The economy is tanking, banks are scrambling for cover, the Fed keeps cutting interest rates . . . and business is booming at Crown City Loan & Jewelry pawn shop in Pasadena.


Standing behind a display case brimming with hocked watches and jewelry, owner Doug Robinson can only smile when asked how things are going.

"Business is very good," he said. "The loan business is very good."

These aren't just any loans, of course. Robinson said the money he hands out -- no questions asked -- in return for people's collateral typically comes with an annual interest rate of about 60 percent.

He declined to say how much his loan balance was. But Robinson said it has risen about 40 percent in the last year, and he expected to do even better this year. "We've been on a continuous uphill run for a number of months," he said. "I don't see anything that will stop it."

For all the reassurance from the Bush administration and Federal Reserve that steps are being taken to keep the U.S. economy from going down the toilet, the harsh reality from the consumer's perspective is that times are tough and getting tougher.

Last week the Fed cut rates for a sixth time since September and assisted in JPMorgan Chase's bargain-basement purchase of stricken investment bank Bear Stearns. President Bush tried to put a brave face on an economic outlook that most prognosticators say will be increasingly chilly.

Hi, Mr. Recession! "I understand there's short-term difficulty," Bush said. "But I want people to understand that in the long term, we're going to be just fine."

I conveyed that sentiment to numerous people in Pasadena the other day, and none seemed convinced that fineness was just around the corner.

"They say they're going to turn things around and help people," said Pasadena resident Darryl Austin, 41, who works as a security guard after serving 12 years in the Marine Corps. "I'm still waiting. I feel like a stepchild in my own country."

Saul Powell, 45, of Burbank said that no matter how hard he worked, he was having a hard time keeping his fiscal head above water because of rising gas and food costs.

"Prices just keep going up," he said. "Why did the government get so aggressive helping Wall Street but isn't doing anything for Main Street?"

There it is. Many consumers might think that a series of aggressive rate cuts would be helpful for things like mortgages and credit cards.

But that's apparently wishful thinking.

After the latest interest rate cut of 0.75 of a percentage point was announced March 18, the average for 30-year fixed-rate mortgages fell after weeks of increases, but not as much as might have been expected, considering how much interest rates for 10-year Treasury notes -- a benchmark for mortgages -- have come down.

Analysts say the spread between mortgages and Treasuries is increasing because banks are reluctant to reopen the credit spigot that got them into so much trouble with the subprime mortgage mess.

The average rate for a 30-year fixed loan was 5.98 percent last week, according to a national survey by Bankrate.com. This compares with 6.19 percent a year ago. Similarly, credit card rates are budging very little. Six months ago, the average piece of plastic was costing users about 14 percent in interest for revolving balances. Now it's about 13 percent.

Things also aren't getting any better for people who believe in squirreling away cash for a rainy day. All those rate cuts are taking their toll on savings accounts, money-market accounts and certificates of deposit. That's not to say your money is going to disappear, even if your bank goes belly-up. The Federal Deposit Insurance Corp. insures ordinary accounts as much as $100,000 and retirement accounts as much as $250,000. But six-month CDs and money-market accounts are paying an annual rate of less than 3 percent. The cost of living, by contrast, was up 4 percent last month from a year earlier.

Back at the Crown City pawn shop, Robinson, the owner, said his vantage point on the economy suggests that people need money just to get by, but they're having a hard time getting it from banks.

"People have used up their available cash and credit," he said.

The government can be doing more to cushion people from the economic downturn. For one thing, why aren't lower rates for banks to borrow money being passed down the financial food chain in the form of lower rates for consumers? Whether that takes a gentle nudge from the Fed or more overt regulatory action, it would help convey that we're all in this together.

It also would be nice to see more concrete measures to help people who are either losing their homes or in danger of being turned out on the street. The government did this during the Great Depression, and it certainly could provide a helping hand now.

Bush might be right -- things will be fine over the long haul. But for the moment, things seem quite grim.

David Lazarus is a columnist for the Los Angeles Times. E-mail him at david.lazarus@latimes.com.