By Douglas A. McIntyre is an editor at 247wallst.com, Oct 2nd 2008 9:05AM
What if the economic bailout package is not enough to free the locked-up credit markets? Big banks may sell bad assets to The Treasury Department, but will they loan that money to the man in the street or small businesses?
If the Paulson plan is not effective, the number of arrows in the federal government's quiver drops substantially.
The Fed has tried to save the economy with a number of rate cuts. Many analysts have thought the agency would not cut again before the election, but those many analysts could be wrong.
According to The Wall Street Journal, "Federal Reserve officials are weighing further interest-rate cuts, even if Congress passes a $700 billion rescue plan, in the face of a deteriorating economic outlook and severely strained financial conditions."
The Fed had better hurry along. On Wednesday, reported car sales figures were down over 30% for September for many auto companies. The major excuse for the problem was not gas prices, it was the inability of people to get car loans. There is absolutely no evidence that the housing or mortgage markets are getting better. Default rates on credit cards are rising. Retail sales this holiday season are likely to be pathetic.
The economy is at the stage when it is time to pull out all the stops. The window to save the consumer may close in the next week or so. That may mix metaphors a bit, but that makes it no less true.
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