With the potentially multi-trillion dollar meltdown in the U.S. housing market well underway and a bear market in equities taking root, President Bush mentioned a $150 billion stimulus package last week. Given the U.S. consumer's rapidly deteriorating financial position and the non-prospect of wage gains being able to fill the void that falling asset prices threaten to create, it is unlikely that $150 billion is a large enough figure to seriously combat economic slow down.

Needless to say, it is impossible to forget that Mr. Bush passed multiple stimulus packages starting in 2001 based upon the pledge that government deficits now would be forgotten about when growth picked up later. Sorry Mr. Bush: with a U.S. government surplus nowhere to be seen and even more government assistance likely on the way, your perversion of Art Laffer's curve is quickly coming into view.

The stark reality, for those that care to think about it, is that the U.S. government cannot perpetually help avert painful recessions and economic crisis's because eventually the government's financial position will itself become the crisis. And yes, not many U.S. politicians today, save Ron Paul, seem to 'care'...

"To the dismay of deficit hawks, Bush spoke of no plans to pay for the giveaway - and insisted during his address the package should "not include any tax increases"". Canwest

While another round of fiscal stimulus may or may not be able to slow the housing depression and equities plunge, an even less certain outlook can be gleaned when looking at U.S. monetary policy. Having already tinkered with interest rates, expanded what it deems acceptable discount window collateral, and launched a more secretive auction lending process, Bernanke and company will likely continue to toil with novel lending platforms while reducing interest rates. But what Fed may not be able to do is spark the positive and lasting reaction it so desperately needs from the marketplace. Quite frankly, as U.S. consumers and investors threaten to seriously retrench in tandem for the first time in almost 30-years, the danger is that Fed rate cuts have lost the all important element that is psychological gas.

In short, after Bush's announcement last week global stock markets plunged to begin this week. Unless there is a material improvement in stocks soon,Bernanke is about to take the stage...