Friday, 14 March 2008

How much?

You have to laugh at the today's press release from the Fed on the Bear Stearn's crisis. Does the Fed think that starving the markets of information will a) stabilize expectations or b) generate more rumours?

For immediate release

The Federal Reserve is monitoring market developments closely and will continue to provide liquidity as necessary to promote the orderly functioning of the financial system. The Board voted unanimously to approve the arrangement announced by JPMorgan Chase and Bear Stearns this morning.

Here are just a few unanswered questions? How much liquidity does Bear Stearns need? What arrangements are in place? What guarantees has the Fed put in place to ensure that Bear Stearns won't go down?

Well, you won't find many answers from this press release. A lack of answers can not give anyone any confidence that the situation will stabilise.


Josh said...

At this stage, the Fed probably doesn't know how much money is needed to bail out Bear Stearns.

James P said...

Josh, I reckon you are right. The Fed has no idea how bad things are in Bear Sterns. At this stage, the intervention is probably increasing by the hour, as more depositors, clients and lenders to to get their money out.