I’m not the only one disgusted with the Bailout of Bear Sterns, and I think there are several things that we are not taking into consideration, such as the domestic and political impact. There is also a global impact, one that will have a serious impact on your daily lives.
Yet, I don’t hear much discussion of this bailout by regular people I encounter. It’s really sad that so many people are silent on the hypocrisy of the Fed’s bail-out. This hypocrisy should lead us to acknowledge that regulation has meaning. Let’s face it, many of the regulations the (semi) Free Market lovers hated were there for a reason.
As Bonddad notes, the Fed is scared shitless. But, I think this assessment sums up the best reason why the Fed Reserve should not have gotten involved in the JP buyout of the Bear (emphasis his):
The Fed can provide plenty of money. Over the last 9 months they have flooded the market with cash. But that does not good if people aren’t willing to use it. And right now, no one wants to loan anybody any money. That’s the central problem — and so long as that exists there will be a mis-match between the Fed’s policy tools and the market’s problems.
Welcome to the roller coaster.
[...] Crone isn’t happy: with the Fed’s decision to bail Bear Stearns out: I don’t hear much discussion of this [...]