Watch out for the Storm

After extended losses in global financial markets and with increasing fears of a looming recession, today the Federal Reserved slashed interest rates by 3/4 of a percentage point to 3.5%. The size of the cut and the fact that the decision came at an unscheduled policy meeting provides a hint of the depth of the problems facing the US economy and the expanding loss of confidence. Given the compounding pressures on consumers (higher cost of living, stagnant wages, declining home values, US macro economic problems) it is easy to understand why panic is spreading and why more substantial market losses are ahead. Beyond the financial markets, however, the key message today is that painful times lay ahead for all of us as the economy and job markets continue to worsen. If do not enjoy an executive level golden parachute, be prepared for some stormy conditions.