Zeev's Turnips Patch-No Politics (ZEEV)

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For an interesting view of the Bear Sterns deal see Hussman's weekly commentary at
http://www.hussman.net/wmc/wmc080324.htm


Below is brief excerpt. For copyright reasons, I cannot reproduce the full text here.



In effect, the Federal Reserve decided last week to overstep its legal boundaries – going beyond providing liquidity to the banking system and attempting to ensure the solvency of a non-bank entity. Specifically, the Fed agreed to provide a $30 billion “non-recourse loan” to J.P. Morgan, secured only by the worst tranche of Bear Stearns' mortgage debt. But the bank – J.P. Morgan – was in no financial trouble. Instead, it was effectively offered a subsidy by the Fed at public expense. Rick Santelli of CNBC is exactly right. If this is how the U.S. government is going to operate in a democratic, free-market society, “we might as well put a hammer and sickle on the flag.”