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| The Fed provided a lot of liquidity to the system as they should have. I think Bernanke did a very good job.
Do you want the market to crash..? History shows us that isn't a very good thing. I believe a lot of the meltdown last year was fear driven.. Lot's of GMO orders (get me out) on the Dow last October.. as people were taking their savings and running for the hills... that wasn't very smart... nor a good thing for our economy/Country.
So even if the Gov't did do something like that (not saying they did..) yal.. I probably would agreed with it.
The point of the article is that we've had a liquidity collapse.. matched with a bubble bursting in Housing/Stocks and the markets needed someone to step in and fill the breech.. As confidence is restored the normal players return.. as they are able.. to the status quo. The only one big enough to step into the breech last year was the Government... and they should make some money on the deal... again as the article notes they did.
As the government assumed the risks by buying the assets during the fire sale.. effectively providing a floor.. the return to calmer waters should allow people who were physically not able to assume the risks last year to function again.. and the risks of really really really bad goes away.. As we the people earn that risk/return.. we should use it to pay down the debt.. and further restore confidence in our economy... IMHO. Who knows what they will really do?
The Tarp should be another area where there are significant profits for the Treasury.. also The Fed or someone.. Treasury is buying MBS which is trading below fair value that should provide a return as the Housing market returns to stability over the next couple of months/years. Without someone wading into the waters.. the vultures would just sit there and watch it collapse.. which is unneccessary when you are watching markets collapse to begin with and people are losing their jobs and life savings.
The Dow peaked out in October 2007 at 14,198 then fell to a low last February of 7063.. a decline of right at 50% to a recovery (so far) of 10,664.. We are still down 3,534 pts from the all time high... Without the gov't providing the liquidity to the economy... no doubt this 6 Trillion dollar recovery would have taken longer.. or not occured as fast... If the gov't did indeed step in.. I would think that would have been a good thing.
However, I don't view the gov't as an investor... other than serving in a role of providing Confidence in the US economy... Once stability is restored.. we should go back to people playing by the rules as investors.. without gov't intervention. | |
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The Fed made a $52 Billion dollar profit last year.
