How has the Fed handled the crisis?
1) Very poor
3) What were they thinking?
4) Save me from the FED
Sylvester Stallone would have done a better job, Rocky for Chairman of Fed Reserve. Should the best response would have been to wait and watch and continue the inflation targetting, which is what central banks have been doing from the Freidman era? or will the interventionist policy save the day.
I would still take a view that the Fed would have been best served by not really getting involved with any of the individual players. What they should have purely done is that guaranteed all deposits, investors can lose as much money as they want but the depositors losing money will send the economy into a tailspin. Fed was to be the bailout mechanism of the last resort, the continuing freeze in the credit markets essentially proves that the Fed has failed and that it cannot restore faith in the markets. (The Fed was held responsible even during the Great Depression).
Now the Fed will play the Keynes Quote "The markets can remain irrational longer than the rational investor can remain solvent", Fed is buying up all the assets and if that it not working, it is frightening to say the least. Of oucrse the Fed really couldnt be blamed if every stupid bank in the entire developed world bought the same stupid assets and shoved it up their (now the Feds ) ass can it?
And how much did the shorts ban contribute to financials fall yesterday?