The Fed and the stock market
A friend described what happened during the last month (weeks) as the “nationalization of risk and privatization of rewards framework”. How True. Looks like the US lawmakers are not yet ready to sign a USD 700 Bn cheque to the Treasury. I hope they don’t. The excuse that the world economy may go in to a recession and thus deserves a tax payer hand out is a load of crap.
The private institutions other than Freddi and Fannie should have been allowed to go under. People in power seem to make decisions with their politician hat on their head, rather than the future in mind. By wanting to purchase illiquid assets/ bad debt the Fed is encouraging moral hazard.
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sadly it is going to get worse before it gets better when this passes.
http://jwojdylo.wordpress.com
.. oh yea, and the tax payer might take a USD 700 Bn hit… these are not “normal” times I keep hearing over and over again. Cannot remember where I read this, but some newspaper said “capitalism when the market is going up, socialism when the market is going down”. Man, I wish I had an Econ degree. I know only tit-bits on econ :(