The move by the Fed to force a sale of Bear Stearns to J.P. Morgan to some seemed an over-reach. Employees will be fired. Employees have lost almost all value in their portfolios and shareholders have suffered. But the stock market can still be a risky investment with no guarantees, especially in the short run.
The Fed by the actions yesterday made a psychological statement. One was a warning to other investment banks, we will let you fail. And two we will use everything in our bag of tricks to prevent a run on financial institutions.
This was a great move and proved that the Fed and Bernacke are in control of the financial markets.
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