Imagine a high-wire act performed without a net. That describes the Federal Reserve’s effort to curb inflation without crashing the economy. Success will bring applause and relief; failure, a brief downturn, at best, with a prolonged recession the worst case outcome.Read More
Like a car with worn tires, the U.S. economy is struggling to gain traction. It’s not skidding off the road and it is heading generally toward recovery. But it’s not there yet. And while the forward momentum is encouraging, the slipping and sliding is making for an uncomfortable and unsettling ride.
Layoffs are declining, the employment numbers look better, tight credit is getting looser, retail spending forecasts are becoming more optimistic and the service sector shows signs of strengthening. In fact, many indicators suggest the economy is improving – but not fast enough to reduce the unemployment rate nor dramatically enough to lift an increasingly downbeat consumer mood.
Consumer advocates are assailing a Federal Reserve proposal that would scale back (opponents say “eviscerate) the right of borrowers to rescind a loan found to have predatory characteristics. Attorneys have successfully used the right of rescission, which can be exercised for up to three years after a loan is originated, to extricate borrowers from high-cost loans on which payments have adjusted beyond the consumers’ ability to repay.
Standard advice when you’re in a hole is – before you do anything else, stop digging. But that strategy doesn’t seem to be working for the financial institutions trying to find a way out of the foreclosure morass in which they are buried. While the institutions have tossed their shovels aside, lawmakers, consumer advocates, class action attorneys and investors are digging furiously around them, widening a hole that is already plenty deep.