Fed leads drive to strengthen bank system

The global credit crisis doesn’t seem to want to ease. And the national banks have to do what they don’t want to do, especially in outspoken neoliberal countries, and that’s interfere in to economic play of the market. Although, that’s the very reason of their existence: correct and steer the economy.

The Fed cut the interest rates to make more money easily available for banks, that might be in a uncomfortable position. Analysts were disappointed because they had expected a bigger cut.
The Fed made an aggressive injection in the market: $40 billion this month for this month only.

Both measure indicate that the Fed start to take the crisis seriously, but they failed to convince investors. They claim they are too modest and maybe not the right ones to take away the underlying problems the world economy currently faces.
The markets proved that the investors were not convinced and indicated that there was an actual fear amongst them that the economy might slip into a recession.

However, other investors said they were pleased by the measures takes because it proves that the Fed will ultimately give back-up to them when they truly need it. One investors puts it like this: "This is basically a reinsurance policy, [...] Central bankers are saying, 'We will stand behind you.' "

It becomes clear that national banks and the Fed in particular no longer can nor do try to depict the crisis as a minor problem that will be resolved by the market itself. They realize that if they want to prevent an even worse global economical crisis, they have to act now in a thorough way.

Sarah Struyf
http://www.iht.com/articles/2007/12/13/business/13fed.php#end_main

Retail sales unexpectedly high

The retail sales in November were higher then expected. The fact that the consumers don't seem to care that much about the high energy prices and the crisis in the housing market may be an indication that the economy is doing better then it seems.
In November the retail sales increased by 1.2% when it was only expected to rise with 0.6%. In October it only rose 0.2%
These numbers really show were the people are spending their money. The luxury car sales rose 1.8%, the gas sales rose, boosted by the high energy prices, with 6.8%, this is the biggest increase in 2 over years. The other big increases were in the electronic (+2.5%), clothes (+2.6%) and the sportinggoods (+2.2%) sales.
Many economists fear that the American economy will have a recession in 2008. It will depend mostly on what the consumers will do.

I thought that for my final blog I would give some good news. As it seems that alot will depend on how the american consumer will react, this is indeed good news cause they are showing signs that the economy is in a better shape then we expect.
On this last postive note I will say goodbye. Let us hope that the economy can survive this and that I will get better again.

Sincerely yours,

Nico Cottry

Source: http://www.tijd.be/artikel/Retailverkopen_VS_onverwacht_sterk.6022565