Fed has nowhere to go

Why is this recession different from all other recessions? Well, lots of reasons, but here's an important one: In a typical recession, the Federal Reserve lowers interest rates in order to jump start the economy (just as it increases rates to cool things down). And it usually works. But the overnight Federal funds rate (that's the rate banks charge for lending to each other) has been between zero and 0.25 percent since last December. In other words, they've been trying to kick start for months - without much effect. In today's announcement, the Fed said it would keep interest rates low for an "extended period." To be sure, there's other stuff the Fed has done to loosen up the credit situation - and with some success. But it's the availability of capital - not the cost of it - that seems to be holding up the works. (NYT)