Some analysts (and people who short the market) are bitter with Fed's latest move. Fed have been putting in measure after measure to rescue the baddies.
This time, they are pumping in $200 billion to a group of 20 big investment firms for a term of 28 days. The funds are available in exchange for debt, including AAA-rated mortgage securities, which many investors have avoided lately on worries that defaults in the underlying assets will diminish the value (CNN.com).
Banks practised reckless lending and now Fed feel the need to do something. Surely giving them more incentive to lend is not the best measure to improve the overall economy.
The announcement has a psychological impact, but the actual impact on the banking system will be minimal. Some say the US government's need to borrow money could absorb half of the $200 billion in 30 days.
I say don't get overly excited with the latest Fed-induced stock rally.
If anything, the market looks more uncertain now. Who is the winner now?
This time, they are pumping in $200 billion to a group of 20 big investment firms for a term of 28 days. The funds are available in exchange for debt, including AAA-rated mortgage securities, which many investors have avoided lately on worries that defaults in the underlying assets will diminish the value (CNN.com).
Banks practised reckless lending and now Fed feel the need to do something. Surely giving them more incentive to lend is not the best measure to improve the overall economy.
The announcement has a psychological impact, but the actual impact on the banking system will be minimal. Some say the US government's need to borrow money could absorb half of the $200 billion in 30 days.
I say don't get overly excited with the latest Fed-induced stock rally.
If anything, the market looks more uncertain now. Who is the winner now?
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