Wow, the Federal Reserve has reacted dramatically to the global markets spinning out of control. According to KCCI TV’s web site  this morning, the Fed lowered the federal funds rate to 3.5%:
In a statement on its Web site, the Federal Reserve took the action in view of a weakening of the economic outlook and increasing downside risks to growth.
“While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households,” the statement said. “Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets.”
The KCCI story provides additional info about what’s been happening around the world, including India halting trading early in the day. Bank of America also reported a sharp drop in fourth-quarter net income (more at WSJ ).
Not a happy morning financially. Expect another down day in the US markets (but please don’t blame me if I’m wrong about that… you know the risks of stock investing, and I’m not a financial advisor). And expect a lot of blaming of Bush, continued fear of an impending recession, and more solutions from the candidates for President.