An Admirable Response to the Crisis

While I agree with the premise that the monetary response by the federal government has been correct by attempting to stimulate investment using the Federal Reserve. However, the author argues that "risk perception is being addressed through tacking solvency issues through the tentitive plan to acquire illiquid debt." The author also believes that the issue of risk perception is being addressed...

In the Byzantine, half socialistically subsidized ( or nationalized ) and all of it overregulated and corrupted  world of US financial sector, there was a need to show a state interest and, probably, stop the panic to spread all over the economy. That said, the socialist-style bailouts, i.e. pouring the taxpayers “equity” into insolvent and corrupt institutions, just invites the same people,...

1. The most important financial principles--and the one that led the US to world leadership--are compromised by the "bailout" proposal. 2. An unintended consequence of the dire talk used ot sell the proposal is increasing the very risks we ostensible want to reduce. 3. The Fed and Treasury have a role--and this is not it.

The article looks at the government response to the crisis as it unfolds.