Tuesday December 11, 4:43 pm ET
By Jeannine Aversa, AP Economics Writer
(AP) The Federal Reserve dropped its most important interest rate to a nearly two-year low on Tuesday and left the door open to additional cuts to prevent a housing and credit meltdown from pushing the economy into a recession.
Fed Chairman Ben Bernanke and all but one of his colleagues agreed to trim the federal funds rate by one-quarter percentage point to 4.25 percent.
The rate reduction, the third this year, was needed to energize national economic growth, Fed officials said. The deepening housing slump is affecting the behavior of consumers and businesses alike, the Fed said.
"Economic growth is slowing, reflecting the intensification of the housing correction and some softening in business and consumer spending. Moreover, strains in financial markets have increased in recent weeks," the Fed said in a statement explaining its decision to cut rates again. The three rate cuts ordered thus far "should help promote moderate growth over time," the Fed added.
On Wall Street, stocks tumbled, reflecting disappointment among some investors who were hoping for a larger rate cut. The Dow Jones industrial plunged more than 200 points.
The funds rate affects many other interest rates charged to individuals and businesses and is the Fed's most potent tool for influencing economic activity.
In response, commercial banks, including Wachovia and Wells Fargo, lowered their prime lending rate by a corresponding amount, to 7.25 percent. The prime rate applies to certain credit cards, home equity lines of credit and other loans.
MORE SKEPTICISM
"The Arctic is screaming," said Mark Serreze, senior scientist at the government's snow and ice data center in Boulder, Colo.
Just last year, two top scientists surprised their colleagues by projecting that the Arctic sea ice was melting so rapidly that it could disappear entirely by the summer of 2040.
This week, after reviewing his own new data, NASA climate scientist Jay Zwally said: "At this rate, the Arctic Ocean could be nearly ice-free at the end of summer by 2012, much faster than previous predictions."
So scientists in recent days have been asking themselves these questions: Was the record melt seen all over the Arctic in 2007 a blip amid relentless and steady warming? Or has everything sped up to a new climate cycle that goes beyond the worst case scenarios presented by computer models?
"The Arctic is often cited as the canary in the coal mine for climate warming," said Zwally, who as a teenager hauled coal. "Now as a sign of climate warming, the canary has died. It is time to start getting out of the coal mines."
FUN IN THE SUN
MORE SKEPTICISM
"The Arctic is screaming," said Mark Serreze, senior scientist at the government's snow and ice data center in Boulder, Colo.
Just last year, two top scientists surprised their colleagues by projecting that the Arctic sea ice was melting so rapidly that it could disappear entirely by the summer of 2040.
This week, after reviewing his own new data, NASA climate scientist Jay Zwally said: "At this rate, the Arctic Ocean could be nearly ice-free at the end of summer by 2012, much faster than previous predictions."
So scientists in recent days have been asking themselves these questions: Was the record melt seen all over the Arctic in 2007 a blip amid relentless and steady warming? Or has everything sped up to a new climate cycle that goes beyond the worst case scenarios presented by computer models?
"The Arctic is often cited as the canary in the coal mine for climate warming," said Zwally, who as a teenager hauled coal. "Now as a sign of climate warming, the canary has died. It is time to start getting out of the coal mines."
FUN IN THE SUN
AMARA, Iraq (AFP) - Four car bombs killed at least 33 people in Iraq on Wednesday, including 28 in the southern city of Amara, as Baghdad said it would retake control of Basra province from British forces on Sunday.
Triple car bombs in Amara killed at least 28 people and wounded another 151, 10 of them children, said Zamil Shia'a al-Oreibi, director general of Amara health department.
Amara police Lieutenant Ali Kadhim Hassan said the bombs exploded within minutes of each other, the first going off at 10:30 am (0730 GMT).
Hundreds of relatives rushed to hospitals to seek loved ones as Amara police announced a 24-hour curfew, an AFP correspondent reported.
"The security personnel must carefully check all the cars in the city, especially those entering the city," said Ali Hussein, 35, whose 11-year-old brother was wounded in the attack.
Prime Minister Nuri al-Maliki called the bombings a "desperate act aimed at shaking the security and stability in Maysan which had suffered under the former regime." Amara is the capital of Maysan province.
US National Security Council spokesman Gordon Johndroe said the attacks were by a "determined enemy" that "does not want the Iraqi people to live in security and freedom."
White House spokeswoman Dana Perino said: "Clearly violence in Iraq is something that has gone down significantly but is still a major problem."
She said Commander of US forces in Iraq General David Petraeus and US Defence Secretary Robert Gates said that the security gains made were "quite significant."
"We in no way are out of the woods yet and we have got, still got a lot of work to do," Perino added.
British troops transferred security control of Maysan province to Iraqi forces in April but the region has seen intense Shiite infighting and battles between militias and Iraqi police.
British soldiers pulled out of Amara in August 2006 and the city of 350,000 residents immediately saw gangs of looters move in and strip the barracks bare.
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