Bernanke Says Fed Will Do What’s Needed

[SD Realtor]

I sure hope so BSR… Unfortunately the Fed essentially responded to the credit crunch like a mom who gives in to a cranky child who is throwing a fit for not getting what he wants. Placating the child in order to stop the screaming rather then letting the child go through the fit and learn to behave better… Keep placating the child simply to stop the fit and the child will continue to behave poorly. What is needed is to change the behavior of the child. I believe a credit crunch would have been a very good first step.

SD Realtor

[LA_Renter]

I agree bsrsharma, the Fed doesn’t really have the luxury to do what it takes to prop this thing up. They will probably be more responsible than the government because they really have no other choice. The $ has reached its limit.

[privatebanker]

I posted this on another thread but I think it’s appropriate for this one as well.

“The current crisis is the result of the normal ebb and flows of
credit cycles, and the free market will amply handle the correction
that is already happening. Calls for Federal Reserve intervention or
for other governmental involvement — including an increase of the
Fannie Mae/Freddie Mac lending limits — must be rejected.

In the free market, those that made bad credit decisions must be
allowed to pay the price, and only by paying dearly can lessons truly
be learned. Borrowers who were unwitting and took on too much debt
must learn that there are consequences for their actions. Homebuilders
that built too many homes or overpaid for land need to face the
consequences. Wall Street firms that provided credit to all of these
activities with too much laxity must also pay a price. This is all
part of a healthy correction.

All of these players reaped benefits during the housing boom that
preceded the current crisis. Certain homeowners were able to
temporarily live above their means. Homebuilder and bank profits have
been exorbitant, and shareholders and executives of these companies
have profited mightily in the boom. To not permit losses now would be
a direct violation of the free-market ideals at the foundation of our
economy.”

[LA_Renter]

“To not permit losses now would be a direct violation of the free-market ideals at the foundation of our economy.”

One might even call it Socialism!

[Author]

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