The economy has definitely been in better shape and has been taking a beating these past 9 months. But with all these rate cuts by the Fed and the pumping of liquidity into the economy, it may have soften the impact of hitting the bottom (which has yet to been reached), but we will still hit the bottom at near full-force regardless of the Federal Reserves and government’s actions. With each rate cut, the dollar weakens, and the price of oil seems to be constantly on the rise pushing over $110 a barrel and headed for $125. The U.S. lost its number one spot as the world’s largest economy due to the decline in the value of the dollar.

So what can we do to fix our U.S. economy? Strengthen the dollar to regain the position as the “world’s largest” economy. This will put some confidence in our economy so other businesses, whether foreign or domestic, will begin to invest in the United States. Secondly, stop the Fed rate cuts! And stop the pumping of liquidity! Our economy was built in the illusion of a booming economy with many being able to afford homes. This artificial stimulus doesn’t last long as we are witnessing. A recession may be the best fix in this case. Although I hate being in a recession, a recession is the time to correct the economy so we can hit the ground running on a true bull run based on ingenuity in products and services, higher earnings, and efficient and well-run businesses. In the meantime we must also take care of our huge national deficit. It sits at over 9.2 trillion dollars! The Fed needs to keep inflation rates in check also. Inflation currently sits at over 4% where normally the comfort range ranges between 2.5-3%. I do NOT use the core-inflation rate because frankly, energy and food prices does have an effect on the economy. You have probably noticed the effects at the gas pumps as well as your local grocery stores.

Now on to the Bear Stearns news. If you haven’t been watching the news, the Federal Reserve Bank of New York and JPMorgan Chase has provided secured financing to Bear Stearns for 28 days. After repeated claims by the CEO of Bear Stearns stating that they do not have liquidity problems, 48 hours later, they call upon the Fed to lend them money. The Fed is often known as the lender of last resort and this news had a huge impact on the stock market today as Bear Stearns is the 5th largest bank. This questions the integrity of the CEO of Bear Stearns and the company itself. So much for business confidence, consumer confidence and transparency. The CEO especially should be well-informed at all times and had no right to go on public television and possibly lie about his company’s financial position. And if he was not aware of his company’s liquidity problem, then he should still be fired for not knowing this. Sure the market have may have over-reacted with their stock decreasing over 46%, but this definitely signals trouble and a possible takeover from JPMorgan Chase?

As Jim Cramer from CNBC and Mad Money puts it, “there is always a bull market somewhere”. And as shown by my Forbes.com portfolio, my year to date earnings is 9.595%. Not bad considering the condition the market is in. If course my index portfolio is suffering due to the credit crisis in the financial markets, but that will surely rise once the economy is booming again, and my short-term stocks will likely make a profit within the few months, so that will only increase year-to-date earning percentage.

Overall, the Fed rate cuts were too little and too late when rate cuts first began. I feel that we may be overreacting with the pumping of liquidity and Fed rate cuts since the financial markets aren’t stabilizing right away. Thus, if we are indeed over correcting the market, this may put us in a bad position again. If so, the Fed cannot act late when we over correct the economy. The Fed must quickly respond by raising the Fed rate.