Published: October 09, 2008 11:39 am         

The fix begins

As the United States goes, so goes the world. Evidence of that is being proffered this week in European, Asian, Australian and Canadian stock markets.

Our world is inter-connected financially as never before. Foreign countries and private investors have always looked to the United States for safe havens for their cash. Now, with our economy slipping a little, we have sneezed and the world has caught a cold.



Evidence of that is seen in market turmoil around the world. Knowing that finances are interconnected, the Federal Reserve Wednesday lowered its federal funds rate by a half percent to 1.5 percent. Joining in the rate cuts were the European Central Bank, Bank of England, The Bank of Canada, the Swedish Riksbank and the Swiss National Bank.

The rate cuts are meant to get banks back in the lending business. The idea is that interest rates are so low the banks can borrow cash from the Fed and loan it out to eager investors. And there are more stabilizing actions coming.



Treasury Secretary Henry Paulson has already told us it will take some time for the federal government to begin using the $700 billion in bailout funds to purchase debts. But that process is coming and should make financial institutions more comfortable with extending credit.

It took a long time to create this mess we are in and it will take some time to get us out of it. But Paulson, Congress and the Federal Reserve seem to be on top of things. The fix won’t be quick and it won’t be cheap, but it is under way.