The Economic News

After 13 rate cuts, the perception is the Fed is nearly powerless to stimulate the economy. Backup responsibility for restoring growth falls to the Federal Government. They are tasked to implement tax cuts and spending increases that would best increase growth and minimize suffering. The current administration has so far chosen to fight two expensive wars of dubious merit, to give the bulk of tax cuts to people who do not need it and are least likely to spend it, and to give the rest of the world economy ample incentive to withdraw their support from an increasingly dysfunctional dollar-centered system of global trade and finance. We'll now throw higher rates onto this pile of woes and see what happens, but as $800 billion in home equity was extracted in 2002, this has the potential to be a very big straw.

AND Twilight Zone Economics By PAUL KRUGMAN

The best guess is that growth in the second half of the year will be faster than in the first half, possibly high enough to create some jobs, but not high enough to make jobs easier to find. In other words, in terms of what matters most, the economy will continue to deteriorate.

All this is, of course, an indictment of our economic policy — a policy that has managed the remarkable trick of generating immense budget deficits without giving the economy much stimulus.