Katrina on the Hudson
That headline, Katrina on the Hudson, is the full text of a comment filed late last night by lwps. It pretty much sets the tone for the way our Readers Who Comment view the Fed's Sunday night actions in attempting to manage the fallout of the sub-prime mortgage crisis.
The Post's first paragraph and headline said the actions -- supporting a fire-sale takeover of Bear Stearns and making more money available to banks squeezed for credit -- were to "avert" a crisis in the global financial system. Another reader, egalitaire, suggested that "mitigate" would be a more accurate verb than "avert."
If reader comments are an indicator of anything, the financial situation is worrying people, at least those who read news articles on web sites in the middle of the night and early in the morning. Some wonder why, if banks can be helped by government so dramatically and quickly, why can't real people? And as is always the case in comments about journalism that involves the federal government, there is partisan finger-pointing and some cheerleading or spite for candidates. Politics aside, the unmistakable tone of comments filed by our readers so far today is one of significant concern about the economy.
First out of the box was markswisshelm, who said, "WOW! A sweet deal for JP Morgan. All the assets basically for free and the taxpayers pick up all the liabilities. The President really knows how to take good care of his base."
But edbyronadams said, "This is a good deal for the country. The economy gets spared the shock of an investment bank filing bankruptcy and the shareholders get rightfully sheared for letting the company get run into the ground..."
RickJohnson621 wrote, "Dear Feds,
I am going through a credit crunch. My credit card in about to be maxed out. Creditors will soon come knocking. I need a bailout. Please send money..."
gce1356 said the Fed's action "...Makes you wonder how over-leveraged and vulnerable other investment banks and hedge funds are, not to mention how fast they can fall if there's A RUN ON THE BANKS MONDAY MORNING... I for one am not waiting to be another Enron stock holder!"
misssymoto, quoting the article's assertion that the "Fed's moves were meant to reverse a rising tide of panic," said "They need to go back to the drawing board!! Nothing says "Run on the Banks" quite like TWO DOLLAR A FREAKING SHARE Bear Stearns stock!!..."
kaygeejay wrote, "Now they'e freaking me out. Rates cut weekly, newly invented loans to banks twice a week. A bail out here, absorbing bank liabilities there.
Whatever the FED and Mr. Paulson see over the horizon has to be downright frightening.
I think my mattress needs to be plumped up in spots."
AlanBrowne said, "We can only hope that once all this dust settles one day that the government begins to see that perhaps there is a place for government to actively regulate and to prevent the stupidities that have led to this cash crisis. The signs have been out for 5 or more years, but the government decided all was fine and dandy..."
cleancut77 wrote, "It appears that the Bush Administration has said no to Socialized medicine and yes to socialized banking. God Help Us."
But truthdigger advised that, "It'll only get a turn for the worse if Obama gets elected. The man is a pumped up balloon."
To which Nissl responded, "...Truthdigger, you're amazing. Random political insults on a thread about the worst financial crisis in half a century."
jasonfehlers said, "Forget Bush. This entire recession is squarely on the shoulders of the Federal Reserve. It has failed (again) to enforce regulations governing the banking industry... How many more times do we have to watch the Fed bail out the banks it represents because it looked the other way?..."
toddpw said, "...The Fed's credibility is shot, and Bush's leveraged buyout of the US is on borrowed time. You can't double the national debt in 7 short years and not expect that to weigh down your currency..."
tysonsCorner1 wrote, "This is a pretty outrageous thing for the Fed to do. If individuals or small companies make bad investments than end up going sour, conventional wisdom is to say "tough luck, better luck next time, that is how markets work."... This seems very unfair to me... The deck is stacked."
IssyWise said, "Not that the Fed should sit on its hands while Rome burns, but it should be noted that the super-rich captains of our economy have again required socialist intervention (in the form of huge amounts of taxpayer funds flooding into private coffers) to avoid damaging the rest of our lives with their unrestrained financial buccaneering..."
dbeins wrote, "All of this is from people living beyond their means or because people dont seem to understand that you cant trust lenders and that they have to read the contract before signing... The whole thing is a pyramid scheme and should be swept away.
What the hell ever happened to market forces?"
rkerg asked, "...which investment bank or hedge fund will fail next? This country has a bad case of overvalued assets, much of which are over leveraged. By taking the near worthless securities as collateral, the Fed is letting Wall street walk away from the consequences of their own decisions and actions..."
marmac5 observed that "We can spend money bailing out banks, but we can't spend money on expanding SCHIP, health insurance for children. Go figure. Of course, bankers are much more important than children. How dumb of me to think otherwise."
And the last word goes to underdogman, who said, "I never want to hear Wall Street complain about "entitlements" or "welfare state" ---or anything about how the capital markets will regulate themselves and correct themselves. For market psychology, of course we must avert a panic. Let's hope the consumer, not the speculators, get some real relief."
All comments on the Fed article are here.
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