Ever-since, the cowboys of business started leaving the US in search of their treasure in Asia- Pacific region, the government and laymen were left high and drive. Gradually, along with the big boys of business the money too went away from the US markets. As usual, synonymous to any governments, the US too did not do much to bring the big boys of business back home. The announcement of fore-closure abatement plan by Bush administration was instantly endorsed by the stock markets with a gain of 1.3%. Such timely intervention in the past by the government, probably could have warded off the present sub-prime crisis and economic slow down.
The White House formally announced a program under which lenders will voluntarily freeze interest rates for certain homeowners with adjustable-rate loans. This aims to help the home owners to get a chance to hold on to their properties. The government hopes this temporary arrangement will bear the desired result soon. Even though this will make losses on the returns of mortgage-loan investors, many widely believe this is for the good of the overall economy.
The banking and financial institutions too partook in the process of putting the economy back on track by reducing interests. The average rate on 30-year fixed-rate mortgages slipped below 6% this week to the lowest level in two years. The Bank of England reduced its interest from 5.75% to 5.50% and the Federal Reserve is expected to cut at-least by quarter points on the short term rate. The government’s corrective measures to overcome the threat perception of economic recession, is good news for the US as well as the world economy.