In a series of comments by Federal Bank Governors, they have let it be known that preventing buildups like the dotcom and housing bubbles may become a priority for the Fed. Ft.com report says that the Treasury recommends giving the Fed wide authority to require financial institutions to alter behaviour that it believes poses a threat to financial ­stability.

About Bernanke's testimony today, from the Wall Street Journal - Notably, Mr. Bernanke omitted a pledge he has repeatedly made in recent months to act in a "timely manner as needed" to support growth from Wednesday's prepared testimony. That could signal that he doesn't see much more room to lower interest rates.

After the last post comparing the history of Market Meltdowns (particularly the 1980s Savings and Loan Crisis), I decided to talk a little bit about how our current market correction differs from back then.

Sorry it took so long to post this article. Surprised no one else has.

The Federal Reserve on Tuesday slashed a key interest rate by three-fourths of a percentage point, moving aggressively to contain a credit crisis threatening to push the country into a severe recession.

Urgently moving to contain a deepening credit crisis, the Federal Reserve is trying to restore confidence in panicked financial markets by becoming a lender of last resort for Wall Street investment houses that on Monday can begin securing short-term emergency loans.

Another move by the the Fed to boost liquidity in credit markets. It will be interesting to see the details of how this play will be structured.
_____________________________________________________

Fed to Lend $200 Billion, Take on Mortgage Securities (Update1)
2008-03-11 08:51 (New York) (Bloomberg)

By Scott Lanman
March 11 (Bloomberg) -- The Federal Reserve plans to lend

Should the Fed directly start lending directly to mortgage REIT investors and reduce their load by taking the mortgage-backed securities off their hands? If this does happen, it will, in one stroke, wipe out the impact of subprime mess, which has three parts - a) Home owners facing foreclosure, b) Investors holding tainted mortgage-backed securities, and c) A credit crunch.

What bernanke is saying is that lenders should reduce loan principals, instead of just interest rates, thus reducing the pressure on mortgage owners facing foreclosure. As motivation for lenders, he offers up the schtick that the foreclosure filing and process could take well over a year, and could end up costing more than a prinicpal write-down. This is extortion, plain and simple.

The euro extended its rally against the dollar Thursday to another record high after poor jobs data and a repeat performance by Federal Reserve Chairman Ben Bernanke on Capitol Hill.

Ben Bernanke, Chairman of the US Federal Reserve, was facing mounting criticism last night of his handling of the crisis in world markets, raising concerns that he has lost the confidence of Wall Street before the Fed’s key meeting on interest rates.

I want to make the case for starting to put some money to work in Financial stocks. Please don't jump all over me before you read this.

I am suprised that I am the first person to post this. For those that don't know, the Federal Reserve, met late last night and slashed a key interest rate by three-quarters of a percentage point on Tuesday and indicated further rate cuts were likely.

Tomorrow looks like it is going to be a blood bath for the bulls... The Dow futures are down as much as 520 points as global markets around the world are being hammered. If you are a long-term investors these are the hardest times to take. It is tough to see your hard fought gains go down the drain as the bears take over and short everything in site.

Higher costs for energy and food last year pushed inflation up by the largest amount in 17 years, even though prices generally remained tame outside of those two areas. Meanwhile, industrial output was flat in December, more evidence of a significant slowdown in the economy.

U.S. Economic data in the first week of the New Year spelled T-R-O-U-B-L-E for both the US economy and the stock market. The December ISM report on January 2nd showed the manufacturing sector joining the housing and financial sectors already in recessionary territory.