The credit crisis has eased, but not gone away. Even with LIBOR rates declining and the numerous programs that the Federal Reserve has initiated (see my post on the Federal Reserve's Money Market Investor Funding Facility), banks nevertheless remain cautious and have imposed higher credit standards for consumer mortgages and credit cards. Couple this with the record $1.4 trillion that analysts expect the government will borrow over the next year alone. The credit crisis has put pressure on business enterprises, especially manufacturing which has faced a substantial downturn. Both Bernanke and Greenspan have warned us that substantial economic problems will remain for some time (see earlier posts of Bernanke and Greenspan speeches)
The economy has been much on the minds of voters. Political rhetoric aside, we all want to know the details of who will do what and how. This is the part that is lacking during a political season. One of the early signals to the economy about direction that the business and financial reforms will take is what key cabinet members the President will choose to address these critical problems. FDR's words remind us that economic problems are much of our own creation:
While they prate of economic laws, men and women are starving. We must lay hold of the fact that economic laws are not made by nature. They are made by human beings.
The economy will have to wait a short time to see who the next President will be. Let's hope that action is decisive and effective.