I don't think that lowering interest rates will spur companies to increase capital investment, hire additional workers and produce more goods and services. The grim realty is we don't have a production shortage in this country- the problem is lack of demand.

It can take months for an interest rate cut to work its way through the economy. In the short term, it makes borrowing cheaper, but the billions of dollars in failed mortgages over the past year have made lenders wary of writing loans to almost anyone- consumers or corporations. And if consumers and companies aren't spending more, an economic recovery can be slow.

I agree with Sapphire, just 'cuz she is a lot brainier about this stuff than I am. :)

The point she makes about lenders battening down the hatches is really true. We went back to increase our line as this whole mortgage debacle started to unravel and, despite a squeaky clean credit history, the bank said no.

Unfortunately, the folks that need to borrow money most are not likely to be those with squeaky clean credit histories, so...a bit of a Catch 22 I guess.

Too little, too late. Saved the day for 1-day. Unless Hong Kong and London central bankers also act quickly, the global nature of today's markets mean a Thursday meltdown.

Bernanke is no Greenspan and the market knows this. If Greenspan whispered the market shuddered. Bernanke can cut rate 100 basis points and no one will care.

While the US edition of Time focussed on romance (are we indeed fiddling whilst Rome burns?) the EU and Asia covers show Ny-lon-kong and the intertwined relationship between New York, London and Hong Kong.

http://www.time.com/time/magazine/article/0,9171,1704398,00.html

Interesting future trend article.

Good article I read a similar article just this morning on the effects of a globalized economy. I agree and disagree with Sapphire. Yes we do not have a demand but if you keep up with the macroeconomics we are not shipping tangible goods like we used to. Yes we have services BUT manufacturing of tangible goods puts more money into the economy because more people are working from the unskilled to the skilled sector.

Great points Sappire. The lower rates will take months to have any effect on our economy. Will the rate cut encourage

companies to spend more and or create jobs? I doubt it!

D2, thank you for the link to this informative article. Hong Kong and all of China are playing large roles in the world of finance and politics.

Another down day, I wish they'd just let it fall and recover on its own. This is death by a thousand cuts....