Jones industrials, down 465 points at one point, closed the day off 128.

The losses have taken stocks into bear market territory; the Dow is down 15 percent and the Nasdaq nearly 20 percent since recent highs back in October, reports CBS News correspondent Anthony Mason.

The Fed, announcing its action after an emergency video conference Monday night, indicated further rate reductions were likely, aimed at encouraging people and companies to start spending again.

The Fed slashed interest rates three-quarters of a point - something it hadn't done in 17 years, reports Mason.

"The urgency that we feel at home is now even more urgent as we see the impact of our markets on others," House Speaker Nancy Pelosi said after both Democratic and Republican lawmakers met with Bush at the White House.

Senate Majority Leader Harry Reid said the goal was to get a deal through Congress and on Mr. Bush's desk within roughly three weeks -- lightning speed compared with the usual snail's pace on Capitol Hill. Bush expressed confidence that he and the Democratic-led Congress could put aside bitter differences that have marked his presidency.

"I believe we can find common ground to get something done that's big enough, effective enough so that an economy that is inherently strong gets a boost - to make sure that this uncertainty doesn't translate into more economic woes for our workers and small business people," Mr. Bush said in the Cabinet Room.

"I've got reasonable expectations about how fast something can happen," the president said. "But I'm also optimistic something will happen."

Potential disagreements between the president and Congress: Democrats want rebates for working Americans who don't pay income taxes and no benefits for high-income earners, reports CBS News senior White House correspondent Bill Plante.

Still, the White House and Democrats have a lot of incentive to get the plan done quickly, reports Plante. No politician wants to be seen as allowing a recession - or blocking your rebate in an election year.

Later, announcing the creation of a panel to educate people about their finances, Mr. Bush said he thought there would be an agreement "in relatively short order."

The White House meeting was intended to show the world that Mr. Bush and his Democratic adversaries recognize the gravity of the economic slowdown and are serious about protecting consumers and investors who have watched their holdings shrink. Wall Street and global markets fear the stimulus package outlined by Mr. Bush is not enough to avert a recession.

Official Washington was accentuating the positive.

"I really feel good that we have an opportunity to do something together," Reid said, standing in the White House driveway with Pelosi after talking with Mr. Bush. Reid said the size of a deal suggested by Bush was "a good number."

Administration officials are focusing on rebates of $800 to $1,600 for individuals and couples and so-called bonus depreciation to allow companies to deduct 50 percent of business investments made this year. Democrats say the package also should include boosts in unemployment benefits, food stamp payments and the Medicaid health care program for the poor and disabled. Talks between Pelosi and Minority Leader John Boehner, R-Ohio, have focused on smaller tax rebates of perhaps $500 for individuals.

Like Mr. Bush, lawmakers would not discuss what a compromise plan would look like, stressing cooperation rather than potential differences over details.

"This is about one thing in this package: Is it a stimulus?" Pelosi said "So whatever it is that we are considering, it must meet that one criterion: Does it stimulate the economy? Does it put money into the hands of those who will spend it?"

When the Democratic leaders were asked if they agreed with Mr. Bush's statement that the economy is inherently strong, Pelosi said, "I certainly hope so."

Reid said the House would pass a package first and send it to the Senate.

Treasury Secretary Henry Paulson went to Capitol Hill for talks on the ingredients of the economic package. "Time is of the essence and the president stands ready to work on a bipartisan basis to enact economic growth legislation as soon as possible," he said earlier in a speech at the U.S. Chamber of Commerce.

Many analysts say the United States already has tumbled into a recession - a notion rejected by the White House. "We are not forecasting a recession," spokeswoman Dana Perino said. "Clearly there is a slowdown."

Leaving open the possibility of a bigger stimulus package, she said, "I'm not going to close the door but I'm not suggesting that anyone believes it has to be bigger" than the roughly $150 billion figure already discussed. Later, she said the White House has not "seen higher numbers floated by members of Congress" and that Mr. Bush believes the package he has outlined is "the right amount."

The Fed's rate cut caught Washington by surprise. Federal Reserve Chairman Ben Bernanke and his colleagues approved the cut Monday night after global markets were slammed by rising concerns that weakness in the world's largest economy was spreading worldwide.

"The world's stock markets are in meltdown, so the Fed came in with an inter-meeting move to try to stop the panic," said Christopher Rupkey, senior economist at Bank of Tokyo-Mitsubishi.

The reduction in the federal funds rate from 4.25 percent to 3.5 percent marked the biggest reduction in this target rate for overnight loans on records going back to 1990. It marked the first time the Fed has changed rates between meetings since 2001, when the central bank was battling the combined impacts of a recession and the terrorist attacks.

Commercial banks responded by announcing similar cuts of three-quarter of a percent in their prime lending rate, the benchmark for millions of business and consumer loans. The action will mean the prime lending rate will drop from 7.25 percent down to 6.50 percent.

Analysts said the fact that the Fed did not wait until its meeting next week to cut rates underscored the seriousness of the situation. The Fed was expected to cut rates further, possibly as soon as their next meeting on Jan. 29-30, if there are continued signs that the economy is weakening.

"This move by the Fed was essential," said Lyle Gramley, a former Fed governor who is now a senior analyst with the Stanford Financial Group in Washington. "Bernanke promised in a speech earlier this month to take substantive action in a timely and decisive manner."

[neoconrcrazy]

seems murky, this relationship of the Fed & Wall Street(WS) -

WS takes a big gamble on high-risk mortgage borrowers, re-packs the debt into "asset-backed securities", and sells them world-wide......

when the bubble bursts ad the losses mount, they turn around looking for even more money to continue business.

who is finally stuck with the WS lunch bill ????

you and me.

[pakaal]

The market is hardly "stabilized", it rallied for the rest of the day after dropping sharply. We''ll know if it has stabilized in a few weeks. And how much you want to bet the slow slide continues?

My only question is why the White House keeps saying the economy is in great shape. It''s kind of like saying... well, for example saying that Saddam had weapons of mass destruction.

Hmm, now that I think about it, I guess I''ve answered my own question.

Cheer up folks, the stock market tanking means it''s a great time to invest - prices are looking very attractive....

[j62kd4b]

NO, NO! Just read on another souce that GW Bush is about to have his stimulus plan okayed!
This ONCE PROUD UNITED STATES OF AMERICA can NOT AFFORD GEORGE W BUSH or RICHARD CHENEY TO HANDLE OR PLAN ANOTHER FIASCO!
Ned Bush bankrupting S&Ls; Enron; Halliburton; DeLay; Blackwater guards; War; lost 100million Dollars in streets of Iraq.....They all need a good "SPANKING" and be sent home to Momma!

[erasmus6]

"President Bush is Truly the Best President we have ever had." posted by fettkonserv

Yikes! Let''s hope the Americans don''t have too many like this guy. You should get out your guns and shoot them if you do.:)

[watcher269-2009]

They have to show that they are Trying - but they don''t care - they''re covered. They take care of themselves because they give themselves pay raises - hospitalization - a good retirement plan.

Then they FU*CK US!

This is both the Democrats and Republicans. All this is THEIR fault! No one Else''s! The want us to fight between Republican and Democrat to justify their positions and their jobs!

Lets kick them all out and start over!

The only way for things to change - is to change the rules and change the rule makers!

This is the reason for the second amendment! GUNS to take back the country! GUNS to stop fascism from taking over.

Kick''em all out of office and start over! There''s change!

[hwy71so]

I thought I''d enjoy my military retirement check. Well, I did up till this past year. Now its necessary income to counter-balance the rising cost of living that''s come up in just the last 6 months.

[hwy71so]

Not to mention payments like mortgage, insurance, water/sewer and vehicle loan(s).

Yeah, its great being middle income...

[hwy71so]

My bi-weekly paycheck goes into fuel in one way or another: Gas for my vehicle, electricity for my home, transportation for my grocerys,...

Congress has been so busy fighting Bush over Iraq, they''ve NEGLECTED their other duties!!!! Yeah, its GREAT having the dems in da house!!!

[hwy71so]

Put a bandaid on a sucking chest wound...

[fizzal-2009]

The federal gov,t can condemn the turnpikes and promote interstate trade. Now that NJ wants to raise turnpike fee through the roof those tastey peaches that were $5.00 a pound last year at a neighbor state and suposed to be a nontaxable item are gona cost a fortune and what about those lobsters from Maine?

[bm6005]

Our entire gov''t is broke! WE, the people, need to lay the law down to the politicians going forward. No corruption, no lying, no wars. As a country we are doomed going forward unless we restore common sense to our gov''t. Unfortunately the only way to do that is by utilizing harsh punishment to the guilty. Abramoff and his ilk should be put to death in the future for attempting to subvert our heritage. Politicians caught with their hand in the cookie jar should be put to death (Jefferson comes to mind). Do away with our white collar prisons, send them all to Pelican Bay while awaiting termination!!!

[fettkonserv]

President Bush is helping America and all the liberals do nothing. President Bush is Truly the Best President we have ever had. When the Evil Fornicators try to seize power The Lord will smite them. America is destined to rule the world, and as soon as the Muslim people accept the fact they are unclean they can begin to serve our Great Leader President George Bush.

[slim1h2o]

We could gamble on them.Get a panel together to judge them on style,technique,landing,and,most important,bounce!

Posted by lexluthor5 at 05:19 AM : Jan 23, 2008

Funny,,,sick,,but very funny. LOL

[alphaa10-2009]

curse914 comments, "The M3 data was removed from public scrutiny for a reason; to mask the financial mysticism that was the foundation of the Bush economic %u201Cexpansion%u201D. Now we require a real economy to continue forward and only one Presidential candidate to date has offered up a valid solution, Edwards. Edwards has spoken of an Alternate energy economy, which in the improper hands could lead to a bubble, but it is the only path that is certain to pull us out of the Third Worldization of the Leo Strauss / Chicago school social Darwinist nightmare that was started under Reagan and has come to fruition under King Doofus.
---
Well characterized as "financial mysticism", the Chicago School of Financial Darwinism believes in the mythical beast of the "free market" and genuflects daily before the black box of "demand-driven consumer economy".

But the political economist who secretly held sway with Reagan and Laffer was Phineas T. Barnum.

[mcv57]

"Lenin is said to have declared that the best way to destroy the Capitalistic System was to debauch the currency... Lenin was certainly right."

Posted by curse914

I agree, but the U.S. Government has been pulling this illusion trick since Nixon era. Donald Trump is even concern - he knows that the Arabs are not giving the Bushwacker no support. Good reason, his cash can turn to paper also.

I think the European Union is going along with the illusion also. They suggested that we do something about the debt and real estate market. They know that is a joke to comfort their own investor - the Bushwacker can not do nothing but make paper money (add more debt - expand the artificial economy). I hope the world tribunal hangs everyone in the White House and his corporate oil buddies, for their misery in the collapse of the world economy - CRIMES AGAINST HUMANITY.

Well, we will see if the investors of the world is going to see the Bushwacker finish his term.

[watcher269-2009]

AND! Bush is lying Now! So Up yours Republicans


This is why they deleted all those emails!


A study by two nonprofit journalism organizations found that President Bush and top administration officials issued hundreds of false statements about the national security threat from Iraq in the two years following the 2001 terrorist attacks.

The study concluded that the statements "were part of an orchestrated campaign that effectively galvanized public opinion and, in the process, led the nation to war under decidedly false pretenses."

The study was posted Tuesday on the Web site of the Center for Public Integrity, which worked with the Fund for Independence in Journalism.

White House spokesman Scott Stanzel did not comment on the merits of the study Tuesday night but reiterated the administration''s position that the world community viewed Iraq''s leader, Saddam Hussein, as a threat.

"The actions taken in 2003 were based on the collective judgment of intelligence agencies around the world," Stanzel said.

[ubrew12]

John Maynard Keyes (great economist): "Lenin is said to have declared that the best way to destroy the Capitalistic System was to debauch the currency... Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million can diagnose."

Guess where Bernanke is going next?
(dollar down 40% against the euro in the last 4 years...)

Read ''Empire of Debt'' by Bonner and Wiggens for more details of what debt has-done /will-do to this country.

[idlepugilist]

Ever notice how Bush''s staff members frequently have their hands over their mouths when Bush speaks? It''s to muffle the laughter that can''t be restrained when a fool speaks.

[idlepugilist]

Our President, full of "reasonable expectations" (oh my, really, finally?) was probably advised by his staff that he will not see much of a recovery from this freshly descending recession until after the next President is elected to salvage America from the fiscal mess Bush has trapped us with.

[idlepugilist]

The Pres leaps into action and pledges to try to soften the recession. Too bad the White House was so eager to let the Massive corruption of subprime mortgages go unchecked in order to make the Bush economy appear healthy. But like anything else built on shifting sands...