Rate Cuts, Stimulus Package Article and Market Summary For the Week Ending Feb 15/08

-- Weekly Market Summary --
Gold
$903.10 Close Feb 15, 2008
-$4.20 Gain/Loss
-1.64% On Week

Silver
$17.105 Close Feb 15, 2008
-$0.095 Gain/Loss
-0.03% On Week

XAU
177.32 Close Feb 15, 2008
+0.25% Gain/Loss
-2.17% On Week

HUI
435.06 Close Feb 15, 2008
+0.18% Gain/Loss
-1.94% On Week

GDM
1305.33 Close Feb 15, 2008
-0.04% Gain/Loss
-2.55% On Week

JSE Gold
2267.66 Close Feb 15, 2008
-12.51 Gain/Loss
-5.26% On Week

USD
76.04 Close Feb 15, 2008
-0.11 Gain/Loss
-0.76% On Week

Euro
146.68 Close Feb 15, 2008
+0.27 Gain/Loss
+1.07% On Week

Yen
92.90 Close Feb 15, 2008
+0.30 Gain/Loss
-0.25% On Week

Oil
$96.50 Close Feb 15, 2008
+$0.04 Gain/Loss
+5.15% On Week

10-Year
3.780% Close Feb 15, 2008
-0.038 Gain/Loss
+3.45% On Week

Bond
117.00 Close Feb 15, 2008
+0.59375 Gain/Loss
-1.45% On Week

Dow
12348.21 Close Feb 15, 2008
-0.23% Gain/Loss
+1.36% On Week

Nasdaq
2321.80 Close Feb 15, 2008
-0.46% Gain/Loss
+0.74% On Week

S&P
1349.99 Close Feb 15, 2008
+0.08% Gain/Loss
+1.40% On Week

Feature Article: Are the Rate Cuts and the Economic Stimulus Packages Enough to Save the US economy from a Recession?

So far, 2008 has been full of disappointing news and commentary on the state of the U.S. economy. Economic news is pointing to a recession, there is a national mortgage crisis and there are many pessimistic views about the economy’s short term future. This week has been a busy week aimed at stimulating the U.S. economy, with a $170 billion economic stimulus package signed by President Bush, a mortgage aid package and an economic hearing before the Senate Banking Committee. The events follow the two recent U.S. Federal interest rate cuts last month of three-quarters percentage points, followed by another half a point 8 days later. Current reports suggest that the Fed is ready to cut rates again.

These economic stimulus attempts by the US government, coupled with the economic discussions from the current campaigns for President, have stirred up a lot of attention focused on the state of the U.S. economy. The question still remains; will this be enough to keep the U.S. economy out of a recession?

According to the Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson who convened Thursday before the Senate Banking Committee; the nation will avoid failing into a recession. Both men did acknowledge that there are problems in the U.S. economy, but they feel that the recent steps taken by the government are enough to keep the economy moving forward.

While onlookers hoped that the stock market would respond favorably to responses in the Senate Banking Committee, the markets did not respond. The DOW closed Thursday (-175.26), down -1.4% and the NASDAQ closed (-41.39), down 1.74% from the previous day. While the S&P closed on a down note, the gold market closed on a positive note at 913.40, up 0.29% from the previous day.

There has been a lot of debate about whether the $170 billion economic stimulus package will make a big enough impact on the economy to avoid a recession. The main premise for the stimulus package is to stimulate consumer spending across the nation. Most individuals will receive a $600 tax relief check and couples will receive a $1200 check. Bush signed the bill this Wednesday, so estimates are suggesting that Americans will receive their checks sometime this summer.
There is some debate as to whether this stimulus package will actually stimulate the economy past the short term. The thought is that short term cuts will equal short term impacts. Some economic commentators also believe that consumers won’t change their spending habits for a one time, short term relief package. There is also some debate about whether the stimulus package will help to create new jobs, as many believe that employers will not add new retail jobs in anticipation of sales that are only going to be $600 per person.

The Fed is currently predicting a 1.8% growth for this year, a more conservative investment than the Council of Economic Advisors estimated growth of 2.7% for 2008. While the U.S. economy has been growing over the past 6 years, the 4th quarter of 2007 experienced minimal growth across most sectors, stimulating a great amount of concern across the entire country.

Another large concern for the U.S. economy is the widespread mortgage crisis. Foreclosures are on the rise and the real estate market has slowed across most of the country. Many economists believe that a primary reason for the recent U.S. stock market’s decline is due to the bad investments and troubles within the sub prime mortgage sector. The recent mortgage aid package is designed to freeze mortgage rates for families who are in trouble. “Project Lifeline”, which is backed by the U.S. government would pause foreclosure proceedings for home owners who are 90 days in arrears in their mortgage payments. The program’s intention is to help determine whether an alternative payment arrangement can be made with the Borrowers to help them keep their homes. The 6 mortgage lenders who are participating in this program are Bank of America, JPMorgan Chase & Co, Citigroup, Countrywide Financial, Washington Mutual and Wells Fargo.

This week has been eventful in attempt to stimulate the U.S. economy and to evade a looming recession this year. People around the world are wondering whether it will be enough.