The Economist's Digest4

Will the credit crisis trigger a downturn?
(Originally from The Economist Sep.22~28, 2007)

Summary:
Markets had expected for a decreased interest-rate by1/4. After gaining the half cut on the interest-rate, the market (in America) seemed spring back to life. The high rate is danger to the market; as the Fed and Congress wanted to make his name, their scream for it wouldn’t stop.
Despite the Fed’s big interest-rate cut, danger still exists. The first firing line is a doubling of foreclosures, the subprime(次級房貸) mortgage crisis in housing market. Even if the America’s economy goes down, it’s not the main danger to other countries because both Asia and Europe are less dependent on America than they were before.
What really matters is the rise in borrowing costs in both EU and US. After the Central Bank of England gave up refusing to interrupt the three-month money market (a three-month term money market), interbank rates also fell but still high. Banks (ordinary banks) have to digest the things they ate for greed (credit debts). Therefore, since they want to keep their money rather than lend to others, it’ll be more difficult for companies and people to loan unless they’re willing to pay the price. It becomes a clear rule in markets.
Even when the policy of cutting down rates would increase danger a little, the problem still can’t be removed so fast, and the policymakers haven’t forgotten inflation (means the price of things coming up) which is still not an urgent problem now, except Fed, who won a reputation for their rate policy.
Bankers in other countries may also follow the Fed’s step, for it’s hard for them to say no.

What I think:
Taiwan just had passed the credit crisis (maybe not?) and the banking industry just had a sauna, the credit crisis in the world (mainly EU) came. The interest-rate in Taiwan just has come up a little, the other countries’ want to run down. Will it affect Taiwan? Maybe we should have to face another low-interest-rate time but things in Taiwan becoming more and more expensive?
Another question I want to ask is it’s necessary to low the rates? Does it really help? Or have no choice? The low interest-rates may help the rich, higher-ups and companies. Will it benefit the society or make the gap between the rich and the poor wider? Wait and see.