Lowering housing inventory is key to solving the ailing real estate market and broader economy, said David Rosenberg, Merrill Lynch chief North American economist.
Though most economists agree that bigger is better at this point, they also say size and complexity of the stimulus package could slow its passage at a time when the economy needs a quick-fix.
A government stimulus must ensure that financial institutions are recapitalized and remain “healthy,” said Frederic Mishkin, former Federal Reserve Board governor and Columbia University economics professor.
The Bank of Japan said Thursday it will provide 1.22 trillion yen ($13 billion) in emergency loans to financial institutions as part of a new program to spur lending to the country's businesses.
Ahead of the Bank of England's interest rate decision Thursday, where the central bank is widely expected to cut rates by 50 basis points, experts tell CNBC to expect another round of rate cuts worldwide.
Federal Reserve officials feared the economy would be stuck in a painful rut for some time despite their decision to slash interest rates to a record low and pledge to use other unconventional tools to fight the worst financial crisis since the 1930s.
Below are the minutes released by the Federal Open Market Committee after its Dec. 15-16 meeting:
Investors could be forgiven for keeping clear of the markets following one of the most turbulent years in recent history, but the positive factors developing are becoming ever more compelling, John Haynes, strategist from Rensburg Sheppards, told CNBC.
After a year-long hangover in 2008, the real estate industry is hoping for some strong, black coffee in the new year.
The US economy is likely to be in worse shape a year from now and will require aggressive government spending and intervention to stem the damage, economist Martin Feldstein told CNBC.
Once the shock of the past year wears off—and the economy shows signs of recovering—investors might find bargain-priced stocks attractive again.
"We're assuming 2009 is going to be a poor year for stocks," says one investment pro. "At the same time, we're looking at investments in high-income vehicles yielding 8, 9 and 10 percent that have nowhere near the risk of common stocks."
While the overall market is unlikely to stage a major turnaround any time soon, experts agree there are a handful of investments that are heating up and could help you recoup some gains.
The big questions for the coming year are how long and deep will the recession be and how it will compare to those of the past.
New U.S. orders for long-lasting manufactured goods fell 1 percent in November, a less severe drop than anticipated though it followed a steeply revised plunge in October orders, a government report on Wednesday showed.
The first half of next year will be very bad for the world economy, but investors will find value in stock markets as some deeply discounted shares will stage a rebound, Marc Faber, editor and publisher Gloom, Boom and Doom Report, told CNBC.
Monday's market is still feeling last week's pain, as lowered earnings outlooks add to the downward pressure from big bank downgrades. And forensic analysts continue to sift through the alleged Bernie Madoff fraud, asking: Can investors get anything back? But CNBC heard from experts who are anticipating an annual Santa Claus rally — and think it's crucial to buy oil stocks and other selected equities now.
On Friday, the auto bailout was announced: General Motors and Chrysler will get up to $17.4 billion in short-term loans from the U.S. in return for deep concessions. Treasury boss Hank Paulson reversed himself, asking for the second half of the TARP fund. Who gets bailed out next — and where does it end? Strategists told CNBC the bailout is going to make things worse; but one airline CEO sees a healthy Darwinian process.
Thursday: U.S. jobless claims eased from a 26-year peak but still showed weakness in the economy. After the Federal Reserve's moves this week, homeowners are scrambling to refinance; the dollar is sliding against the euro. And the second half of the $700 billion TARP bailout fund looks likely to go toward foreclosure relief and economic stimulus. CNBC heard from experts who say crude oil prices are finally correct — and oil, stocks and gold are going to soar.
Now that Fed Chairman Bernanke has answered how low he would take interest rates, he needs to explain what's next.