The Grim Reality of Those Tax Rebate Checks
June 12, 2008 · Print This Article
When President Bush approved the economic stimulus check it was hailed as the shot in the arm the economy needed. Unfortunately, the economy is proving to be worse off then first suspected and those stimulus check may prove to be a short term fix rather than the needed jump start.
Now this is not new to nay-sayers who are just being proved right by the continued credit crunch and the increase in gas prices. Experts now expect that nearly half of those stimulus checks will be used at the pump and for necessities like food instead of consumer goods like electronics, apparel, and other items.
Facing this new fact the Federal Reserve is acting quickly developing several new tactics. Among these tactics is rising the interest rate which is expected to happen in the next few months.
However, it is the Term Auction Facility that is starting to gain attention. The Term Auction Facility is a little known tool offered by the Fed for banks and lenders feeling the negative impact of the mortgage collapse. By placing mortgages as collateral, these lenders are able to receive money for up to one month that they can then create loans with. Many lenders prefer to go through the Term Auction Facility since they are not required to publicly announce their intentions so the consumers remain confident in that institution.
Consumer confidence is, perhaps, one of the highest prized commodity it
The Federal Reserve hopes that the Term Auction Facility will aid the economy where the stimulus checks fail.
While it is not known for sure if this will word the Federal Reserve remains optimistic.
In the mean time, consumer confidence remains at an all time low as they watch the price of food and fuel soar. It is unknown when the market will begin to make any upwards momentum but everyone can agree that it needs to be soon.
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