October 20, 2008
Possibilities Of Another Stimulus Package
Today Federal Reserve Chairman Ben Bernanke share with Congress his concerns for the economy that continues to see a slow down. Despite the recent movements by the Bush Administration and the global efforts of the world's central banks, the US Economy is still continuing retract. The financial and credit markets continue to show daily uncertainty.
The Federal Reserve has left the door open for another rate cut during its meeting on October 28-29. Bernanke believes stimulus provided by monetary policy along with stabilization of the housing and credit markets will help the economy set a strong foundation.
Bernanke proposed an additional stimulus package that could total anywhere from $150-300 Billion.
"If the Congress proceeds with a fiscal package, it should consider including measures to help improve access to credit by consumers, home buyers, businesses and other borrowers," Bernanke said. "Such actions might be particularly effective at promoting economic growth and job creation," he added.
Passage of an additional sitmulus package prior to election seems unlikely, however, the direction of the economy will deterimine how Congress will act.
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Comments on Possibilities Of Another Stimulus Package »
Hey Conrad,
Do you really think that another stimulus package would boost our economy? Did the first one have that much of an impact? Would measures to improve access to credit boost the economy, but leave us right back how we got here, giving loans and money to people who couldn't sustain payments? Just questions, I guess, no solutions, but I'm curious about your thoughts.
Ryan,
Thanks for your inquiry! My thoughts about the stimulus package are all over the board. Of course, I would enjoy an extra check from the government, especially since my 9 month old twins weren't born last time the government issued the stimulus checks! With several friends and family members owning small business in Salem where I live, I definitely say an additional stimulus check may positively impact their businesses.
Personally I think the first stimulus package was much like drinking a cup of espresso in the morning. The stimulus checks put cash in the pockets of consumers and it helped boost consumer spending for a short time, but as soon as the buzz was worked off consumer spending returned to the slow and groggy pace – not to mention the debt the federal government accrued.
The short term benefit is obvious, however, the long term benefit has yet to be determined.
To answer your question regarding access to credit: The term "access to credit" is referring to the government taking action to boost capital for banks to lend to consumers. The lenient underwriting practices that lead to this financial crisis has faded and will likely never return. Banks have returned to the traditional underwriting guidelines that actually require people to be educated about their personal finances. The Federal Reserve is already infusing banks with capital as a part of the "rescue plan" and it seems to be meeting the expectations set forth.
It comes down to the fact that education is a tool that cannot be over looked for people looking for financing. For those seeking financing for homes, school, cars, etc., it is important to seek advice from a trusted resource.
Thanks again for your inquiry! Have a great week.