Inflation Pressures Are Easing but Rate Cut Forecast Remains Uncertain

The New Year is beginning where the old one ended -- with uncertainty about when – or whether – the Federal Reserve will begin cutting interest rates.

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The House of Representatives, as expected, approved the controversial bankruptcy “cram down” legislation, but not until after the bill’s sponsors agreed to add provisions making it more difficult for borrowers to qualify for judicial loan modifications. 

If the economy were a contestant on one of those weight loss reality shows, it would be in terrific shape now. But the economy isn’t a weight loss contestant (though its losses are impressive) and it certainly isn’t in good shape. The challenge for journalists is finding words to describe depths few have seen.

In the 1950s, teachers told students to “duck and cover” in the event of a nuclear attack. We know now (and should have known then) that cowering under a desk would not provide much protection against radiation poisoning. But it may be a reasonable strategy for dealing with the continuing onslaught of dismal economic news. You certainly don’t want to spend a lot of time staring at the daily stock market reports or (even worse) reviewing the statements for your retirement account.

Slam, pan, bemoan, disappoint. Praise was nowhere to be found in the headlines reporting reactions to the much-anticipated bank bail-out plan Treasury Secretary Timothy Geithner announced two weeks ago.