I don’t know as much about economics as I should, but just listening to the radio on the way in to work — with the news about the fed lowering the interest rate, and the world markets taking severe dips — I really am nervous. I guess everybody is.
The U.S. markets just openned and, yikes:
NEW YORK (CNNMoney.com) — U.S. stocks plunged at the start of trading Tuesday, with investors ignoring the Federal Reserve’s emergency rate cut to join the global selloff on recession fears.
The Dow Jones industrial average lost more than 400 points. The Nasdaq composite index fell 5 percent. The Standard & Poor’s 500 index lost 3.5 percent.
UPDATE: Seems to be rebounding, so I guess I’ll put up a widget:
FURTHER THOUGHTS: Okay. Like I said, I’m no expert on these things, but I fail to understand how a tax rebate is going to help the economic woes. President Bush and all the candidates (with the exception of Edwards) seem to be pushing this as some sort of solution to "kick start" the economy.
Now, don’t get me wrong. I could use another $500 in my pocket. Everyone could. But there are a number of issues with this:
(1) Do we actually get it? I mean, will the government send me a check for $500, or will the rebate be a tax writeoff, so it’s not like I actually see the money? Because if it’s not an actual check, I don’t see that people are going to spend it.
(2) When would we get it? If this is going to take months, as I suspect it is, then it’s not going to be in time to turn this economic downturn.
(3) Doesn’t the whole "rebate" plan operate on the assumption that people are going to take that money and buy stuff with it, thereby stimulating the economy? Well, what’s the basis of that assumption? Maybe they’ll just pay off their debt. Or maybe they’ll buy Wiis, and stimulate the Japanese economy.
(4) Isn’t this economic downturn global? As I understand it, the recession has been driven by the subprime mortgage mess — but a lot of foreign banks are holding bad debt because of this, aren’t they? And isn’t the dollar very weak overseas, so there’s no demand for U.S. exports? How is a rebate going to help there?
I don’t know. I just don’t get it.