FLASH: In an unprecedented move before the opening of the stock exchange, the Fed after hours of arm twisting reduced the federal funds rate by 75 basis points or ¾ of one percent.
In an attempt to rescue the markets, the Fed used up their last straw by reducing the feds fund rates ¾ percent just now. This is the Fed's version of a "Hail Mary"- pass to quell the nosedive in World Stock Markets over the past 48 hours.
It is an acknowledgement also that the Bush economy is within a breath of disaster.
The weak link to the Bush policy is also irrevocably proven.
It's about Big Business and Corporate growth.
The US economy historically was known before 1980 as the melded conclusion of 200 plus million personal and family economies throughout the nation.
Only a Ronald Reagan could have somehow made Americans believe that somehow, their lives and "economy' were so small and inconsequential that policy had to be diverted to affect what he felt were the "drivers" of the economy.
The result, of course, was top-driven, trickle down economics. In this scheme, political motivation and stimulus is made in the form of tax policy for the large-scaled rather than the small. Banks, then dictate financial policy, rather than ideas and sound operational decisionmaking.
The prime rate became the ultimate and de-regulation the tool for making the big even bigger and chasing the small out of business. Economy of scale was the only principle with government assisted leverage behind it. And influence in politics begat even greater levels of influence to evolve into what later became known as Bush I and then Bush II debacles.
Lots of folks have commented about trickle down. It is not, however, the weakest link in the Bush version of Reaganism.
Tax Cut Policy
Ronald Reagan politically drove taxes to be a dirty word and tax increase and liberalism to be the brand of the Democrats; conversely tax cuts and conservatism the brands of the Republicans.
It was negative branding, rather than positive branding and the proof of that lies in the fact that the branding was far more important "" accurate or not "" than good economic policy which requires some degree of taxes to support war and peace; research and development and even a modicum of social services which even most Republicans and conservatives have agreed are required.
But while the tax cut policy was always wielded as the sword of the conservatives, it was neither broad-based and spread throughout the population (individuals versus business); nor focused on driving fundamental investment.
Instead, it was an approach that lay flat and without result "" impotent; instead of driving investments and technology to solve critical problems such as energy development.
There was no response in tax cutting to consumers except for a blind patriotic appeal to buy into the "greed is good"- phenomenon; where an economy was jawboned from being a producer-based economy into a consumer-spending economy; jobs were exported along with major US investment; and along with it came the weakening and collapse of the dollar and the weakening of a national security structure that makes the US a policeman; and the rest of the World as the policymaker. The simple fact is, within a consumer-based economy, consumers can not spend money they do not have to spend.
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