Jpmorgan Prime Money Market Fund

The recent bailout sponsored by the Government of Bear Stearns, one of the top five lenders in the United States, has shocked traders and investors leave him cold. Despite the chilly reaction on Wall Street, many secretly breathe a sigh of relief. While Bear Stearns was mismanaged from its upper echelons, its subprime exposure grew until their recent losses of $ 30 billion more have been reported.

Once that happened, their course took a turn for the worse. As their ability to consolidate capital faltered, JPMorgan Chase stepped in with a takeover of a trading value of $ 2 per share, valuing the company worth 3.5 billion dollars to 236 million. Any agreement warned, if it is clearly designed to ensure the continued safety on the market more than pure profit (after the hedge fund collapsed last year, Bear Stearns's lawyers have been engaged in litigation related to sub-prime exposure).

With the impact of derivative financial instruments and more sophisticated, the impact rating of a collapse of Bear Stearns comes to a staggering $ 10 trillion. Moreover, even at an attractive price from that rival Bear Stearns did they would not buy unless a fundamental change in the monetary and fiscal policy had not occurred: the liquidity of the Federal Reserve provided to commercial banks which have been frequent recently in the wake of the credit crisis, were offered at Bear Stearns in order to cover billions in investments fluffy.

This creates a dangerous precedent against the continuous function of U.S. markets by using taxpayer money to bail out what is quite an error related to the market. By covering bad investments with taxpayer money, the Federal Reserve reverses six decades of capitalist politics blatantly in favor of the Socialist takeover. This could be the worst way to introduce Americans to this form of quasi-socialist government ever conceived.

No one put a gun to his head and collective Bear Stearns was ineffective and spread the risks of investing in subprime securities index. They did it by themselves. Yet, here we see a sustained recovery by the government to build confidence in a financial system that seems unable to take care of itself. Laissez-faire? Quite the contrary, it seems. What kind of message does this send to other financial institutions? Can we now expect similar access to the discount window "that had been reserved for institutions that work with taxpayers, not investors?

We now have half dubious promise that the Fed will stop on Wall Street during the boom times, but it is not a lack of regulation in the lending standards and a subsequent increase in "predatory lending" that the into this mess in the first place? And how many others get the Bear Stearns rescue Fed foreclosure facing millions of Americans? The Fed has not received much criticism to date, their responses have taken a course in which they have contributed to the economy weather in past recessions.

However, they will probably break the previous draw flags. Even if nobody will tell the emperor that his clothes are dragging a piece at a time, hopefully, presidential candidates will pounce on this new opportunity to compare the traditional economic goals with the current evolution of policy .